MAHENDRA KUMAR SETHIA, Jaipur V. ITO (T & J), Jaipur

ITA 186/JPR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6145 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Assessee Lawyers: ESHA KANUNGO
• Keywords: Bogus purchase; Question of law; Validity of assessment; Procedural lapse; Assessment record; Reassessment proceedings

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 186/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08 SHRI MAHENDRA KUMAR SETHIA O-1-B, HOSPITAL ROAD, JAIPUR- 302004. CUKE VS. THE ITO, (T&J), O/O THE PR. COMMISSIONER OF INCOME TAX-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AIDPS 1739 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ESHA KANUNGO (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 31/05/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 11.01.2017 OF CIT (A), AJMER FOR THE ASSESSMENT YEA R 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) HAS ERRED IN PASSING THE ORDER EX-PA RTE WITHOUT SERVING THE NOTICE TO THE ASSESSEE. ITA NO. 186/JP/2017 SHRI MAHENDRA KUMAR SETHIA VS. ITO (T&J) 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED IN NOT GIVING THE OPPORTUN ITY TO THE ASSESSEE OF BEING HEARD. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE LEARNED ASSESSING OFFICER IN MAKING DISALLOWANCE OF 25% OF ALLEGED BOGUS PURCHASES THEREBY MAKING ADDITION OF RS. 1,53,87,305/-. 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. SINCE GROUND NO. 1 WAS NOT RAISED BY THE ASSESSE E BEFORE THE AUTHORITIES BELOW, THEREFORE, THE ASSESSEE HAS FILE D AN APPLICATION UNDER RULE 11 R.W.S. 22 OF THE ITAT RULES, 1963 FOR ADM ISSION OF THE ADDITIONAL GROUND WHICH READS AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE LEA RNED ASSESSING OFFICER IN COMPLETING THE ASSESSMENT U/S 147/143(3) OF THE INCOME TAX ACT, 1961 WITHOUT ISSU ING NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 BEFO RE COMPLETION THE ASSESSMENT. 3. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR ON ADMISSION OF ADDITIONAL GROUND AND CONSIDERED THE RELEVANT MATER IAL ON RECORD. THERE IS NO DISPUTE THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE INVOLVES PURE QUESTION OF LAW AND DOES NOT REQUIRE ANY INVES TIGATION OF FACTS OR ITA NO. 186/JP/2017 SHRI MAHENDRA KUMAR SETHIA VS. ITO (T&J) 3 ANY FRESH FACTS TO BE VERIFIED BUT THE FACTS ALREAD Y AVAILABLE ON RECORD OF THE ASSESSING OFFICER ARE REQUIRED TO BE CONSIDERED IN ORDER TO ADJUDICATE THE ADDITIONAL GROUND RAISING THE ISSUE OF VALIDITY OF ASSESSMENT PROCEEDINGS WITHOUT ISSUING NOTICE U/S 1 43(2) OF THE ACT. THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPRE ME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 299 ITR 383 AND IN VIEW OF THE FACT THAT FOR ADJUDICATION OF QUESTION LAW N O NEW FACTS ARE REQUIRED BUT THE FACTS WHICH ARE ON RECORD TO BE CO NSIDERED, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. 4. ON MERIT OF THE ADDITIONAL GROUND:- THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSMENT ORDER IN QUESTION HAS BEEN PASSED BY THE AO WITHOUT ISSUING NOTICE U/S 143(2) AND THEREFORE, THE IMPUGNED ASSESSMENT IS NOT SUSTAINABLE IN LAW WHEN THE AO HAS PROCEEDED TO PASS THE ORDER WITHOUT ISSUING THE MAN DATORY NOTICE U/S 143(2) OF THE ACT. THE LD. AR OF THE ASSESSEE HAS R ELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF ACIT VS. HOTEL BLUE MOON 321 ITR 362 AS WELL AS THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN CASE OF CIT VS. RAJEEV SHARMA 336 ITR 678 . THE LD. AR HAS ALSO RELIED UPON A SERIES OF DECISIONS OF HO NBLE HIGH COURTS ON ITA NO. 186/JP/2017 SHRI MAHENDRA KUMAR SETHIA VS. ITO (T&J) 4 THE POINT THAT WITHOUT ISSUING NOTICE U/S 143(2) OF THE ACT THE COMPLETION OF ASSESSMENT/ REASSESSMENT IS NOT VALID . 5. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT WHE N THE ASSESSEE DID NOT RAISE THIS GROUND BEFORE THE AO AND ALLOWED THE AO TO COMPLETE ASSESSMENT PROCEEDINGS THEN, THE ASSESSEE CANNOT TA KE THIS OBJECTION THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ILLEG AL. THE LD. DR AS ALSO PRODUCED THE ASSESSMENT RECORD AS PER DIRECTIO NS OF THE BENCH AND ADMITTED THE FACT THAT THERE IS NO NOTICE U/S 143(2 ) ON THE ASSESSMENT RECORD. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS CAREFUL PERUSAL OF RECORD WE NOTE THAT THE ASSESSING OFFICE R HAS NOT STATED EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER SHEE TS OF THE ASSESSMENT PROCEEDINGS THAT ANY NOTICE U/S 143(2) OF THE ACT W AS ISSUED TO THE ASSESSEE. EVEN THE ASSESSMENT RECORD PRODUCED BEFOR E US BY THE LD. DR DOES NOT CONTAIN ANY NOTICE ISSUED U/S 143(2) OF TH E ACT. THUS, IT IS CLEAR THAT THERE IS NO NOTICE U/S 143(2) OF THE ACT ISSUED BY THE AO AND THE REASSESSMENT PROCEEDINGS IN THE CASE OF THE ASS ESSEE WERE COMPETED WITHOUT ISSUING A NOTICE U/S 143(2) OF THE ACT. THE HONBLE SUPREME COURT IN CASE OF ACIT VS. HOTEL BLUE MOON(S UPRA) HAS HELD THAT FAILURE ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S ITA NO. 186/JP/2017 SHRI MAHENDRA KUMAR SETHIA VS. ITO (T&J) 5 143(2) CANNOT BE A MERE PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE. IT IS NOT A MERE FORMALITY BUT IT GIVES TH E JURISDICTION TO THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT U/S 14 3(3) OF THE ACT THEREFORE, NON ISSUANCE OF NOTICE U/S 143(20 VITIAT ES THE ASSESSMENT PROCEEDINGS. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA) AS WELL AS THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN CASE OF CIT VS. RAJ EEV SHARMA (SUPRA) THE ASSESSMENT PROCEEDINGS COMPLETED WITHOUT ISSUIN G NOTICE U/S 143(2) OF THE ACT ARE VOID AB-INITIO AND LIABLE TO BE QUASHED. ACCORDINGLY, WE QUASH THE IMPUGNED ASSESSMENT BEING ILLEGAL AND VOID AB-INITIO. SINCE, WE HAVE QUASHED THE ASSESSMENT AS INVALID, THEREFORE, WE DO NOT PROPOSE TO GO INTO OTHER GROUNDS RAISED I N THIS APPEAL. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31/05/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MAHENDRA KUMAR SETHIA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT - ITO,(T&J), JAIPUR. ITA NO. 186/JP/2017 SHRI MAHENDRA KUMAR SETHIA VS. ITO (T&J) 6 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 186/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR