9911796707
TMI Blog2021 (12) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... aw, the Ld. CIT(A) erred in confirming reassessment proceeding by issuing notice under section 148 which is bad in law and require to be quashed. 2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reassessment order passed by Ld. AO without providing reason recorded for reopening for issuing notice under section 148. 3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reassessment order which is passed by ld. AO without issuing notice under section 143(2) after filing return on 28.09.2018 in response to notice under section 148, though the Ld. CIT(A) accepted that notice u/s. 143(2) was not issued after filling of return of income. 4. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming disallowance of Rs. 63,17,228 being 5% of purchases amount Rs. 126344575 by treating the same as non-genuine. 5. On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that assessment order was passed without furnishing the material, evidenced and opportunity of cross examination to the appellant. This is gross violation of principal of Audi Alteram Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh return for the A.Y. 2011-12. The AO recorded that the assessee did not reply to the said notice dated 20.08.2018. The AO in order to verify the genuineness of purchases expenses deputed Inspector to verify the existence of parties at their address. The Inspector vide his report dated 30.11.2018 reported that none of the firm/company from whom the assessee has shown purchases is not working at the given address. The AO further recorded that it is a fact that all entities which were operated by Rajendra Jain Group admitted during the search that they are providing accommodation entries. The AO issued notice under section 133(6) of the Act to verify the genuineness of transaction. The AO received reply from all parties in his office on 05.12.2018. The AO noted that the reply is contrary to the finding of the Inspector. The AO noted that this is a typical feature of such type of concern which are managed by entry provider while party is practically non-existent at the address, but they managed with postal communication by various arrangements. 4. On the basis of aforesaid observation, the AO issued show cause notice to the assessee on 10.12.2018 asking assessee to show cause as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee also raised ground that notice under section 143(2) of the Act was not issued after filing return of income. The assessee filed detailed written submissions. The detailed written submissions of assessee is recorded on page 8 to 28 in para 7 of order of ld. CIT(A). The ld. CIT(A), upheld the validity of reopening by holding that quashing of reopening of assessment would give undue benefit of mistake of AO. 6. On non-issuance of notice under section 143(2) of the Act, the ld. CIT(A) held that though he find merit in the submission of assessee, but in his opinion the defects are curable and do not strike at validity of assessment order and thereby dismissed the corresponding ground. On the addition of impugned bogus purchases, the ld. CIT(A) after referring the various decisions of Hon'ble Jurisdictional High Court including of Mayank Diamonds 2014(11) TMI 812 Gujarat and Bholenath Polyfab in ITA No. 137/AHD/2009 restricted the disallowance to the extent of 5% of disputed/bogus purchases. 7. Further aggrieved, both the parties have filed their respective appeals. The Revenue has challenged the order of ld. CIT(A) in sustaining the disallowance to the extent of 5%. On the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(2), subsequent to filing of return was issued to the assessee. The ld. AR for the assessee submits that the Co-ordinate Bench by following the decision of Hon'ble Supreme Court in Hotel Blue Moon 321 ITR 362 also held that section 292BB comes to rescue the Department only after issuance of notice under section 143(2) of the Act. the ld. AR for the assessee also relied on the decision of Jurisdictional high Court in PCIT Vs Marck Biosciences Ltd. (2019) 106 taxmann.com 399 (Gujarat). 9. On merit, the ld. AR of the assessee submits that the purchases of assessee are genuine. The assessee furnished complete and detailed evidence to substantiate the genuineness of purchases. The AO has not discussed the evidence furnished by assessee. The assessee furnished the ledger account, purchases bill, account confirmation, Income Tax Return and Bank Account Extract of Arihant Exports, Karnavat Impex Pvt. Ltd., Kriya Impex Pvt. Ltd., Sun Diam and Avi Exports. The statement and account of assessee, which is duly audited was not rejected. The AO solely relied on the report of Investigation Wing. No independent evidence was brought on record by the AO. The ld. AR prayed for deleting the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue being invalid. 12. We find that on the Jurisdictional High Court in PCIT vs. Marck Biosciences Ltd., (supra) also held that where notice under section 143(2) was issued to assessee prior to filing of return of income, said notice being invalid, assessment order passed in pursuance of same deserved to be set aside. The ld. CIT(A) in his order held that non-issuance of notice under section 143(2) of the Act is a curable defect, we find that Hon'ble Jurisdictional High Court in Marck Biosciences Ltd., (supra) also considered the provision of section 292BB and held from the language employed in section 292BB, which emerges that a notice would be deemed to be valid in three circumstances provided therein, namely where assessee has participated in the proceedings it would not be permissible him to raise objection that (i) notice was not served upon him; (ii) was not served upon him in time; & (iii) was served upon him in an improper manner and held that all the circumstances contemplated under section 292BB of the Act are in case where a notice has been issued, has either not been served upon the assessee or not served in time or has been served in an improper manner. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position that no notice under section 143(2) of the Act had been issued after the assessee informed the Assessing Officer to treat the earlier return of income as the return filed in response to the notice under section 148 of the Act. In other words, no notice under section 143(2) of the Act was issued after the filing of the return of income. The question that, therefore, arises for consideration is whether the assessment order framed under section 143(3) read with section 147 of the Act would be rendered invalid in the absence of a notice under section 143(2) of the Act? 13. For the purpose of better understanding of the controversy in issue, it may be germane to refer to the provisions of sub-section (2) of section 143 of the Act, which as it stood at the relevant time when the notice under section 148 of the Act was issued reads thus: "143. Assessment (1) ** ** ** (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,- (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be valid in the three circumstances provided therein, namely, where the assessee has participated in the proceedings it would not be permissible for him to raise objection that (i) the notice was not served upon him; or (ii) was not served upon him in time; or (iii) was served upon him in an improper manner. 17. Thus, all the circumstances contemplated under section 292BB of the Act are in a case where a notice has been issued, but has either not been served upon the assessee or not served in time or has been served in an improper manner. The said provision clearly does not contemplate a case where no notice has been issued at all. 18. The Supreme Court in case of Hotel Blue Moon (supra) held thus: '21. We may now revert back to Section 158-BC(b) which is the material provision which requires our consideration. Section 158-BC(b) provides for enquiry and assessment. The said provision reads that: "158-BC. (b) the assessing officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158-BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income, unless a notice under section 143(2) of the Act is issued to the assessee, he would have no means of knowing as to whether or not the Assessing Officer has accepted the return of income as filed by him. As held by the Supreme Court in the above decision, omission to issue a notice under section 143(2) of the Act is not a procedural irregularity and is not curable. It is, therefore, mandatory to issue notice under section 143(2) of the Act. 21. At this juncture, reference may also be made to the contents of the Central Board of Direct Taxes Circular No. 549 dated 31.10.1989, which finds reference in the decision of this Court in case of Mahi Valley Hotels & Resorts (supra), which has been reproduced in paragraph 8.5 hereinabove. A perusal of the above circular indicates that if an assessee, after furnishing the return of income, does not receive a notice under section 143(2) of the Act from the Department within the prescribed period, then he can take it that the return filed by him has become final and no scrutiny proceedings could be started in respect of that return. This is the kind of significance that has been attached to a notice under section 143(2) of the Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
