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TMI Blog2021 (12) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer wherein huge additions were made. Addition of Rs. 176,11,00,000/- towards unexplained investments: 5. The Ld. CIT (A) erred in confirming the addition of Rs. 176,11,00,000/- made by the A.O towards unexplained investments for purchase of lands by the appellant. 6. The Ld. CIT (A) erred in relying on the finding of the A.O that the liabilities of Dr. p.s. Prasad have been settled by the appellant, whereas these findings are baseless. 7. The Ld. CIT (A) ought to have appreciated the fact that the image copies taken from the hard disk seized, on the basis of which the A.O made addition towards unexplained investments, have no evidentiary value. 8. The Ld. CIT (A) ought to have appreciated the fact that the appellant has not paid any amount for purchase of lands and therefore the question of unexplained investment to the extent of Rs. 176.11 crores by the appellant does not arise. 9. The Ld. CIT (A) ought to have appreciated the fact that the findings of the A.O that Dr. P.S. .Prasad entered into agreement with the appellant for transfer of land and received Rs. 230.00 crores and an amount of Rs. 176.11 crores settled towards purchase of lands are based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 176.11 crores towards unexplained investments on the basis of dumb material and on suspicion and surmises and without any corroborative evidence and therefore cannot be sustained before law. 22. The Ld. CIT (A) ought to have appreciated the fact that the A.O erred in making addition towards unexplained investment in the hands of the appellant on protective basis. 23. The Ld. CIT (A) ought to have appreciated the fact that the documents on which the A.O relied on for making addition towards unexplained investment are draft agreements which have not been materialised. Addition of Rs. 6,50,00,000 towards undisclosed income 24. The Ld. CIT (A) erred in confirming the addition of Rs. 6.50 crores made by the A.O towards undisclosed income on the basis of the declaration made by the appellant under section 132(4) of the Income Tax Act, 1961. 23. The Ld. CIT (A) ought to have appreciated the fact that the appellant had withdrawn the declaration made by him under section 132(4) of the Act and therefore, any addition made by the A.O solely on the basis of the above declaration becomes null and void. 26. The CIT (A) ought to have appreciated the fact that the statement u/ s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us year in which period such search u/ s 132 is conducted." 3. As the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon'ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC), we admit the said additional grounds of assessee. 4. Briefly the facts of the case are that a search and seizure operation u/s 132 of the Act was carried out in the case of Shri Sukesh Gupta, the assessee on 11/03/2010 and accordingly, a notice u/s 153A was issued to the assessee on 26/10/2010. In response to the said notice, the assessee filed return of income for the AY 2010-11 on 08/12/2011 declaring a total income of Rs. 59,00,000/-, which is a searched year. 4.1 As per the assessment order the AO issued notices u/s 143(2) and 142(1) of the Act and questionnaire to the assessee on 20/07/2011 calling for information. 5. Before us, the ld. AR argued the case only on the legal issue raised in the additional grounds of appeal regarding challenging the issuance of notice u/s 143(2) of the Act and no arguments were advanced on the merits of the case. We, therefore, adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted a paper book containing pages 1 to 278, which is placed on record. He filed a written synopsis in support of revenue's case, which is as under: "The following written submissions are made for kind consideration of Hon'ble ITAT in relation to the above appeal filed by the assessee. 1. It is humbly submitted that in this case, search action was conducted on 11/03/2012 and incriminating evidence was seized. During the search the assessee disclosed an amount of Rs. 12.50 Cr. Admittedly notice u/s 142(1) was also issued on 17/10/2011 to the assessee calling for the return of income. Thereafter another notice along with questionnaire was issued on 18/11/2011. The assessee filed a belated return of income on 07/12/2011 declaring income of Rs. 59 lakhs just before the time barring date for completion of assessment. On 26/12/2011, a notice was issued to the assessee proposing to make addition of ~ 176.11 Cr on account of settlements made by the assessee on behalf of Dr P 5 Prasad (Goldstone group) linked with purchase of land at Hyder Nagar and due opportunity was granted to the assessee to present his case. The assessee filed his reply on 28/12/2011 denying the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound nos: 1 to 4 are general in nature except that in ground no:4, the assessee states that due opportunity was not granted by the CIT(A). However, as seen from the order of CIT(A), six hearings spanning over 4 years were granted and the ground taken by the assessee is devoid of merit. Ground no: 3 is also devoid of merit because the CIT(A) duly considered the submissions of the assessee. 5. Ground nos: 5 to 23 are on the issue of addition of Rs. 176.11 Cr. The sum and substance of these grounds is that the addition is based on dumb documents (the MOUs, the purchase of land and rigging of shares) which have no evidentiary value, the parties on whose statements reliance was placed by the AO are not known to the assessee and their assertions are not relatable to him. 6. It is submitted that on the face of mounting evidence, it is incorrect on the part of the assessee to state that the seized documents are dumb material. On the other hand, the seized documents clearly indicate a well thought out scheme of unaccounted transactions entered into by the assessee. 7. With regard to deficit stock of jewellery in case of MBS Jewellers Pvt Ltd, it is submitted that during the search pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders of Mis. Gold Stone Technologies Limited were also seized during the search. Transfer of land to assessee group is also evident from various sale deeds. 9. It is submitted that it is evident from the statement of the assessee recorded from 132(4) dated 11.03.2010, that there are unaccounted transactions between both the groups, when the transaction of payments of unaccounted cash for settlement of liabilities were confronted to him, in response to question no. 13, he stated "I am not denying any transaction with the said parties. However, the quantum of the transactions need to be verified and I need some time." In response to question no. 39 of the same statement, he also admitted that there were inadvertent omissions due to business compulsions and declared additional income. 10. It is also submitted that in response to question no. 9 of the statement recorded u/s 131 from the assessee on 31.03.2010, he admitted that payments were made by him in the form of jewellery, diamonds and cheques in lieu of purchase of 98 acres of land from Dr. Prasad and his associates. It is submitted that these payments were made to third parties. It is also submitted that in the statement re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was manipulation and rigging. The statement of one of the operators, Shri Santosh Doshi recorded by ADIT(lnv), Unit - IV(2), Mumbai also clearly indicates that Mr Sukesh Gupta (the assessee) promised him to compensate the losses on account of manipulation of share price of Goldstone Technologies Ltd. He also stated that he received off market shares from Mr Mangesh Kane and given them to Mr Gopal Marathe off market as per telephonic instructions of the assessee. It is also on record that about Rs. 4.35 Cr were transferred from the account of Goldstone Export to the account of RJL Infrastructure Ltd. The funds to Goldstone Export were provided from the account of Aashi Realtors, which is a concern managed by the assessee. The names of the operators are also available in the seized record. Detailed discussion on these transactions is available in the assessment order. 13. In light of the above, it is clear that the evidence in the form of seized record has a live link with the unaccounted transactions. The evidence in the form of multiple documents was seized during the search in case of the assessee and his group companies. The statement of director of Summit Communications Pvt L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retraction is without any basis. Therefore, appropriate decision in light of the fact that the disclosure was to cover up the defects and there was no coercion or pressure. In light of the above, the appeal may kindly be dismissed." 7.1 Further, the ld. DR submitted that there is no need to issue notice u/s 143(2) and mentioned the issuance of notice u/s 143(2) in the order sheet. He submitted that the ld. AR stated in the written synopsis filed before the CIT(A) that notices u/s 143(2) and 142(1) were issued to the assessee and the assessment was completed u/s 143(3) of the Act, which is evident at page 6 at para 5 of the CIT(A)'s order. He, therefore, submitted that the assessee himself has accepted that the notice was issued u/s 143(2) and, therefore, at this stage he cannot challenge the legality of the issue of notice u/s 143(2) of the Act and since the assessee participated in the assessment proceedings, section 292BB will apply. He submitted that the revenue authorities were completed the assessment in the case of the assessee as per the income-tax proceedings. He therefore, submitted that the arguments advanced by the ld. AR of the assessee are not tenable on legal issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible to issue a notices before filing of return of income. The assessee also filed his return of income u/s 139(1) of the Act on 30/08/2010 under the acknowledgment No. 4400001008/Ward - 4(4). Even if we correlate the notice u/s 143(2) with the assessment order, the issue of notice is time barred. This is a search year, in which, assessment has been framed u/s 143(3) of the Act, but, the assessment has not been framed u/s 153A. Therefore, even if notice issued u/s 143(2) is time barred or not issued at all or notice u/s 143(2) is invalid in the eye of law, the assessment framed u/s 143(3) will not survive. As held by the Hon'ble High Court of Madras in the case of B. Kubendran Vs. DCIT, [2021] 126 Taxmann.com 107 (Madras.), notice u/s 143(2) is not required to be issued in the cases where assessments framed u/s 153A, but, in the present case, assessment has been framed u/s 143(3), therefore, as per the statute notice u/s 143(2) is mandatory to be issued by the jurisdictional AO, which is absent in this case. Therefore, non-issuance of a valid notice u/s 143(2) of the Act, the entire assessment framed by the AO is void-ab-initio. Accordingly, we set aside the order of the CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or particulars specified therein on which the assessee may rely in support of such claim. 15. Section 292BB of the Act reads thus; "292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was - (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." 16. From the language employed in section 292BB of the Act, it emerges that a notice would be deemed 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement of notice under section 143(2) cannot be dispensed with." 19. Thus, the Court held that if an assessment has to be completed under section 143(3) read with section 158BC of the Act, then notice under section 143(2) of the Act should be issued within a period of one year from the date of filing of block return. The Court held that omission on the part of the Assessing Officer to issue notice under section 143(2) of the Act cannot be said to be a procedural irregularity and the same is not curable, and therefore, the requirement of notice under section 143(2) of the Act cannot be dispensed with. 20. In the facts of the present case also, if the contention of the appellant were to be accepted, it would amount to dispensing with the notice under section 143(2) of the Act in view of the fact that it is an admitted position that no such notice had been issued after the return of income was filed by the assessee. After the filing of the return of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of defective service of notice, which would be squarely covered by the provisions of section 292BB of the Act. The said decision, therefore, has no applicable to the facts of the present case. 24. In the light of the fact that non issuance of a notice under section 143(2) of the Act is not a procedural irregularity, the same cannot be cured under section 292BB of the Act and hence, the assessment order passed without issuance of notice under section 143(2) of the Act, would be rendered invalid. The Tribunal as well as the Commissioner (Appeals), therefore, did not commit any error in holding that the notice issued prior to the filing of the return of income was invalid and that, in absence of a valid notice under section 143(2) of the Act, the assessment order was rendered invalid. 8.2. In the case under consideration, the AO has not issued a notice u/s 143(2) and even the ld. D.R. also could not bring on record any copy of the notice issued by the assessing officer or any proof of service of notice U/s 143(2) of the Income Tax Act, 1961 as mentioned above. The provisions of section 292BB also do not support the revenue because in the impugned case there is no documentary evi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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