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2015 (4) TMI 764 - AT - Income TaxAdmissibility of additional ground - Non-service of the notice u/s 143(2) for making reassessment u/s 147 - Addition of Income u/s 68 of Income Tax Act, 1961 - Held that - We have heard both the parties and perused the relevant records especially the order passed by the Revenue Authorities along with the documentary evidence filed by the assessee attaching therewith the various documentary evidence supporting the claim of the assessee as well as the various decisions rendered by the Hon ble Supreme Court on the legal issue in dispute. Regarding admission of this additional ground before us, which is challenging the very jurisdiction of the AO to pass the reassessment order, is no longer res-integra and it is well settled that an assessee can raise a legal ground at any stage of the proceedings as held by Apex Court in the case of Varas International 2006 (3) TMI 74 - SUPREME Court and National Thermal Power Co. Ltd. 1996 (12) TMI 7 - SUPREME Court and the Special Bench decision in the case of DHL operators 2007 (3) TMI 420 - ITAT MUMBAI . Keeping in view the facts and circumstances of the present case and the arguments raised by the ld. counsel, we are of the view that the issue raised in additional ground regarding the non-issuance of notice u/s. 143(2) of the Act which goes to the root of the matter, needs to be admitted. We are of the view that the AO has not issued notice u/s. 143(2) of the Act which is mandatory. We are also of the view that in completing the assessment u/s. 148 of the Act, compliance of the procedure laid down u/s. 142 and 143(2) is mandatory. As per record, we find that there was no notice issued u/s. 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported by the various judgments of the Hon ble Supreme Court, and Hon ble Jurisdictional High Court. Refer cases are Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA , M/s Silver Line 2014 (10) TMI 141 - ITAT DELHI , Aligarh Auto Centre 2013 (9) TMI 332 - ITAT AGRA . In the result, the Cross Objection filed by the Assessee is allowed. Since the assessment order is held to be void abnitio, the other grounds raised by the assessee in the Cross Objection have become academic in nature, hence, the same are not being adjudicated upon. - Decided in favour of assessee.
Issues Involved:
1. Deletion of additions made under Section 68 of the Income Tax Act. 2. Validity of reopening of assessment under Sections 147/148. 3. Non-service of mandatory notice under Section 143(2). Detailed Analysis: 1. Deletion of Additions Made Under Section 68: The Revenue raised multiple grounds regarding the deletion of additions made under Section 68 by the CIT(A). The key points of contention were: - Addition of Rs. 50,00,000: The Revenue argued that CIT(A) erred in deleting the addition on account of income from undisclosed sources, shown as received from M/s Aayushi Stock Brokers Pvt. Ltd., an identified entry operator. - Addition of Rs. 10,00,000: Similarly, the deletion of another addition of Rs. 10,00,000 shown as a refund of share application money from the same entity was contested. - Addition of Rs. 12,50,000: The Revenue also contested the deletion of Rs. 12,50,000 shown as share application money from the same entry operator. The Revenue contended that CIT(A) relied on the paper book filed by the assessee without verifying the facts and failed to appreciate the entire facts discussed in the assessment order about the modus operandi of M/s Aayushi Stock Brokers Pvt. Ltd. The CIT(A) was also criticized for relying on the decision in the case of Lovely Exports (P) Ltd 216 CTR 199 (SC) without proper verification. 2. Validity of Reopening of Assessment Under Sections 147/148: The Assessee raised several grounds in its Cross Objection regarding the validity of the reopening of the assessment: - Invoking Provisions of Section 147: The Assessee argued that the CIT(A) erred in holding that the AO was justified in invoking Section 147, as the provisions were not applicable to the facts of the case. - Service of Notice Under Section 148: The Assessee contended that the service of notice under Section 148 was improper as it was issued to a different address and through affixture without proper justification. - Reopening Based on Incorrect Reasons: The Assessee argued that the reopening was not based on proper and correct reasons, lacked application of mind, and was without any material on record to conclude that certain income had escaped assessment. 3. Non-Service of Mandatory Notice Under Section 143(2): The Assessee raised an additional ground during the hearing regarding the non-service of mandatory notice under Section 143(2): - Non-Issuance of Notice: The Assessee argued that the reassessment order was invalid as the AO did not issue the mandatory notice under Section 143(2) before completing the reassessment. - Legal Precedents: The Assessee cited several judgments supporting the contention that non-service of notice under Section 143(2) vitiates the reassessment. Notable cases included CIT Vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H) and ACIT Vs. Hotel Blue Moon (2014) 321 ITR 362 (SC). The Tribunal found that the AO did not issue the mandatory notice under Section 143(2) before completing the reassessment. The Tribunal held that the non-issuance of this notice is a substantive defect that cannot be cured under Section 292BB. Consequently, the reassessment order was declared invalid and void ab initio. Conclusion: - Cross Objection by Assessee: The Tribunal allowed the Cross Objection filed by the Assessee, holding that the reassessment order was invalid due to the non-issuance of the mandatory notice under Section 143(2). - Revenue's Appeal: As the reassessment order was declared void, the Revenue's appeal became infructuous and was dismissed. Order: The Cross Objection filed by the Assessee was allowed, and the Appeal filed by the Revenue was dismissed. The order was pronounced in the open court on 08.04.2015.
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