2022 (10) TMI 1041 - AT - Income Tax

Validity of Assessment u/s 153A - no notice under section 143(2) was served on the assessee - HELD THAT - We observe that despite several opportunities, DR has not been able to place on record any documents/assessment records/evidence which shows that notice under section 143(2) of the Act was issued/served upon the assessee at any time prior to completion of assessment. The assessee has filed a specific Affidavit to the effect that no notice under 143(2) of the Act was issued/served upon the assessee during the course of assessment proceedings i.e. prior to completion of assessment. DR has not placed on record any documents to contradict the Affidavit filed by the assessee regarding non-service/non-issuance of notice u/s 143(2). Hon'ble High Court Gujarat High Court in the case of Panorama Builders (P.) Ltd 2012 (8) TMI 955 - GUJARAT HIGH COURT held that Section 292BB is only confined to service of notice and does not apply to issuance of notice. In the case of Narendra Singh 2010 (11) TMI 209 - ITAT AGRA the ITAT held that in pursuance of return filed by assessee u/s 153A, service of notice as per provisions of section 143(2) within prescribed time is mandatory. Therefore, in absence of service of such a notice, Assessing Officer cannot make addition and he is bound to accept income as returned by assessee. Thus, since the Ld. AO did not issue/serve notice under section 143(2) of the Act before completion of assessment under section 143(3) of the Act, the assessment order framed is void. DR has not brought anything on record to substantiate that notice u/s 143(2) of the Act was either issued/served on the assessee prior to completion of assessment. In view of the above, we are of the view that the assessment order is invalid in the eyes of law in absence of a valid issuance and service of notice under section 143(2) of the Act. In the result, appeal of the assessee is allowed on jurisdiction. Accordingly, we are not discussing the merits of the case.

Issues Involved:
1. Validity of assessment under Section 143(3) based on notice under Section 153A.
2. Issuance of notice under Section 143(2) within the prescribed time.
3. Assessment under Section 143(3) versus Section 153A.
4. Violation of principles of natural justice.
5. Additions to returned income post search.
6. Addition based on statement recorded under Section 132(4).
7. Addition on account of unexplained jewellery.
8. Addition on account of unaccounted marriage expenses.

Detailed Analysis:

1. Validity of Assessment under Section 143(3) Based on Notice under Section 153A:
The appellant argued that the assessment year 2011-12, being the search year, should not be assessed under Section 153A. The Tribunal referenced the Indore Bench of ITAT in Susheei Kumar Jain, which clarified that the assessment for the year of search should be completed under Section 153A read with Section 153B. The Tribunal upheld the assessment under Section 153A, rejecting the appellant's contention.

2. Issuance of Notice under Section 143(2) within the Prescribed Time:
The appellant contended that no notice under Section 143(2) was issued within six months from the end of the financial year in which the return was filed, rendering the assessment void. The Tribunal noted that despite several opportunities, the Department failed to produce evidence of such notice. The Tribunal relied on judicial precedents, including CIT v. Lakshman Das Khandelwal and ACIT v. Hotel Blue Moon, which mandate the issuance of notice under Section 143(2) for a valid assessment. The absence of such notice invalidated the assessment.

3. Assessment under Section 143(3) versus Section 153A:
The appellant argued that the assessment should be under Section 143(3) rather than Section 153A. The Tribunal, referencing the Indore Bench decision, concluded that the assessment for the search year should be under Section 153A, aligning with the statutory provisions.

4. Violation of Principles of Natural Justice:
The appellant claimed that the assessment was completed without proper opportunity, violating natural justice principles. The Tribunal did not specifically address this issue, as the assessment was invalidated on other grounds.

5. Additions to Returned Income Post Search:
The appellant argued that the additions were unwarranted as the income was already disclosed. The Tribunal did not delve into the merits of the additions, focusing instead on the procedural validity of the assessment.

6. Addition Based on Statement Recorded under Section 132(4):
The appellant contested the addition of Rs. 9,30,00,000 based solely on a statement without corroborative evidence. The Tribunal did not address this issue separately, given the assessment's procedural invalidity.

7. Addition on Account of Unexplained Jewellery:
The appellant challenged the addition of Rs. 22,05,147 for unexplained jewellery. The Tribunal did not specifically address this issue due to the overarching procedural invalidity.

8. Addition on Account of Unaccounted Marriage Expenses:
The appellant disputed the addition of Rs. 31,18,767 for unaccounted marriage expenses. Again, the Tribunal did not specifically address this issue, as the assessment was invalidated on procedural grounds.

Conclusion:
The Tribunal concluded that the assessment order was void due to the absence of a valid notice under Section 143(2) before the completion of the assessment. Consequently, the appeal was allowed on jurisdictional grounds, and the merits of the case were not discussed. The order was pronounced in the open court on 19-10-2022.

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