TMI Blog2024 (4) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord. The very initiation of assessment proceedings u/s 143(3) of the Act, suffers from serious jurisdictional error and infirmity. Before us, DR has made an attempt to make out a case in favour of the Department by submitting that notice u/s 143(2) of the Act was issued based on Form 29B, Form 3CA and form 3CEB. We are not impressed with such submission. The provision contained u/s 143(2) makes it clear that only upon filing of return of income proceedings could have been initiated. Certainly Form 29B, Form 3CA and Form 3CEB cannot be considered as return of income in terms of section 139 of the Act. Though, in the assessment order, the AO has referred to only a single notice dated 23.09.2015 issued under section 143(2) however, in letter dated 27.12.2021, AO has referred to two more notices u/s 143(2) issued on 26.05.2016 and 25.07.2016. Even assuming that such notices were actually issued, however, they were issued prior to the filing of return of income on 26.12.2016. As fairly well settled that an assessment order u/s 143(3) can only be passed based on a valid notice issued under section 143(2) - In this context, we may refer to a decision in case of PCIT Vs. Marck Bioscience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer completed the assessment under section 143(3) of the Act vide order dated 30.12.2016, making couple of additions, as under: (i) Unexplained expenditure of Rs. 78,68,52,192/- (ii) Unexplained purchases of Rs. 66,04,678/- 5. Contesting the aforesaid additions, the assessee filed an appeal before learned first appellate authority. In course of proceedings before learned first appellate authority, the assessee canvassed an additional ground challenging the validity of the assessment order due to invalid notice issued under section 143(2) of the Act. While deciding the appeal, learned first appellate authority granted substantial relief to the assessee on merits by restricting the total addition to Rs. 1,25,30,213/-. However, he did not decide the additional ground raised by the assessee challenging the validity of the assessment order. 6. Before us, learned counsel appearing for the assessee submitted that the notice issued under section 143(2) of the Act is invalid, as, it was issued prior to filing of return of income by the assessee. He submitted, a valid notice under section 143(2) of the Act being a sine qua non for a valid assessment order under section 143(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be necessary to look into the provisions of section 143 of the Act. On a careful reading of the aforesaid provision, it becomes clear that where a return of income has been filed under section 139, or in response to a notice issued under section 142(1) of the Act in terms of sub-section (1) of section 142 of the Act, such return is to be processed in the manner provided in the said sub-sections. However, upon furnishing of a return under section 139(1) of the Act or in response to notice issued under section 142(2) of the Act, if the Assessing Officer deems it appropriate to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, he shall serve a notice under section 143(2) of the Act requiring him to produce any evidence, which the assessee may rely in support of the return on a date to be specified by the Assessing Officer. Once the assessee complies to the notice issued under section 143(2) of the Act, the Assessing Officer proceeds to complete the assessment under section 143(3) of the Act. 10. Thus, the provisions of section 143 read as a whole, makes it clear that assumption of jurisdiction to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Sumitra Menon Vs. ACIT (supra), notice under section 143(2) of the Act was validly issued, but as claimed by the assessee, it was never served on him. However, the Tribunal after verifying the facts recorded a factual finding that the notice was validly served on the assessee. Therefore, the Hon ble High Court upheld the decision of the Tribunal. In case of Josh Builders Developers (P.) Ltd. Vs. PCIT (supra), the facts are quite similar as the Tribunal recorded a finding of fact that notice under section 143(2) of the Act was validly served on the assessee and the assessee without any objection participated in the assessment proceedings. Therefore, any defect in the notice was cured under section 292BB of the Act. 16. However, facts are completely different in the present case, as, the notice issued under section 143(2) of the Act was prior to filing of return of income by the assessee, at which point of time, the provisions of section 143(2) of the Act could not have got triggered. Therefore, the very assumption of jurisdiction by the Assessing Officer was invalid. That being the case, section 292BB of the Act cannot come to the rescue of the Department. 17. A reading of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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