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TMI Blog2018 (11) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... n the fact and circumstances of the case, the Ld. CIT(A) has erred in confirming the addition of Rs. 3,82,55,045/- upholding the addition done by the Sales tax Authorities without any evidence in hand with the CIT(A) and in view of the fact that the Appellate Authorities in VAT have also set aside this addition with a direction for fresh assessment having regard to the fact that the factory premises have been sealed by the Sales Tax Authorities and the assessee was left no option to produce the evidence. 3. That on the fact and circumstances of the case, the Ld. AO has erred in enhancing the addition made under section 69C of the Act amounting to Rs. 62,89,918/- without giving any notice of enhancement and opportunity of being heard and to present the version before him. Apart from the above grounds of appeal, the appellant has also sought permission to raise following additional grounds by way of application dated 18th January, 2018 : "1. That the assessment framed u/s 143(3)/147 of the Act is without jurisdiction and deserves to be quashed as such. 2. That both the initiation of proceedings and the assessment framed without satisfying the pre-conditions for invoking the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the submissions of the assessee and material available on record, made addition of Rs. Rs. 21,16,38,052/- as suppression of sales vide order dated 28.03.2013. 4. The assessee carried the matter in appeal before the ld. CIT(A), where he challenged the validity of reopening of assessment on various legal contentions as well as merits of addition by filing detailed written submissions and relying on various decisions. The ld. CIT(A), however, after considering the submissions of the assessee and the assessment order on various aspects, restricted the addition to Rs. 3,82,55,045/- on account of suppressed sales and also made addition of Rs. 62,89,918/- u/s. 69C on account of suppressed purchases. Aggrieved, the assessee is in appeal before the ITAT. 5. The ld. AR of the assessee assailed the impugned order on various legal aspects, which are summarized as under : (i). The reassessment made without serving any notice u/s. 143(2) of the IT Act, is invalid under law. (ii). The initiation of proceedings and consequential assessment without satisfying the pre-conditions for invoking the provisions of section 148, is invalid in law. (iii). Reasons recorded and formation of beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the submissions of both the sides and have gone through the entire material available on record. Before we consider the legal contentions of the assessee, we deem it proper to mention here the chronological sequence of events in the instant case as under : 08.03.2006: An exparte assessment was passed by Sales Tax Authorities raising a demand of Rs. 4,74,56,058/-. 11.05.2006: A survey was conducted by Enforcement Branch of Trade & Taxes Deptt. At the premises of the assessee, where it was found that the assessee has sold 2187 Cars of Toyota Company instead of 1872 Cars shown to have been sold by the assessee during the year. The enforcement department also found that the assessee has developed a CDMI program for inflation of the price of the cars. The premises were sealed and computer laptop and related papers were also seized by them. 23.02.2007: Writ petition of the assessee stood disposed of by Hon'ble Delhi High Court quashing the exparte order dated 08.03.2006. 29.01.2008: Assessment order in pursuance to Survey dated 11.05.2006 was passed by VAT Officer, creating a demand of Rs. 1,04,37,563/-. The VTO found that numbers of cars sold by the assessee as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to form a belief of escapement of income, as the information so received was neither found well founded nor the AO made any efforts to make any verification or application of his mind on the same. The provisions of section 147 do not give unfettered powers to reopen the assessment and the AO is required to satisfy the pre-conditions as given in the said section, which is lacking in the present case. For this, there are several decisions of Hon'ble Courts, as also cited by the assessee before the ld. CIT(A). In view of this, the reassessment u/s. 147 cannot be said to be valid. 9. Adverting to the next legal contention of the assessee regarding non-issuance of notice u/s. 143(2) before passing the reassessment, a perusal of the impugned order shows that the ld. CIT(A) though has categorically recorded that issuance of notice u/s. 143(2) is sine qua non, which was not issued to the assessee in the instant case, yet we find that even after recording such a finding, the ld. CIT(A) has not addressed on the validity of reassessment on this score, despite finding that no copy of notice u/s. 143(2) was found in assessment record nor was there any evidence to dispatch any such notice. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersus Lunar Diamonds Ltd. [2008] 281 ITR 1 (Del.) has held that service of notice under Section 143(2) is mandatory. It is not disputed that in respect of the proceedings under Section 147 of the act, notice under Section 143(2) is required and is mandated except in cases covered by the first and second proviso to Section 148 of the Act. The present case is not covered by the exceptions carved out in the two provisos as the return in the present case filed on or after 1 st October, 2005. In the case of Assistant Commissioner of Income Tax and Another vs. Hotel Blue Moon (2010) 321 ITR 362 (SC), the Supreme Court had examined the question of mandate and necessity to issue notice under Section 143(2) of the Act, in the case of block assessment proceedings and it was observed as under: "The other important feature that requires to be noticed is that Section 158-BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub-sections which are to be followed by the assessing officer. Had the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In these circumstances, the Assistant Director could not rely upon the main section 292BB and claim that notice under section 143(2) was deemed to be served within the stipulated time. In view of this position, there was no reason why reassessment proceedings should continue as no notice under section 143(2) of the Act was served on the assessee within the stipulated time. The assessment proceedings pursuant to the notices under section 148 of the Act were to be quashed and the Assistant Director was to issue a "no objection certificate" to the petitioner as required by the Reserve Bank of India." 10. In view of the above, we are of the opinion that on the facts of the assessee's case, the decision of Hon'ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. (supra) and V.R. Educational Trust (supra) would be applicable. Respectfully following the same, we hold that the assessment completed without issue of notice under Section 143(2) of the Act was invalid. The same is quashed and consequentially, the assessment order passed in pursuance thereto is also cancelled. " 10. In view of the aforesaid decision, in our considered opinion, the issue of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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