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TMI Blog2021 (10) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-Tax (Appeals) has erred in law and in facts in upholding the validity of issuing notice u/s 148 of the Act by Assessing officer. The Ld CIT (A) overlooked the fact that AO has not recorded finding in the reason that there was failure on the part of the assessee to disclose truly and fully all material fact necessary for the assessment as well as ignored the fact that AO has not obtained sanction from CIT before issue of notice u/s 148 of the Act as required u/s 151 of the Act. The assessee pleads that the order passed u/s 143(3) r.w.s. 147 of the Act is bad in law and invalid. 2. The learned Commissioner of Income Tax (Appeal) has erred in law and in facts in upholding the validity of impugned reassessment order passed by assessing officer without considering the fact that notice u/s 143(2) of the Act was not issued and served on the assessee. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in partially confirming the addition of impugned bogus purchases of Rs. 80,17,790/- (being 12.50% of total alleged bogus purchases of Rs. 6,41,42,308/-) made by assessing officer. The Ld CIT(A) has relied on irrelevant consideration and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to the tune of Rs. 6,41,42,308/- on account of bogus sales. 4. On appeal, ld. CIT(A) dismissed the assessee`s technical issue (challenging the validity of reopening the assessment), observing as follows: "9. Ground regarding validity of re-opening of assessment 9. 1 This ground of appeal pertains to validity of re-opening of the case u/s 147 of the Act and issuing of notice u/s 148 of the I T Act. I have perused the submission of the AR and considered verbal arguments. It is seen from the records that the AO has received report from the Investigation Wing, Mumbai, which indicated that the assessee was beneficiary of accommodation entry operators. The said accommodation entry operator has admitted before the Investigation Wing that he had given bogus purchase bills to many persons including the assessee. Based on this report, the ld. assessing officer had 'reason to believe' that income has escaped the assessment. In the facts and circumstances, I am convinced that the re-opening in this case is justified. Further, in his submission and verbal arguments, the AR contested that the assessment is not made as per Law. The Id assessing officer has not provided the copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dences, therefore Assessing Officer has fulfilled the statutory condition. Learned DR also contended that no specific notice was required to be issued u/s 143(2) and also contended that non-issuance of notice u/s 143(2) will not render the assessment invalid. Learned DR had also referred to a case law to buttress his contention, [Commission of Income Tax v. Madhya Bharat Energy Corporation Ltd. (2011) 337 ITR 339 Del], which purported to hold that non-issue of notice under 143(2) of the Act on an assessee prior to completion of the reassessment would not be fatal to the reassessment. Learned DR also sought to distinguish the decision in ACIT v. Hotel Blue Moon 321 ITR 362(SC), on the ground that it pertained to a block assessment. Learned DR also stated that during the assessment proceedings the assessee has participated in the assessment proceedings and did not object the jurisdiction of the assessing officer, so notice under section 143(3) has been deemed to be issued. The ld DR also got report from assessing officer, on the issue whether notice under section 143(2) was issued or not during the assessment stage? The said report of the assessing officer is reproduced below: "2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it." 8. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that main grievance of the assessee is that assessing officer has not obtained sanction from Commissioner of Income Tax before issue of notice u/s 148 of the Act as required u/s 151 of the Act, therefore the reassessment proceedings are invalid. However, we examined this fact from the paper book of ld DR and noticed that assessing officer has obtained sanction from Commissioner of Income Tax before issue of notice u/s 148 of the Act as required u/s 151 of the Act, therefore, according to us the reassessment proceedings are valid. The sanction obtained from Commissioner of Income Tax before issue of notice u/s 148 of the Act is reproduced below: "OFFICE OF THE COMMISSIONER OF INCOME-TAX - II, ROOM NO.227, 2ND FLOOR, AAYKAR BHAVAN, MAJURAGATE, SUK AT. No.SRT/CIT-II/HQ/Re-open/RNS/151(1)/2013-14 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot take the benefit of first proviso to section 147 of the Act. During the course of hearing the Bench asked ld Counsel to provide the copy of original assessment made under section 143(3) of the Act, however, ld Counsel failed to provide the copy of the original assessment framed under section 143(3) of the Act, therefore it is not possible for the Bench to examine whether all books of accounts, documents and evidences were submitted during the original assessment proceedings and assessing officer has examined these or not? Hence, plea of the ld Counsel that "assessing officer cannot reopen the assessment beyond a period of four years" is not tenable. Hence, according to us assessee has not disclosed all the facts necessary for making the assessment; therefore, we dismiss the ground raised by the assessee. 10. We have also gone through the reasons recorded by the assessing officer, which is placed at assessee`s paper book page No.2 and 3, and noticed that there is no any defect in the reasons recorded by the assessing officer. The assessing officer took the approval from the commissioner and issued notice in accordance with law. Having gone through the "reasons recorded", we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his part to disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor, absence of any such statement would be fatal, if on the basis of reasons recorded, it can be culled out that there were sufficient grounds for the Assessing Officer to hold such beliefs." 12. A three Judges bench of Hon'ble Gujarat High Court in the case of A.L.A. Firm v. CIT, 189 (1991) ITR 285, after an elaborate discussion of the subject opined that the jurisdiction of the Income Tax Officer to reassess income arises if he has in consequence of specific and relevant information coming into his possession subsequent to the previous concluded assessment, reason to believe, that income chargeable to tax and had escaped assessment. It was held that even if the information be such that it could have been obtained by the I.T.O. during the previous assessment proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income Tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under Section 147 of the Act are satisfied. 13. As observed earlier not only there existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the basis of said material provided by the Excise Department, the Assessing Officer has reopened the assessment of the assessee by issuing notice under Section 148 of the Act. The assessee of that case in the similar manner in this case has contended that the information provided by a different Investigating Team may not be ipso facto utilized to reopen the assessment which has become final by the Income-tax authority. It was also contended by the assessee of that case that there was no independent application of mind on the part of Assessing Officer and just based upon said information provided by the Excise Department, the authority resorted to Section 148 of the Act to reopen the assessment. This issue in extenso dealt with by the Division Bench and by a detailed judgment, came to conclusion that the Assessing Officer has merely relied upon the show cause notice issued by the Excise Department and has not concluded finally and therefore, there is no illegality or irregularity in arriving at a belief that assessment deserves to be reopen. Relying upon the decision delivered by the Apex Court in the case of Purushottam Das Bangur & Another, 224 ITR 362 (SC), it was held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter. In view of the above facts and provisions of the Act regarding the issue of jurisdiction, it is evident the Assessing Officer has initiated the reassessment proceedings u/s. 147/148 of IT Act, 1961 as per the provisions of the Act and all the conditions laid down for reopening has been fulfilled. Hence, this ground of the assessee fails and the ground of appeal is dismissed. 15. The next stand of assessee is that notice under section 143(2) of the Act was not issued. In this regard, ld DR submits before us that assessee has been participating in the assessment proceedings before the Assessing Officer and he did not raise this issue before the Assessing Officer, therefore at this point the assessee cannot raise this issue. On the perusal of the details it is observed that the assessee has never raised any objection during the assessment proceedings regarding the reopening of the assessment. The assessee had not filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k with remark 'Left'. Thereafter the assessee filed on 06/01/2015 an objection against reopening his case, which had been duly disposed off on 09/02/2015 by passing speaking order. Said order was also intimated on 18/02/2015. Thereafter a show cause notice date 17/02/2015 was issued on 18/02/2015 against which the assessee filed an unsatisfactory reply a 25/02/2015. Accordingly order u/s l44 r.w.s.l47 was passed on 02/03/2015 and issued at the assessee's given address which had received back from the postal authorities with remark left. 3. From the above it is apparent that the assessee has raised unsustainable arguments which are not tenable on the basis of documents brought on record. Necessary approval was duly accorded by CIT-II, Surat before issuing notice u/s 148 of the I.T. Act. Further assessee's contention is that no notice u/s 143(2) was issued in its case. Here on perusal of record it is seen that in response to notice issued u/s 148 of the I.T. Act, the assessee did not e-file a revised return of income a copy of e-filling profile the assessee is attached. Accordingly, there is no case for issuance of notice u/s 143(2) of the IT Act. Order under section 144 r. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48) has overturned the earlier ruling given in case of Madhya Bharat energy Corporation (after duly considering this decision) and held that failure of assessing officer to issue notice u/s 143(2) is fatal to order of reassessment and such failure cannot be condoned by referring to section 292BB of the Act. Thus, decision in the case of Madhya Bharat Energy Corporation (supra) does not hold the field, therefore, we do not agree with the contention of ld DR to the effect that non-issuance of notice under section 143(2) of the Act does not render the reassessment invalid. 18. We note that Ld. DR for the Revenue also sought to distinguish the decision in ACIT v. Hotel Blue Moon (supra) on the ground that it pertained to a block assessment. We note that Ld Counsel of the Assessee had referred plethora of judgments laid down by Hon'ble High courts following the judgment of the Apex court where in the facts were similar to case at hand and it was held that for completing the assessment under section 148 of the Act, compliance with the procedure of issue of notice under Section 143 (2) was mandatory. This position of law has been further clarified by Delhi high Court in the case of A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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