Sukesh Gupta, Hyderabad V. Asst. Commissioner of Income Tax, Central Circle-3, Hyderabad

ITA 332/Hyd/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5691 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y.V.S.T. SAI
• Keywords: Unexplained investment; Search and seizure; Retraction; Set aside
• Section: 131; 145; 148; 144; 143(3); 142(1); 153A; 143(1); 292BB; 143(2); 142(2A); 158BC; 113; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) B EFORE SH RI SA TBEER SING H GODA RA, JU DI CIA L MEM BER AND SHR I L AXMI PR AS A D SAHU , AC COUNT ANT MEMBE R ITA No. 332/H/2018 Assessment Year: 2010-11 Sukesh Gupta, Hyderabad. PAN – AERPG 3535M Vs. Asst. Commissioner of Income-tax, Central Circle – 3, Hyderabad. (Appellant) (Respondent) Assessee by: Shri P. Murali Mohan Rao Revenue by: Shri Y.V.S.T. Sai, CIT-DR Date of hearing: 06/12/2021 Date of pronouncement: 23/12/2021 O R D E R PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT(A), Tirupati’s order dated 19/12/2017 for AY 2010-11 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short “the Act on the following grounds of appeal: “1. The order of the Ld. Commissioner of Income Tax (Appeals) is bad both in law and on facts. ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 2 -: 2. The Ld. CIT (A) erred in dismissing the appeal of the appellant, without appreciating the facts of the case. 3. The Ld. CIT (A) erred in relying on the findings of the Assessing Officer without considering the submissions made by the appellant. 4. The Ld. CIT (A) ought to have given reasonable opportunity of being heard to the appellant, before dismissing the appeal of the appellant and upholding the order of the Assessing Officer wherein huge additions were made. Addition of Rs.176,11,00,000/- towards unexplained investments: 5. The Ld. CIT (A) erred in confirming the addition of Rs.176,11,00,000/- made by the A.O towards unexplained investments for purchase of lands by the appellant. 6. The Ld. CIT (A) erred in relying on the finding of the A.O that the liabilities of Dr. p.s. Prasad have been settled by the appellant, whereas these findings are baseless. 7. The Ld. CIT (A) ought to have appreciated the fact that the image copies taken from the hard disk seized, on the basis of which the A.O made addition towards unexplained investments, have no evidentiary value. 8. The Ld. CIT (A) ought to have appreciated the fact that the appellant has not paid any amount for purchase of lands and therefore the question of unexplained investment to the extent of Rs. 176.11 crores by the appellant does not arise. 9. The Ld. CIT (A) ought to have appreciated the fact that the findings of the A.O that Dr. P.S. .Prasad entered into agreement with the appellant for transfer of land and received Rs.230.00 crores and an amount of ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 3 -: Rs.176.11 crores settled towards purchase of lands are based on dump material having no evidentiary value. 10. The Ld. CIT (A) ought to have appreciated the fact that the A.O failed to afford reasonable opportunity to the appellant to contradict the findings of the A.O on each issue and the submissions made were not properly appreciated by the A.O. 11. The Ld.CIT (A) erred in holding that the appellant had purchased the lands and also paid the money to Goldstone group, on the basis of the seized material which has no evidentiary value. 12. The Ld. CIT (A) erred in holding that the appellant had paid on money through settlement of losses in shares and also averment of share brokers about the involvement of the appellant in rigging of shares, without any basis or evidence. 13. The Ld. CIT (A) erred in relying on his own findings contained in his order in the case of Mis MBS Impex Pvt. Ltd for AY. 2010-11, while passing the order in the case of the appellant. 14. The Ld. CIT (A) erred in holding that the ratio of the decisions cited by the appellant before him are not applicable to the facts of appellant's case, without giving any detailed reasons in respect of each decision. 15. The Ld.CIT (A) ought to have appreciated the fact that the A.O could have made his own enquiries and gather evidence to deny the submissions made by the appellant before him and to support his findings. 16. The Ld. CIT (A) ought to have appreciated the fact that the A.O should have relied on regular books of accounts maintained by the appellant and not the loose papers and dumb documents I material for making the assessment. ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 4 -: 17. The Ld. CIT (A) ought to have appreciated the fact that the A.O failed to prove with any corroborative evidence that the appellant earned income to the extent of the above addition made by him. 18. The Ld. CIT (A) ought to have appreciated the fact that the A.O made additions based on the statements of third parties, without giving opportunity to the appellant to cross examine them. 19. The Ld. CIT (A) ought to have appreciated the fact that the statements of the parties on which he relied, are not known to the appellant and they are not relatable to him. 20. The Ld. CIT (A) ought to have appreciated the fact that the A.O made additions without giving reasonable opportunity of being head to the appellant. 21. The Ld. CIT (A) ought to have appreciated the fact that the A.O resorted to addition of Rs. 176.11 crores towards unexplained investments on the basis of dumb material and on suspicion and surmises and without any corroborative evidence and therefore cannot be sustained before law. 22. The Ld. CIT (A) ought to have appreciated the fact that the A.O erred in making addition towards unexplained investment in the hands of the appellant on protective basis. 23. The Ld. CIT (A) ought to have appreciated the fact that the documents on which the A.O relied on for making addition towards unexplained investment are draft agreements which have not been materialised. Addition of Rs.6,50,OO,OOO towards undisclosed income 24. The Ld. CIT (A) erred in confirming the addition of Rs. 6.50 crores made by the A.O towards undisclosed ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 5 -: income on the basis of the declaration made by the appellant under section 132(4) of the Income Tax Act, 1961. 23. The Ld. CIT (A) ought to have appreciated the fact that the appellant had withdrawn the declaration made by him under section 132(4) of the Act and therefore, any addition made by the A.O solely on the basis of the above declaration becomes null and void. 26. The CIT (A) ought to have appreciated the fact that the statement u/ s 132(4) of the Act was taken from the appellant under coercion and undue influence. 27. The CIT (A) ought to have appreciated the fact that any statement obtained cannot be enforced unless it is supported by corroborative evidence. 28. The Ld. CIT (A) ought to have appreciated the fact that the A.O made addition towards undisclosed income without any corroborative evidence. 29. The Ld. CIT (A) ought to have appreciated the fact that the A.O failed to prove with any corroborative evidence that the appellant earned income to the extent of the above addition made by him. 30. The Ld. CIT (A) ought to have appreciated the fact that the A.O made an addition towards undisclosed income without giving reasonable opportunity of being heard to the appellant. 31. The appellant may add or alter or amend or modify or substitute or delete and/ or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal. ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 6 -: 2. The assessee also filed a petition dated 05/10/2018 for the admission of the following additional grounds relying on the judgement of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT, 229 ITR 383; “32. As per the ratio laid down by the Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd v. CIT (1998) 229 ITR 383 (sq, the Hon'ble ITAT has jurisdiction to examine the question of law which has been taken before the ITAT for the first time though not taken before the first appellate authority. 33. The Ld. CIT(A) ought to have annulled the assessment made u/s 143(3) of the Act dated 30.12.2011 on the ground that no notice u/s 143(2) of the Act has been issued and served on the assessee for the assessment year under consideration. 34. The Ld. CIT(A) ought to have followed the ratio laid down by the Apex Court in the case of ACIT & Anr. v M J S. Hotel Blue Moon in Civil Appeal No.1198 of 2010 dated 02.02.2010 and annulled the impugned assessment before completion of which no notice u/s 143(2) of the Act has been issued and served on the assessee for the assessment year under consideration. 35. The AO erred in issuing notice u/s 143(2) for the A.Y. 2010-11 beyond the parameters as laid down in the guidelines/ criteria issued by the CBDT u/s, l19 of the Act for selection of scrutiny of the return of income for the assessment year relevant to the previous year in which period such search u/ s 132 is conducted.” ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 7 -: 3. As the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon’ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC), we admit the said additional grounds of assessee. 4. Briefly the facts of the case are that a search and seizure operation u/s 132 of the Act was carried out in the case of Shri Sukesh Gupta, the assessee on 11/03/2010 and accordingly, a notice u/s 153A was issued to the assessee on 26/10/2010. In response to the said notice, the assessee filed return of income for the AY 2010-11 on 08/12/2011 declaring a total income of Rs. 59,00,000/-, which is a searched year. 4.1 As per the assessment order the AO issued notices u/s 143(2) and 142(1) of the Act and questionnaire to the assessee on 20/07/2011 calling for information. 5. Before us, the ld. AR argued the case only on the legal issue raised in the additional grounds of appeal regarding challenging the issuance of notice u/s 143(2) of the Act and no arguments were advanced on the merits of the case. We, therefore, adjudicate the appeal on the legal issue only. ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 8 -: 6. The ld. AR of the assessee vehemently argued that the impugned AY is a searched year and, therefore, the assessment has to be made as per the provisions of section 143(3) of the Act, which has been mentioned by the AO in the assessment order . The assessee filed return of income on 8 th December, 2011, whereas, as per the assessment order, the AO has issued the notice u/s 143(2) on 20 th July, 2011. The relevant paras of assessment order are extracted below for the sake of clarity: “ A search and seizure operation u/s. 132 of the LT. Act, 1961 was carried out in the case of Sri. Sukesh Gupta on 11.03.20.I0. Accordingly, notice u/s 153A was issued to the assessee on 26-10-2010. In response to the notice issued, assessee filed return of income for the A.Y. 2010- 11 on 08.12.2011, declaring a total income of Rs. 59,00,000/- . 2. Notice u/s. 143(2) and 142(1) of the LT. Act, 1961 and questionnaire was issued to the assessee on 20.07.2011 calling for information. In response to the notices issued Sri. Sukesh Gupta and Sri. P. Murali Mohan Rao, FCA and AR of the assessee appeared and filed the information. After verifying the same, the assessment is completed as under:” 6.1 The ld. AR invited the Bench attention to paper book at page 35, which is a copy of the order sheet wherein there is no mention of issuing notice u/s 143(2) of the Act. For the sake of clarity, the order sheet is extracted below: ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 9 -: 6.2 He, therefore, submitted that in the assessment order the AO has deliberately mentioned that the notice u/s 143(2) was issued on 20/07/2011, which is wrong because notice u/s 143(2) should be issued after filing the return of ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 10 -: income u/s 139, as the assessee has filed the return of income on 8 th December, 2011. However, in this case, the AO has issued the notice u/s 143(2) prior to the filing of the return of income, which is patently wrong. He, therefore, submitted that the assessment order passed by the AO is non-est in the eye of law. He submitted that before taking up the case for scrutiny, the AO is required to issue notice u/s 143(2) for acquiring his jurisdiction and for this proposition, he relied on the judgment of the Apex Court in the case of ACIT & Anr. Vs. M/s Hotel Blue Moon reported in [2010] 188 Taxman 113 (SC). 7. The ld. DR, on the other hand, relied on the orders of revenue authorities below and submitted a paper book containing pages 1 to 278, which is placed on record. He filed a written synopsis in support of revenue’s case, which is as under: “The following written submissions are made for kind consideration of Hon'ble ITAT in relation to the above appeal filed by the assessee. 1. It is humbly submitted that in this case, search action was conducted on 11/03/2012 and incriminating evidence was seized. During the search the assessee disclosed an amount of Rs. 12.50 Cr. Admittedly notice u/s 142(1) was also issued on 17/10/2011 to the assessee calling for the return of income. Thereafter another notice along with questionnaire was issued on 18/11/2011. The assessee filed a belated return of income on 07/12/2011 declaring income of Rs. 59 lakhs just before the time barring date for completion of ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 11 -: assessment. On 26/12/2011, a notice was issued to the assessee proposing to make addition of ~ 176.11 Cr on account of settlements made by the assessee on behalf of Dr P 5 Prasad (Goldstone group) linked with purchase of land at Hyder Nagar and due opportunity was granted to the assessee to present his case. The assessee filed his reply on 28/12/2011 denying the transactions. The assessment was completed on 30/12/2011 after considering the reply of the assessee and the evidence in the form of seized record as well as the disclosure given by the assessee u/s 132(4). In the assessment two additions were made viz., Rs. 176.11 Cr on account of unaccounted payments as part of settlements on behalf of Dr P 5 Prasad and Rs. 6.5 Crore being the disclosure u/s 132(4) given on 26/05/2010. 2. The assessee filed appeal before the CIT(A) challenging the additions as well as the evidence relied upon by the AO including the sworn statements and also cited retraction from the disclosure u/s 132(4). Before the CIT(A), the assessee submitted that notices u/s 143(2) and 142(1) were issued and the assessment was completed u/s 143(3) but the additions are unwarranted because he did not pay any money for purchase of land at Survey no: 172, Hydernagar of 98.10 acres. The assessee also stated that the evidence relied on was dumb material and challenged the addition on protective basis. The assessee also stated that there was no incriminating material and the land does not belong to the alleged seller and the entire sale proceeds were recorded in the books of Trinity Infraventures Pvt Ltd. On the addition of Rs. 6.5 Cr, the assessee stated that the disclosure u/s 132(4) was withdrawn and hence no addition could have been made based on the said disclosure. 3. The CIT(A) examined the submissions and the evidence on record and held that there is clear evidence to the fact of rigging of shares of Goldstone Technologies Ltd by the assessee, the settlement of ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 12 -: losses incurred in manipulation of the share price by the assessee on behalf of Dr P S Prasad and absence of physical stock in the case of MBS Impex Pvt Ltd as against the book stock. The CIT(A) held that the funds on unaccounted sale of stock were diverted by the assessee for settlement in loss of shares by Dr P S Prasad as part of payment of consideration for purchase of the land at Sy No: 172, Hyder Nagar and Sy no: 76, Hafizpet. Accordingly, the CIT(A) sustained the addition of Rs. 176.11 Cr. On the addition of Rs. 6.5 Cr also, the CIT(A) held that the fact of coercion or pressure could not be substantiated by the assessee with any evidence and therefore, the retraction dated 26/12/2011 is not acceptable. 4. Aggrieved by the decision of the CIT(A), the assessee filed the present appeal. Ground nos: 1 to 4 are general in nature except that in ground no:4, the assessee states that due opportunity was not granted by the CIT(A). However, as seen from the order of CIT(A), six hearings spanning over 4 years were granted and the ground taken by the assessee is devoid of merit. Ground no: 3 is also devoid of merit because the CIT(A) duly considered the submissions of the assessee. 5. Ground nos: 5 to 23 are on the issue of addition of Rs. 176.11 Cr. The sum and substance of these grounds is that the addition is based on dumb documents (the MOUs, the purchase of land and rigging of shares) which have no evidentiary value, the parties on whose statements reliance was placed by the AO are not known to the assessee and their assertions are not relatable to him. 6. It is submitted that on the face of mounting evidence, it is incorrect on the part of the assessee to state that the seized documents are dumb material. On the other hand, the seized documents clearly indicate a well ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 13 -: thought out scheme of unaccounted transactions entered into by the assessee. 7. With regard to deficit stock of jewellery in case of MBS Jewellers Pvt Ltd, it is submitted that during the search proceedings a clear deficit was noticed between the book stock and the stock as physically available. It is humbly submitted that in the letter dated 06.06.2010 which was filed by the AR of the assessee on 29.06.2010 before DDlT (Investigation) Unit-1(1), Hyderabad, with regard to the difference in stock, the assessee stated that "the details of gold lying with karigars and others cannot be given in view of its sensitiveness, delicacy and of business secrecy." This letter is signed by the assessee Mr. Sukesh Gupta and copy of the same is available at pages 10-13 of this paper book. From the above, it is clear that the claim made by the assessee that certain stock was lying with goldsmiths, karigars and customers was only an alibi to cover the deficit stock and the assessee was bound to prove the existence of such stock but he failed in doing so. 8. It is also humbly submitted that apparently the sale of stock was not accounted in the books by the said company and the amounts were diverted by the assessee for purchase of lands from Dr. P.S. Prasad of the Gold Stone Group and also for settlement of liabilities towards loss on manipulation of share price being unaccounted consideration in lieu of purchase of land. It is humbly submitted that during search incriminating material was seized with reference to the unaccounted transactions. Details of some of the documents are mentioned below. There is an unsigned and undated agreement, a memorandum of settlement dated 25.01.2010 and an undated memorandum wherein the clear fact of purchase of land coupled with dealing in shares, cash etc for Rs. 230 crores is clearly evident. From the unsigned memorandum at pages 17 & 18 of this paper book, it is also evident that account of Gold Stone Group is also maintained by the assessee ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 14 -: indicating settlement to third parties in cash and kind. A handwritten agreement dated 19.02.2010 also confirms this fact. From the sheets indicating settlement dated 25.01.2010, it can also be seen that diamonds and pearls etc were paid in lieu of losses incurred in manipulation of shares of Mis Gold Stone Technologies Limited. It is clearly evident from the seized record that as per the instructions of Dr. P.S.Prasad, Mr. Sukesh Gupta (the assessee) has settled the amounts due to various parties for losses incurred in the manipulation of share price. Share purchase agreements with the share holders of Mis. Gold Stone Technologies Limited were also seized during the search. Transfer of land to assessee group is also evident from various sale deeds. 9. It is submitted that it is evident from the statement of the assessee recorded from 132(4) dated 11.03.2010, that there are unaccounted transactions between both the groups, when the transaction of payments of unaccounted cash for settlement of liabilities were confronted to him, in response to question no. 13, he stated "I am not denying any transaction with the said parties. However, the quantum of the transactions need to be verified and I need some time." In response to question no. 39 of the same statement, he also admitted that there were inadvertent omissions due to business compulsions and declared additional income. 10. It is also submitted that in response to question no. 9 of the statement recorded u/s 131 from the assessee on 31.03.2010, he admitted that payments were made by him in the form of jewellery, diamonds and cheques in lieu of purchase of 98 acres of land from Dr. Prasad and his associates. It is submitted that these payments were made to third parties. It is also submitted that in the statement recorded u/s 131 from the assessee on 26.05.2010, in response to question no. 6, the assessee admitted that there was a memorandum of understanding for Rs. 230 crores and he paid ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 15 -: substantial amount of more than Rs. 75 crores. It is also submitted that in the same statement, he confirmed that the existence of draft memorandum of understanding and also obtaining Noes from Mr. Raghu, Mr. Vamsi Mohan and Mr. Vaddepalli Narsing Rao. It is also humbly submitted that in response to question no. 11, the assessee confirmed the share purchase agreements with Mr. Gopal Kashinath Marathe by Summit Communication Private Limited and promise to reconcile the payments. 11. He also admitted that adjustment of payment sheets containing payment of ~ 165.66 erores. He also confessed that payments made but not explainable with sources as per books will be reconciled but did not reconcile the same. In response to question no. 15, he admitted that he could not submit stock reconciliation as called for. From the unsigned memorandum available at pages 26 & 27 of this paper book (which is copy of seized record), it is seen that it is written at clause 7(iii) "that the costs and sums payable by the party of FIRST PART to the third parties both listed an un foreseen claimants shall be paid by the party of SECOND PART through Shri P. Murli Mohan Roo CA on behalf of them and the same is subject to account and payable from the total consideration payable to the party of FIRST PART or its nominees." This shows that the learned AR was mentioned as a person acting on behalf of the assessee group to facilitate payments towards settlement of third party liabilities of Gold Stone Group. Hon'ble ITAT may kindly take notice of the fact apparently, the learned AR was acting as a facilitator of the transactions and there is conflict of interest for learned AR because on one hand he is the Statutory Auditor of Goldstone Technologies Ltd and on the other hand his name was mentioned as a party acting on behalf of the assessee and his group companies. 12. It is also submitted that Shri Bhandhakavi Phani Madhav, Director of M/s. Summit Communications Private Limited in his statement u/s 131 dated ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 16 -: 21.04.2010 stated that details of the transactions are known to Mr. Sukesh Gupta (the assessee) only. The statements of concerned operators cited by the AO in the assessment order also indicate that there was manipulation and rigging. The statement of one of the operators, Shri Santosh Doshi recorded by ADIT(lnv), Unit - IV(2), Mumbai also clearly indicates that Mr Sukesh Gupta (the assessee) promised him to compensate the losses on account of manipulation of share price of Goldstone Technologies Ltd. He also stated that he received off market shares from Mr Mangesh Kane and given them to Mr Gopal Marathe off market as per telephonic instructions of the assessee. It is also on record that about Rs. 4.35 Cr were transferred from the account of Goldstone Export to the account of RJL Infrastructure Ltd. The funds to Goldstone Export were provided from the account of Aashi Realtors, which is a concern managed by the assessee. The names of the operators are also available in the seized record. Detailed discussion on these transactions is available in the assessment order. 13. In light of the above, it is clear that the evidence in the form of seized record has a live link with the unaccounted transactions. The evidence in the form of multiple documents was seized during the search in case of the assessee and his group companies. The statement of director of Summit Communications Pvt Ltd, which is a company owned by the assessee group also specifically mentions that only the assessee was in the knowledge of the unaccounted settlements. The orders of SEBI clearly establish the fact that there was manipulation in the share prices of Goldstone Technologies Ltd and punitive action is also taken by SEBI. 14. Therefore, the claim of the assessee that the seized record is dumb material is nothing but an argument of convenience on part of the assessee to cover up his unaccounted transactions. It is also humbly submitted in a scheme of share price manipulation which is ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 17 -: evident from the orders of the market regulator viz. SEBI, the demand for cross examination of the said operators has no material value because the findings and order of SEBI hold the forte even today in the case Goldstone Technologies Ltd. 15. It is humbly submitted that there is a clear unaccounted sale of jewellery by the assessee to divert the amounts for transactions related to purchase of land of 98 acres from the Gold Stone Group and also settlement of liability of third parties. This is because the deficit stock was not explained by the assessee as the vague claims of the stock being elsewhere were not established by the assessee. 16. The fact that there was heavy stock difference coupled with unaccounted transactions of diversions of funds clearly establish the fact that there was generation of cash which was utilized to meet the unaccounted consideration on the purchase of lands. The assertion that the land transactions are accounted in the books of Trinity Infraventures Ltd is also devoid of merit because the said company was part of the Goldstone group. Part of the consideration was also paid in kind by the assessee. The facts clearly indicate that payments were made to third parties also in settlement of losses in manipulation of share price of Gold Stone Technologies ltd. The affidavit of Shri G. Damodar Rao filed by the assessee before the CIT(A) and before Hon'ble ITAT in the present proceedings with regard to 2.10 acres is dated 09/12/2013 and is nothing but a document of convenience prepared after the assessments are completed. 17. It is also submitted that, in the statement recorded uls 132(4) of the IT Act, 1961 of Shri sukesh Gupta dated 11/03/2010, he disclosed additional income of Rs. 12.5 Cr out of which Rs. 6.5 Cr is on his own account. The later retraction is without any basis. Therefore, appropriate decision in light of the fact that the ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 18 -: disclosure was to cover up the defects and there was no coercion or pressure. In light of the above, the appeal may kindly be dismissed.” 7.1 Further, the ld. DR submitted that there is no need to issue notice u/s 143(2) and mentioned the issuance of notice u/s 143(2) in the order sheet. He submitted that the ld. AR stated in the written synopsis filed before the CIT(A) that notices u/s 143(2) and 142(1) were issued to the assessee and the assessment was completed u/s 143(3) of the Act, which is evident at page 6 at para 5 of the CIT(A)’s order. He, therefore, submitted that the assessee himself has accepted that the notice was issued u/s 143(2) and, therefore, at this stage he cannot challenge the legality of the issue of notice u/s 143(2) of the Act and since the assessee participated in the assessment proceedings, section 292BB will apply. He submitted that the revenue authorities were completed the assessment in the case of the assessee as per the income-tax proceedings. He therefore, submitted that the arguments advanced by the ld. AR of the assessee are not tenable on legal issue. 8. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The ld. DR has raised objections that the assessee cannot challenge the legal issue regarding the issuance of notice U/s 143(2) at this stage due to he had accepted before the CIT (A) in his written ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 19 -: submissions is not tenable because the legal issue can be challenged at any stage of appeal as decided by the Hon’ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC). We therefore accept the arguments advanced by the Authorised Representative (AR) of the assessee in regard to the issuance and legality of the notice U/s 143(2) of the Income Tax Act. 1961. This assessment year is searched assessment year therefore the assessment shall be completed U/s 143(3) of the Income Tax Act. 1961 to which the AO has done. As facts noted above from the assessment order and written synopsis submitted by CIT DR produced before us, it is clear that the notice has been issued by the assessing officer (AO) before filling of the return of income . The submission of CIT-DR is also not tenable that the assessee has himself has accepted before the CIT (A) that the notice U/s 143(2) has been issued for want of any evidence. The Section 292BB will not apply here in this case also because there is no proof of documents or emanating from the record that the notice U/s 143(2) had been issued. Similar issue has been decided by the coordinate bench of this Tribunal in the case of Anurag Gupta in ITA No. 114/Hyd/2020 vide order dated 15/11/2021, wherein the coordinate bench has held as under: “7. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. As per the assessment order notices u/s 143(2) and 142(1) along ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 20 -: with questionnaire were issued to the assessee on 18 th November, 2011 calling for information. As per the order sheet filed by the ld. AR, which is placed on record, clearly shows that there is no issuance of the 143(2) notice. Even, if we go through the assessment order, assessee filed his return of income on 7 th December, 2011 in response to the notice u/s 142(1) dated 26/10/2010, whereas, notices u/s 143(2) & 142(1) were issued on 18 th November, 2011, the date of which is before filing of the return of income, how is it possible to issue a notices before filing of return of income. The assessee also filed his return of income u/s 139(1) of the Act on 30/08/2010 under the acknowledgment No. 4400001008/Ward – 4(4). Even if we correlate the notice u/s 143(2) with the assessment order, the issue of notice is time barred. This is a search year, in which, assessment has been framed u/s 143(3) of the Act, but, the assessment has not been framed u/s 153A. Therefore, even if notice issued u/s 143(2) is time barred or not issued at all or notice u/s 143(2) is invalid in the eye of law, the assessment framed u/s 143(3) will not survive. As held by the Hon’ble High Court of Madras in the case of B. Kubendran Vs. DCIT, [2021] 126 Taxmann.com 107 (Madras.), notice u/s 143(2) is not required to be issued in the cases where assessments framed u/s 153A, but, in the present case, assessment has been framed u/s 143(3), therefore, as per the statute notice u/s 143(2) is mandatory to be issued by the jurisdictional AO, which is absent in this case. Therefore, non-issuance of a valid notice u/s 143(2) of the Act, the entire assessment framed by the AO is void-ab-initio. Accordingly, we set aside the order of the CIT(A) and quash the order passed by the AO.” 8.1 We also refer to the judgment of the Hon’ble Gujarat High Court in the case of PR. CIT Vs Marck Biosciences Ltd. (Gujarat High Court), Appeal Number : Tax Appeal No. 1374 of 2018, Date of Judgement/Order : 04/02/2019, ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 21 -: Related Assessment Year : 2005-06, wherein the Hon’ble Court has held as under: “13. For the purpose of better understanding of the controversy in issue, it may be germane to refer to the provisions of sub-section (2) of section 143 of the Act, which as it stood at the relevant time when the notice under section 148 of the Act was issued reads thus: “143. Assessment (1) xxxxxx (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,— (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim: Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003; (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not under-stated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return: Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 22 -: end of the financial year in which the return is furnished.” 14. On a plain reading of the above provision, it is manifest that it contemplates that when an assessee files a return under section 143 of the Act, and the Assessing Officer finds that any claim as described therein is inadmissible, he is required to serve a notice to the assessee specifying particulars of such claim and a date on which he should produce or caused to be produced, any evidence or particulars specified therein on which the assessee may rely in support of such claim. 15. Section 292BB of the Act reads thus; “292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was – (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.” 16. From the language employed in section 292BB of the Act, it emerges that a notice would be deemed to be valid in the three circumstances provided therein, namely, where the assessee has participated in the proceedings it would not be permissible for him to raise objection that (i) the notice was not served upon him; or (ii) was not served upon him in time; or (iii) was served upon him in an improper manner. ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 23 -: 17. Thus, all the circumstances contemplated under section 292BB of the Act are in a case where a notice has been issued, but has either not been served upon the assessee or not served in time or has been served in an improper manner. The said provision clearly does not contemplate a case where no notice has been issued at all. 18. The Supreme Court in case of CIT v. Hotel Blue Moon (supra) held thus: “21. We may now revert back to Section 158BC(b) which is the material provision which requires our consideration. Section 158BC(b) provides for enquiry and assessment. The said provision reads that: “158BC. (b) the assessing officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply;” An analysis of this sub-section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under sections 143(2)/142 and complete the assessment under section 143(3). This section does not provide for accepting the return as provided under section 143(1)(a). The assessing officer has to complete the assessment under section 143(3) only. In case of default in not filing the return or not complying with the notice under sections 143(2)/142, the assessing officer is authorized to complete the assessment ex parte under section 144. 22. Clause (b) of section 158BC by referring to sections 143(2) and (3) would appear to imply that the provisions of section 143(1) are excluded. But section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 24 -: should issue notice under section 143(2). However, if an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with.” 19. Thus, the Court held that if an assessment has to be completed under section 143(3) read with section 158BC of the Act, then notice under section 143(2) of the Act should be issued within a period of one year from the date of filing of block return. The Court held that omission on the part of the Assessing Officer to issue notice under section 143(2) of the Act cannot be said to be a procedural irregularity and the same is not curable, and therefore, the requirement of notice under section 143(2) of the Act cannot be dispensed with. 20. In the facts of the present case also, if the contention of the appellant were to be accepted, it would amount to dispensing with the notice under section 143(2) of the Act in view of the fact that it is an admitted position that no such notice had been issued after the return of income was filed by the assessee. After the filing of the return of income, unless a notice under section 143(2) of the Act is issued to the assessee, he would have no means of knowing as to whether or not the Assessing Officer has accepted the return of income as filed by him. As held by the Supreme Court in the above decision, omission to issue a notice under section 143(2) of the Act is not a procedural irregularity and is not curable. It is, therefore, mandatory to issue notice under section 143(2) of the Act. 21. At this juncture, reference may also be made to the contents of the Central Board of Direct Taxes Circular No.549 dated 31.10.1989, which finds reference in the decision of this Court in case of CIT v. Mahi Valley ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 25 -: Hotels & Resorts (supra), which has been reproduced in paragraph 8.5 hereinabove. A perusal of the above circular indicates that if an assessee, after furnishing the return of income, does not receive a notice under section 143(2) of the Act from the Department within the prescribed period, then he can take it that the return filed by him has become final and no scrutiny proceedings could be started in respect of that return. This is the kind of significance that has been attached to a notice under section 143(2) of the Act by the Central Board of Direct Taxes itself. 22. Section 292BB of the Act provides for a deeming provision that any notice under any provision of the Act, which is required to be served upon the assessee, has been duly served upon him in time, in accordance with the provisions of the Act. In the opinion of this Court, this section would be applicable where a notice has, in fact, been issued and a contention is raised that such notice has not been served upon the assessee or has not been served in time or has not been served properly, namely, where there is a defect in the service of notice. This provision does not apply to a case where no notice has been issued at all. In the facts of the present case, at the cost of repetition, it may be stated that no notice under section 143(2) of the Act has been issued after the assessee had filed its return of income and hence, section 292BB of the Act would not be attracted. 23. In the light of the above discussion, this Court does not agree with the view adopted by the Punjab and Haryana High Court in case of Commissioner of Incometax v. Ram Narain Bansal (supra). Insofar as the decision of the Madras High Court in case of Venkatesan Raghuram Prasad Incometax officer, NonCorporate Ward2(3), Chennai (supra) is concerned, that was a case where notice was in fact, issued, but it was contended that such notice was not served properly. Therefore, the said case was a case of defective service of notice, which would be squarely ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 26 -: covered by the provisions of section 292BB of the Act. The said decision, therefore, has no applicable to the facts of the present case. 24. In the light of the fact that non issuance of a notice under section 143(2) of the Act is not a procedural irregularity, the same cannot be cured under section 292BB of the Act and hence, the assessment order passed without issuance of notice under section 143(2) of the Act, would be rendered invalid. The Tribunal as well as the Commissioner (Appeals), therefore, did not commit any error in holding that the notice issued prior to the filing of the return of income was invalid and that, in absence of a valid notice under section 143(2) of the Act, the assessment order was rendered invalid. 8.2. In the case under consideration, the AO has not issued a notice u/s 143(2) and even the ld. D.R. also could not bring on record any copy of the notice issued by the assessing officer or any proof of service of notice U/s 143(2) of the Income Tax Act, 1961 as mentioned above. The provisions of section 292BB also do not support the revenue because in the impugned case there is no documentary evidence to show that there was a notice issued U/s 143(2) of the I.T. Act. 1961. Even in the assessment order, the AO has mentioned the notice has been issued before filling of the return of income. Considering all the attending facts and respectfully following the ratio laid down in the aforesaid judgments as well as the decision of the coordinate bench cited supra, we hereby set aside the order of the CIT(A) and hold that the entire assessment framed by the AO is void-ab-initio for ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 27 -: non-issuance of a notice u/s 143(2) of the Act. Accordingly, the legal grounds raised by the assessee are allowed. 9. Further, we observe from the assessment order the assessment has been made on a protective basis, but, it is not clear whether any assessment has been framed in substantive basis in case of other/s. As observed from the assessment order at page 14 of the top para, which is reproduced below: “Considering the fact that the lands are held by Dr. P.S. Prasad through his group companies and also in view of the fact that the major entities involved in these transactions are subject matter of audit uls 142(2A) of the LT. Act., { (i) Mis MBS Impex P Ltd., (ii) Mis MBS Jewellers P Ltd (iii) Aashi Realtors P Ltd (iv) M/s Goldstone Exports p Ltd subject to outcome of the same the amount of Rs. 1,76,11,00,000/- is assessed protectively in the hands of the assessee.” 9.1 when the assessments in other/s assessee’s cases are not framed on substantive basis, how the protective assessment can be framed in the case of the assessee on hand. Therefore, in our considered opinion, the assessment framed on protective basis in the case of the assessee does not stand in the eyes of law. 10. As we have quashed the assessment order on both counts as per our observations vide Para Nos. 8 & 9 supra, the grounds raised by the assessee on merits are not required to be adjudicated. ITA No.. 332/Hyd/2018 M / s Su k e s h G u p t a , H y d . :- 28 -: 11. In the result, appeal of the assessee is allowed in above terms. Pronounced in the open court on 23 rd December, 2021. Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 23 rd December, 2021. kv Copy to : 1 Sukesh Gupta, C/o P. Murali & Co., CAs, 6-3-655/2/3, 1 st Floor, Somajiguda, Hyderabad – 82 2 ACIT, Central Circle - 3, Hyderabad. 3 CIT(A), Tirupati 4 Pr. CIT – Central Circle, Hyderabad 5 ITAT, DR, Hyderabad. 6 Guard File.