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TMI Blog2019 (7) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... empty formality, he may in an appropriate case, as indeed the instant case, choose not verify the same and, consequentially, not issue notice u/s. 143(2). The ensuing assessment, as also observed in Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] is an assessment u/s. 144. The instant assessment is an assessment u/s. 144, and not, as stated, u/s. 143(3). Rather, a return is not filed has to be supplemented by physical return, of which there is no mention or contention, in the absence of which the same cannot be said to have been filed. In fact, the completion of the said procedure after 20.03.2013, the date of assessment, even if so, is to moment, as the assessment stand already completed on that date. The assessment in the instant case, is accordingly, to be regarded as u/s. 144 r/w s. 147, and the AO is incorrect stating it to be u/s. 143(2) r/w s. 147. Considered whichever way, the assessee s legal challenge is without merit, both on facts as well as, and for that reason as well, in law. In fact, the assessment as framed is in u/s. 144, and the Revenue authorities, were in law, under no obligation to accept the additional evidences sought to be furnished by the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te findings of fact (by the AO). The assessee shall cooperate in the matter lest the AO draw adverse inference as admissible under the circumstances. The AO shall complete the said verification in a time bound manner, being also required to observe the time limit u/s. 153 of the Act, as specified after 01.06.2016. - assessee s appeal is partly allowed on the afore-said terms X X X X Extracts X X X X X X X X Extracts X X X X ..... nces no occasion for the Assessing Officer (AO) to issue notice u/s. 143(2), who in fact had time only up to 31.12.2008 for framing the assessment, i.e., barely 1-2 days after the filing of the return, while in the present case, the AO had time up to 31.3.2013, though yet chose to complete the assessment on 20.3.2013. On being queried by the Bench qua the valid assumption of jurisdiction for framing an assessment u/s. 147 by the issue of notice u/s. 148(1) on 28.3.2012, as explained in R.K. Upadhyaya v. Shamabhai P. Patel [1987] 166 ITR 163 (SC), he could not furnish any satisfactory answer. On being further asked about the prejudice caused to the assessee by the non-issue or, as the case may be, the non-service of the notice u/s. 143(2), he would submit that the question is not of prejudice caused, but of the assumption of jurisdiction to frame a valid assessment, which is, in view of the admitted non-issue of notice u/s. 143(2), absent. The Tribunal had, in arriving at it's decision in Anil Kumar (supra), relied on the decision in Hotel Blue Moon (supra), i.e., besides on the decisions by other High Courts as well. On being further asked by the Bench as to if in any of these dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Court upheld the assessment. It's decision was on the basis that the assessee had participated in the proceedings and, in fact, raised no objection to the service of notice u/s. 143(2), and which could, therefore, not be before the higher forums for the first time in view of s. 292 BB, even as noted by it earlier in CIT v. Panchvati Motors (P.) Ltd. [2011] 59 DTR 289 (P&H). The Hon'ble Court also relied upon the decision in K.J. Thomas v. CIT [2008] 301 ITR 301 (Ker) wherein, again, a reassessment made without observing the procedure u/s. 143(2) was not regarded, for that reason, invalid; the Hon'ble Court reproducing the relevant part of the said decision, which is as follows: "The procedure under s. 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and reassessment notice and final order were also issued within the time limit prescribed under the Act." The position in law is not very different for an assessment u/s. 153A, as noted in Ashok Chaddha v. ITO [2011] 337 ITR 399 (Del). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 495 (P&H) to an issue of notice u/s. 143(2) within the prescribed time.) That is, the notice u/s. 143(2) assumes a nature of a jurisdictional notice, i.e., for framing an assessment u/s. 143(3), invalidating the assessment framed without observing the same. The jurisdiction to frame an assessment qua an assessment u/s. 147, on the other hand, is upon issue of a valid notice u/s. 148, so that it is this notice which is the jurisdictional notice in such a case, as shall be presently seen. 3.4 It might appear that the Hon'ble Court in Ram Narain Bansal (supra) had decided the question of law raised before it on equitable grounds in-as-much as the assessee was provided reasonable opportunity to state his case in the assessment proceedings. It is so said as in the facts of that case, unlike in the instant case, assessee responded to the notice u/s. 148 by giving his reply on 24/04/2007, i.e., soon after the receipt of said notice issued on 13/4/2007, as indeed the case was in K.J. Thomas (supra). This is, however, not so, though was no doubt conscious of the equitable aspect., This is as the Hon'ble Courts, including the Apex Court, having prior to the amendment in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame, the AO issued notice u/s. 142(1), requiring him to furnish the details as called for, being considered fit and proper by the assessing authority to examine the issue at hand, or, verify the information furnished in response. The matter in fact stands discussed at length by the Tribunal in Rakesh Gupta v. ITO (ITA No. 222/Asr/2016,dated 31/1/2019) and Asst. CIT v. Khosla International (in ITA No. 307/Asr/2016, dated 28/3/2019). 3.5 Without prejudice, there is, in the facts of the instant case, no occasion, much less a requirement in law, for the AO to issue a notice u/s. 143(2), which is only toward the verification of a return. The assessment order is dated 20.3.2013, so that the hearing had been closed prior thereto. There is, in any case, nothing on record to indicate that it is not so. The assessee did not file a return in response to notice u/s. 148(1), i.e., within the time prescribed thereby, and in fact even within a reasonable time thereafter. The AO is, none-the-less, legally bound to proceed in the matter and frame the assessment within the statutorily prescribed time. Reference here may be made to the decisions in Jai Hanuman Trading Co. (supra); Sheo Kumari Devi ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed. In fact, the completion of the said procedure after 20.03.2013, the date of assessment, even if so, is to moment, as the assessment stand already completed on that date. The assessment in the instant case, is accordingly, to be regarded as u/s. 144 r/w s. 147, and the AO is incorrect stating it to be u/s. 143(2) r/w s. 147. 3.6 The decision in Anil Kumar (supra) is distinguishable in-as-much as the hearing, for both the years, took place on 30.3.2008, as noted by the Tribunal, so that, clearly, the hearing had not been closed before that date. The AO, where he wanted to, could therefore take cognizance of those returns, even as it appears (from the order-sheet entry), that he was not aware of the said returns, filed surreptitiously behind his back. The process of law, designed to provide a fair opportunity of hearing to the assessee, and the completion of assessment in a time bound manner, has thus been abused. The decision in the Tribunal, whose decision, afraid to say, is inconsistent with that by the Apex Court and by the Hon'ble Courts, including the jurisdictional High Court, in R.K. Upadhyaya (supra); Jai Hanuman Trading Co. (supra); Sheo Kumari Devi (supra); and R.N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 01.11.2011). No corroborative evidence as regards his financial worth was, however, furnished, apart from stating him to own 21.82 acres of agricultural land. The plea of cash gift being wholly unevidenced, was not accepted by the ld. CIT(A). The assessee had also, alternatively, filed a cash flow statement in the remand proceedings, which was not commented upon by the AO in his remand report dated 17.7.2014. The opening cash (on 01.4.2004) therein was taken at ₹ 10.50 lacs on the basis of cash flow statement for f.y. 2003-04, showing a balance of ₹ 8.11 lacs on 31.3.2004. The balance as on 01.4.2004, i.e., at the beginning of the year, was however taken by the AO at ₹ 1 lac only, i.e., on the basis of the cash withdrawal from Bank (#927 with Punjab and Sind Bank) for that amount just prior to that date, i.e., on 29.3.2004. On the basis of the said cash flow statement, prepared jointly for the assessee, his wife (Narinder Kaur) and son (Manjit Singh), the ld. CIT(A) confirmed an addition for ₹ 12 lacs. The said cash flow statement not accounting for any amount spent on household expenditure, taken at ₹ 3 lacs, the shortfall in cash worked to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs, confirming the addition based on the cash flow statement at ₹ 15 lacs. A revised cash flow statement was filed (at PB pgs. 10-12) to exhibit the same, introducing cash at ₹ 9 lacs (on 08.4.2004) as 'addition as made by the ld. CIT(A)'. The argument is valid. The cash-in-hand being at ₹ 1 lac on 01.4.2004, ranges from a minimum of nil (on 08.04.2004) - the next lowest being at ₹ 30,000 on 24.4.2004, to a maximum of ₹ 16.53 lacs on 31.3.2005. The addition, thus, should be restricted to ₹ 9 lacs instead of ₹ 15 lacs by the ld. CIT(A). There are, however, some observations deemed pertinent in the matter. Firstly, the said cash flow statement would require being verified by the AO in-such-as it has not been. In this regard it is observed that while the cash stands withdrawn, besides the assessee's bank account, from that of his wife and son, the cash deposited in bank is only in the assessee's bank account. Surely, the cash withdrawals and deposits in all the bank accounts (of all these three persons), is to be taken into account, to arrivc at the availability of cash at any particular date during the year. Again, assuming no adverse cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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