M/S SUNCITY NIKETAN PVT.LTD.,KOLKATA vs. INCOME TAX OFFICER, 5(1), KOLKATA, KOLKATA

We find merits in the above contentions of the ld. AR. The assessment order in this case is totally cryptic. Even though the assessment order has been passed u/s 144 of the Act still, the Assessing Officer was supposed to discuss as to the relevant transactions and should have also correlate the same with the books of account of the assessee as well as bank account of the assessee and should have mentioned at least as to from whom the assessee has received the unexplained cash credits etc. Even the most peculiar point is that on identical reasons, the assessment for assessment year 2012- 13 was reopened, however, in the assessment order, no additions were made on this issue. Even the assessee had duly filed objections in this respect but the Assessing Officer failed to decide the objections and Assessment Year: 2013-14 M/s Suncity Niketan Pvt. Ltd passed the impugned cryptic assessment order. Therefore, in our view, the reopening of the assessment in this case was bad in law and the same is liable to be quashed on this score alone. Even on merits, the impugned additions are not sustainable.

The second legal ground taken by the assessee is that no notice u/s 143(2) of the Act has been issued before passing the impugned assessment order. The ld. counsel has invited our attention to page 13 of the paper-book, which is the copy of the e-proceedings, whereby, the assessee has demonstrated that the assessee had duly requested the Assessing Officer/Faceless Assessment Centre to provide the copy of the notice u/s 143(2) of the Act as the assessee till date has not received any copy of the notice issued u/s 143(2) of the Act. Even the ld. counsel has invited our attention to the relevant para of the objections filed by the assessee, wherein, the assessee has duly mentioned in the very first para of the objections that the assessee has not received any mandatory notice u/s 143(2) of the Act. Even there is no mention in the assessment order that any notice u/s 143(2) of the Act has ever been issued to the assessee. Even, the ld. DR could not bring out any evidence on the file to show that any notice u/s 143(2) of the Act was ever issued to the assessee. The assessee having duly taken the aforesaid plea that no notice u/s 143(2) of the Act was issued to the assessee and there is a complete silence about it in the assessment order, which duly proves that no notice u/s 143(2) of the Act has ever been issued to the assessee in this case. The Hon’ble Supreme Court in the case of ‘ACIT vs. Hotel Blue Moon’ reported in 321 ITR 362 (SC) held that the issue of notice u/s 143(2) is sine qua non to assume jurisdiction to proceed with the assessment in a case. The assessment carried out without issuing any notice u/s 143(2) of the Act in such cases will be bad in law. Reliance in this respect can be placed on the decision of Jurisdictional Calcutta High Court in the case of ‘PCIT vs. Assessment Year: 2013-14 M/s Suncity Niketan Pvt. Ltd Nopany & Sons’ reported in [2022] 136 taxmann.com 414 (Calcutta) and in the case of ‘PCIT vs. Cosmat Traders (P) Ltd.’ reported in [2023] 146 taxmann.com 207 (Calcutta).

In DIT v. Society for Worldwide Interbank Financial Telecommunications [2010] 323 ITR 249 (Delhi), this court invalidated a reassessment proceeding after noting that the notice under section 143(2) of the Act was not issued to the assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under section 143(2) of the Act only after the return filed by the assessee is actually scrutinised by the Assessing Officer.

In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All), it was held as under: "10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from April 1, 2008. Section 282BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated In any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him ; or ii) not served upon him in time ; or (iii) served upon him in an improper manner. IN other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to section 292BB of the Act, however, carves out an exception to the effect that the section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292BB of the Act cannot obviate the requirement or complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under section 143(3) of the Act, it is necessary to issue a notice under section 143(2) of the Act and in the absence of a notice under section 143(2) of the Act, the assumption of jurisdiction itself would be invalid."

In the same decision in Salarpur Cold Storage (P.) Ltd. (supra), the Allahabad High Court noticed that the decision of the Supreme Court in Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with."

The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO [2012] 25 taxmann.com 341/210 Taxman 78 (Mad.) (Mag.). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required Assessment Year: 2013-14 M/s Suncity Niketan Pvt. Ltd explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. It was observed that: "Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act."

As already noticed, the decision of this Court in Vision Inc. (supra) proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143 (2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of "service" of notice was concerned and not with regard to failure to "issue" notice. In other words, the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act.” 6.3 Reliance can also be placed on another decision of the Hon’ble Delhi High Court in the case of PCIT vs. Staunch Marketing P Ltd. in IT Appeal No.935 of 2015 order dated 28.04.2017 wherein, the Hon’ble Delhi High Court in para 14 has held as under:

In any event, factually the Assessee filed a return pursuant to notice issued under Section 148 of the Act, notwithstanding that it may not have filed a return in the first place under Section 139 of the Act for the AY in question. Once a return is filed notice under Section 143 (2) of the Act to the Assessee is mandatory prior to framing an assessment. The question of framing an assessment ex parte without even issuing a notice under Section 143(2) of the Act did not arise. The mandatory nature of that requirement is settled not only by the decision of the Supreme Court in the case of ACIT v. Hotel Blue Moon (supra) but also by a decision of this court in Commissioner of Income Tax-08 v. Jai Shiv Shankar Traders Pvt. Ltd. (2016) 388 ITR 448 Del.