MANGALA PRODUCT PRIVATE LIMITED, Jaipur V. ACIT, Jaipur

ITA 348/JPR/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0391 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANCHAL MEENA JCIT DHK
• Keywords: Period of limitation; Accommodation entries; Procedural lapse; Assessment record; Block assessment; Retraction
• Section: 143(3); 142(1); 143(1); 292BB; 143(2); 139(1); 48; 13; 147; 145; 27; 148; 6; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 347/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08. M/S. MANGALA ISPAT (JAIPUR) LTD., B-234, ROAD NO. 9, VKI AREA, JAIPUR. CUKE VS. THE ACIT, CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCM 2067 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 348/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08. M/S. MANGALA PRODUCT PVT. LTD., B-235, ROAD NO. 9, VKI AREA, JAIPUR. CUKE VS. THE ACIT, CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACCM 1206 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VEDANT GUPTA (ADVOCATE) & SHRI SATISH GUPTA (CA) JKTLO DH VKSJ LS@ REVENUE BY : MS. CHANCHAL MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17.12.2019. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/12/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY TWO CONNECTED ASSESSEES (GROU P CONCERNS) ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT (A) BOTH DAT ED 30.03.2017 ARISING FROM THE COMMON FACTS FOR THE ASSESSMENT YEAR 2007-08. THERE FORE, BOTH THESE APPEALS ARE 2 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. CLUBBED TOGETHER FOR THE PURPOSES OF HEARING AND DI SPOSAL. FOR THE PURPOSE OF RECORDING THE FACTS, THE APPEAL IN CASE OF M/S. MAN GALA PRODUCT PVT. LTD. IN ITA NO. 348/JP/2017 IS TAKEN AS LEAD CASE WHEREIN THE ASSES SEE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD A.O. GROSSLY ERRED IN REOPENING THE ASSESSMENT BY I NVOKING THE PROVISIONS OF SECTION 147 OF THE ACT WITHOUT HAVING ANY MATERIAL FORMING THE BELIEF OF ESCAPEMENT OF INCOME. LD CIT (A) ALSO ERRED IN CONFIRMING THE SAME. 1.1 ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD A.O. GROSSLY ERRED IN INITIATING REASSESSMENT PROCE EDINGS SIMPLY ON THE BASIS OF INFORMATION RECEIVED FROM INV. WING, M UMBAI WITHOUT INDEPENDENT APPLICATION OF MIND. 1.2 ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD A.O. GROSSLY ERRED IN INITIATING REASSESSMENT PROCEEDING S MECHANICALLY WITHOUT GIVING COPY OF SATISFACTION RECORDED BY SUP ERIOR AUTHORITY ON THE APPROVAL IN REGARDS TO ESCAPEMENT OF INCOME BY THE ASSESSEE. 1.3 ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD A.O. GROSSLY ERRED IN INITIATING REASSESSMENT PROCEEDING S EVEN WITHOUT HAVING COPY OF STATEMENTS & DETAILS AT THE TIME OF RECORDING REASONS. 1.4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE N OTICE ISSUED U/S 148 IS TIME BARRED AS THE NOTICE WAS ISSUED AFTER E XPIRY OF 4 YEARS IGNORING THE FACT THAT NO ALLEGATION IN THE REASONS HAVE BEEN MADE THAT SOME MATERIAL FACTS WERE NOT DISCLOSED FULLY A ND TRULY BY THE ASSESSEE AS PRESCRIBED IN FIRST PROVISO TO SECTION 147 OF THE ACT. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W ALSO LD. A.O. GROSSLY ERRED IN PASSING THE ORDER ON 22/03/2015 I. E. ONLY AFTER 9 DAYS FROM THE DATE OF REJECTION OF PRELIMINARY OBJE CTIONS BY LD A.O. AS PER PARA 2.4 AT PAGE 5 OF THE ASSESSMENT ORDER T HE PRELIMINARY OBJECTIONS WERE REJECTED ON 13.03.2015. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD A.O. GROSSLY ERRED IN FRAMING THE ASSESSMENT WITHOUT ISS UING NOTICE U/S 143(2) TO THE ASSESSEE. ON 30/05/2014 NO NOTICE U/S 143(2) WAS ISSUED. LD CIT (A) GROSSLY ERRED IN REJECTING THIS GROUND BY RELYING 3 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. ONLY ON THE MENTION OF LD A.O IN THE ASSESSMENT ORD ER, IGNORING THE REMAND REPORT THAT COPY OF NOTICE IS NOT AVAILABLE IN RECORD AND FACT THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED IN THIS C ASE. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W ALSO LD. A.O. GROSSLY ERRED IN NOT PROVIDING THE OPPORTUNITY OF C ROSS EXAMINATION OF PRAVEEN KUMAR JAIN AND EVEN FULL COPY OF HIS STATEM ENTS TO THE ASSESSEE ON THE LOGIC THAT IT IS THE RESPONSIBILITY OF ASSESSEE COMPANY TO PROVE CASH CREDIT IGNORING THE FACT & LAW THAT S INCE REOPENING WAS MADE BY THE DEPARTMENT ON THE BASIS OF THAT ALLEGED STATEMENT, THEREFORE IT WAS DUTY OF LD A.O. TO PROVIDE THE OPP ORTUNITY OF CROSS EXAMINATION. WE RELY ON HON'BLE SUPREME COURT THE C ASE OF KISHAN CHAND CHELARAM 125 ITR 713(SC) & ON THE CASE OF AND MAN TIMBER INDUSTRIES IN APPEAL NO 4228 OF 2006 (SC). LD CIT ( A) ALSO ERRED IN CONFIRMING THE A.O'S ORDER IN THIS RESPECT. 5. ON THE FACTS & CIRCUMSTANCE OF THE CASE & IN LAW ALSO LD. A.O. GROSSLY ERRED IN MAKING ADDITION OF RS. 45, 00,000/- U/S 68 OF THE INCOME TAX ACT, 1961 SIMPLY ON ASSUMPTIONS, & PRESUMPTION, SURMISES & CONJECTURES IGNORING THE FOLLOWING FACTS:- (I) THAT NO WHERE THE NAME OF ASSESSEE COMPANY HAS BEEN STATED BY PRAVEEN KUMAR JAIN. (II) THAT THE ASSESSEE COMPANY HAS NO RELATION WITH PRAVEEN KUMAR JAIN. (III) THAT THE ASSESSEE COMPANY HAS PROVED ALL THE THREE INGREDIENTS I.E., IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS BEYOND DOUBT AND THERE IS NO MATERIAL BEFORE LD A.O . TO PROVE THEM WRONG EXCEPT ALLEGED STATEMENTS. (IV) THAT THE ASSESSEE COMPANY HAS ALSO ALLOTTED SH ARES OF THE COMPANY TO THE APPLICANTS, WHICH IS NOT POSSIBLE IN CASE OF AN Y NAME LENDER. (V) THAT LD A.O. DID NOT CONSIDER THE DETAILED REPL IES FILED BY THE ASSESSEE. 6. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD. A.O. GROSSLY ERRED IN NOT CONSIDERING THE RETRACTION OF SH. PRAVEEN KUMAR JAIN THROUGH AN AFFIDAVIT AND SH. PRAVEEN KUMAR JAI N WAS NOT CROSS EXAMINED BY THE DEPARTMENT THEREAFTER. THEREFORE RE LIANCE ON REBUTTED STATEMENTS IS UNLAWFUL. 4 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. IN GROUND NO. 3 WHICH IS ALSO COMMON IN BOTH THE AP PEALS, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REASSESSMEN T FRAMED BY THE AO WITHOUT ISSUING A NOTICE UNDER SECTION 143(2) OF TH E IT ACT. 2. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT T HE ASSESSEE FILED ITS RETURN OF INCOME UNDER SECTION 139(1) OF THE IT ACT ON 26.10. 2007 DECLARING LOSS OF RS. 35,81,940/-. THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE IT ACT ON 1 ST DECEMBER, 2009 ON TOTAL LOSS OF RS. 23,31,940/-. THEREAFTER, THE AO INITIATED THE PROCEEDINGS UNDER SECTION 147/148 BY ISSUING NOTICE UNDER SECTION 148 ON 27 TH MARCH, 2014 ON THE REASON THAT AS PER THE INFORMAT ION RECEIVED FROM THE INVESTIGATION WING, MUMBAI IT WAS FOUND THAT THE AS SESSEE HAS RECEIVED ACCOMMODATION ENTRIES IN THE SHAPE OF SHARE APPLICA TION MONEY FROM THE ENTITIES CONTROLLED AND MANAGED BY SHRI PRAVEEN KUMAR JAIN. THE ASSESSEE FILED ITS RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 ON 2 2 ND APRIL, 2014 DECLARING THE SAME INCOME AS DECLARED IN THE RETURN OF INCOME FIL ED UNDER SECTION 139(1) OF THE IT ACT. THE AO HAS COMPLETED THE REASSESSMENT WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. HE HAS SUBMITTED THAT THOUGH TH E AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT NOTICE UNDER SECTION 143(2)/1 42(1) OF THE ACT WAS ISSUED ON 30 TH MAY, 2014, HOWEVER, NO SUCH NOTICE WAS ISSUED BY T HE AO OR RECEIVED BY THE ASSESSEE. EVEN THE LD. CIT (A) CALLED FOR A REMAND REPORT FROM THE AO ON THIS POINT AND THE AO HAS ADMITTED THE FACT THAT THERE IS NO N OTICE UNDER SECTION 143(2) AVAILABLE ON RECORD. THUS THE LD. A/R HAS SUBMITTED THAT THE ASSESSMENT FRAMED BY THE AO WITHOUT ISSUING THE NOTICE UNDER SECTION 143 (2) IS INVALID AND LIABLE TO BE 5 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. QUASHED FOR WANT OF JURISDICTION. IN SUPPORT OF HI S CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISIONS :- PRINCIPAL CIT VS. SILVER LINE 383 ITR 455 (DELHI) CIT VS. CEBON INDIA LTD. 347 ITR 583 (P&H) ACIT VS. HOTEL BLUE MOON 321 ITR 362 (SC) CIT VS. LAXMAN DAS KHANDELWAL 108 TAXMANN.COM 183 (SC) PCIT VS. KAMLA DEVI SHARMA DATED 10 TH JULY, 2018 IN DBIT APPEAL NO. 197/2018 (RAJ.) M/S. KAIZEN ORGANICS PVT. LTD. VS. ACIT (IN ITA NO. 834/JP/2017 DATED 19.12.2018. THUS THE LD. A/R HAS CONTENDED THAT THE NOTICE UNDE R SECTION 143(2) IS MANDATORY REQUIREMENT FOR COMPLETING THE SCRUTINY ASSESSMENT UNDER SECTION 143(3). IT IS NOT A PROCEDURAL IRREGULARITY, AND OMISSION TO ISSUE THE NOTICE IS NOT A CURABLE DEFECT. THEREFORE, THE NOTICE UNDER SECTION 143(2) IS A JUR ISDICTIONAL CONDITION AND IN THE ABSENCE OF NOTICE, THE ASSESSMENT FRAMED BY THE AO IS A NULLITY. 3. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE AO HAS GIVEN THE DATE OF NOTICE ISSUED UNDER SECTION 143(2) AS WELL AS UN DER SECTION 142(1) OF THE ACT. THE ASSESSEE HAS NEVER RAISED ANY OBJECTION REGARDI NG THE SERVICE OF THE NOTICE DURING THE ASSESSMENT PROCEEDINGS AND HAS DULY PART ICIPATED IN THE PROCEEDINGS BEFORE THE AO, THEREFORE, THE ASESSEE CANNOT BE ALL OWED TO RAISE THIS OBJECTION AFTER COMPLETION OF THE ASSESSMENT. THE LD. D/R HAS ALSO PRODUCED THE ASSESSMENT RECORD AND SUBMITTED THAT THOUGH ON THE ASSESSMENT RECORD NOTICE UNDER SECTION 6 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. 143(2) IS NOT AVAILABLE, HOWEVER, THE OFFICIAL COPY OF NOTICE UNDER SECTION 142(1) IS AVAILABLE ON RECORD. THUS THE LD. D/R HAS CONTENDED THAT WHEN BOTH THE NOTICES WERE ISSUED ON THE SAME DATE AND ONE NOTICE UNDER S ECTION 142(1) IS AVAILABLE ON RECORD, THEN THE NOTICE UNDER SECTION 143(2) ISSUED ON THE SAME DATE CANNOT BE DISPUTED. SHE HAS RELIED UPON THE ORDERS OF THE AUT HORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE LD. D/R HAS PRODUCED THE ASSESSMENT RE CORD AS DIRECTED BY THE BENCH AND AFTER VERIFICATION OF THE ASSESSMENT RECORD, TH E LD. D/R HAS FAIRLY ADMITTED THIS FACT THAT THERE IS NO NOTICE AVAILABLE ON RECORD IS SUED UNDER SECTION 143(2) OF THE ACT, HOWEVER, NOTICE UNDER SECTION 142(1) DATED 30 TH MAY, 2014 IS AVAILABLE ON RECORD. THE LD. D/R HAS ALSO ADMITTED THAT THERE I S NO PROCEEDING RECORDED BY THE AO REGARDING THE NOTICE ISSUED UNDER SECTION 143(2) AND THE PROCEEDINGS WERE RECORDED BY THE AO ONLY FROM THE MONTH OF AUGUST, 2 014 AND NOT PRIOR TO THAT. WE FIND THAT THE AO HAS STATED IN PARA 2.2 OF THE ASSE SSMENT ORDER AS UNDER :- NOTICE UNDER SECTION 143(2)/142(1) OF THE ACT WAS ISSUED ON 30.05.2014 THIS STATEMENT OF THE AO IN THE ASSESSMENT ORDER IS RECORDED ONLY AT THE TIME OF PASSING THE ASSESSMENT ORDER AND DOES NOT LEAD TO T HE CONCLUSION THAT THE NOTICE UNDER SECTION 143(2) WAS ACTUALLY ISSUED BY THE AO WHEN THERE IS NO RECORD OF ISSUING THE SAID NOTICE EITHER IN THE FORM OF PROCE EDING SHEET OR ANY EVIDENCE OF SENDING THE NOTICE UNDER SECTION 143(2) TO THE ASSE SSEE. THE DEPARTMENT HAS NOT PRODUCED ANY RECORD SHOWING THAT THE NOTICE UNDER S ECTION 143(2) WAS ACTUALLY SENT 7 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. BY THE AO EITHER THROUGH REGISTERED POST OR ANY OTH ER MODE. THEREFORE, THE MERE MENTION OF THE NOTICE UNDER SECTION 143(2)/142(1) O F THE ACT WOULD NOT IPSO FACTO PROVE THE FACT THAT THE NOTICE WAS ACTUALLY ISSUED BY THE AO. EXCEPT THIS ONE NARRATION IN THE ASSESSMENT ORDER, THERE IS NO MATE RIAL OR ANY OTHER EVIDENCE AVAILABLE ON THE ASSESSMENT RECORD INCLUDING ANY PR OOF OF SENDING THE NOTICE IN THE SHAPE OF POSTAL RECEIPT OR DISPATCH REGISTER TO SHO W THAT THE NOTICE UNDER SECTION 143(2) WAS ISSUED BY THE AO. IT APPEARS THAT AT TH E TIME OF PASSING THE ASSESSMENT ORDER WHEN THE AO REALIZED THIS DEFECT OF NOT ISSUI NG NOTICE UNDER SECTION 143(2) OF THE ACT, HE HAS JUST MENTIONED THAT NOTICE UNDER SE CTION 143(2)/142(1) WAS ISSUED ON 30 TH MAY, 2014. THEREFORE, STATING A NOTICE UNDER SECTI ON 143(2) WITH NOTICE UNDER SECTION 142(1) IN THE ASSESSMENT ORDER WITHOU T ACTUALLY ISSUING ANY NOTICE UNDER SECTION 143(2) WOULD NOT SATISFY THE MANDATOR Y CONDITION OF SUCH NOTICE TO BE ISSUED BY THE AO WITHIN THE PERIOD OF LIMITATION PR OVIDED UNDER SECTION 143(2) OF THE ACT. HENCE WE FIND THAT THERE IS NO NOTICE ISSUED BY THE AO UNDER SECTION 143(2) IN THE CASE OF THE ASSESSEE. THE AO HAS NOT STATED ANY THING ABOUT THE ISSUANCE OF NOTICE UNDER SECTION 143(2) IN THE PROCEEDING SHEET OF THE ASSESSMENT RECORD WHICH GIVES THE DETAILS OF THE PROCEEDINGS CONDUCTED BY T HE AO IN CHRONOLOGICAL ORDER. THUS THE AO DID NOT ISSUE ANY NOTICE UNDER SECTION 143(2) PRIOR TO COMPLETION OF REASSESSMENT IN THE CASE OF THE ASSESSEE. THE NOTI CE UNDER SECTION 143(2) IS A MANDATORY REQUIREMENT AND GIVES THE JURISDICTION TO THE AO TO PROCEED WITH THE SCRUTINY ASSESSMENT. IT IS A JURISDICTIONAL CONDIT ION AND IN THE ABSENCE OF THE NOTICE UNDER SECTION 143(2), THE ORDER PASSED BY THE AO IS INVALID FOR WANT OF JURISDICTION. ONCE THE ASSESSEE HAS FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 8 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. 148, THEN THE NOTICE UNDER SECTION 143(2) IS A MAND ATORY JURISDICTIONAL REQUIREMENT FOR TAKING UP THE RETURN OF INCOME UNDER SCRUTINY. THE HONBLE SUPREME COURT IN CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA) WHILE CONS IDERING THE REQUIREMENT OF NOTICE UNDER SECTION 143(2) IN BLOCK ASSESSMENT PRO CEEDINGS, HAS HELD IN PARA 15 TO 18 AS UNDER :- 15. WE MAY NOW REVERT BACK TO SECTION 158 BC(B) WHICH IS THE MATERIAL PROVISION WHICH REQUIRES OUR CONSIDERATION. SECTION 158 BC(B) PROVIDES FOR ENQUIRY AND ASSESSMENT. THE SAID PROVISION READS 'T HAT THE ASSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME O F THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158 BB AND THE PROVISIO NS OF SECTION 142, SUB- SECTION (2) AND (3) OF SECTION 143, SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY.' AN ANALYSIS OF THIS SUB SECTION IND ICATES 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(I)(A). THE ASSESSING OFFICER HAS TO COMPLETE THE ASSESSMENT UNDER SECTIO N 143(3) ONLY. IN CASE OF DEFAULT IN NOT FILING THE RETURN OR NOT COMPLYING W ITH THE NOTICE UNDER SECTIONS 143(2)/142, THE ASSESSING OFFICER IS AUTHORIZED TO COMPLETE THE ASSESSMENT EX- PARTE UNDER SECTION 144. CLAUSE (B) OF SECTION 158 BC BY REFERRING TO SECTION 143(2) AND (3) WOULD APPEAR TO IMPLY THAT THE PROVI SIONS OF SECTION 143(1) ARE EXCLUDED. BUT SECTION 143(2) ITSELF BECOMES NECESSA RY ONLY WHERE IT BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHERE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THE RE IS NO REASON, WHY THE AUTHORITIES SHOULD ISSUE NOTICE UNDER SECTION 143(2 ). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 158-BC, 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 NOTI CE UNDER SECTION 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTANT FEATU RE THAT REQUIRES TO BE NOTICED IS THAT THE 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 CHAPTE R XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUBSECTIONS WHICH ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. HAD TH E INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLATURE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING O F THE PROVISION WOULD CLEARLY INDICATE, IN OUR OPINION, IF THE ASSESSING OFFICER, IF FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESP ONSE TO NOTICE UNDER SECTION 9 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. 158 BC(A), THE ASSESSING OFFICER MUST NECESSARILY I SSUE NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2) OF THE ACT. WHERE THE LEGISLATURE INTENDED TO EXCLU DE CERTAIN PROVISIONS FROM THE AMBIT OF SECTION 158 BC(B) IT HAS DONE SO SPECI FICALLY. THUS, WHEN SECTION 158 BC(B) SPECIFICALLY REFERS TO APPLICABILITY OF T HE PROVISO THERETO CANNOT BE EXCLUDE. WE MAY ALSO NOTICE HERE ITSELF THAT THE CL ARIFICATION GIVEN BY CBDT IN ITS CIRCULAR NO.717 DATED 14 AUGUST, 1995, HAS A BINDING EFFECT ON THE DEPARTMENT, BUT NOT ON THE COURT. THIS CIRCULAR CLA RIFIES THE REQUIREMENT OF LAW IN RESPECT OF SERVICE OF NOTICE UNDER SUB-SECTION ( 2) OF SECTION 143 OF THE ACT. ACCORDINGLY, WE CONCLUDE EVEN FOR THE PURPOSE OF CH APTER XIV-B OF THE ACT, FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A B LOCK PERIOD UNDER THE PROVISIONS OF SECTION 158 BC, THE PROVISIONS OF SEC TION 142 AND SUB-SECTIONS (2) AND (3) OF SECTION 143 ARE APPLICABLE AND NO AS SESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. HOWEVER, IT IS CONTENDED BY SRI SHEKHAR, LEARNED COUNSEL FOR THE D EPARTMENT THAT IN VIEW OF THE EXPRESSION 'SO FAR AS MAY BE' IN SECTION 153 BC (B), THE ISSUE OF NOTICE IS NOT MANDATORY BUT OPTIONAL AND ARE TO BE APPLIED TO THE EXTENT PRACTICABLE. IN SUPPORT OF THAT CONTENTION, THE LEARNED COUNSEL HAS RELIED ON THE OBSERVATION MADE BY THIS COURT IN DR. PRATAP SINGH'S CASE [1985] 155 ITR 166 (SC) . IN THIS CASE, THE COURT HAS OBSERVED THAT SECTION 37(2) PRO VIDES THAT 'THE PROVISIONS OF THE CODE RELATING TO SEARCHES, SHALL SO FAR AS M AY BE, APPLY TO SEARCHES DIRECTED UNDER SECTION 37(2). READING THE TWO SECTI ONS TOGETHER IT MERELY MEANS THAT THE METHODOLOGY PRESCRIBED FOR CARRYING OUT THE SEARCH PROVIDED IN SECTION 165 HAS TO BE GENERALLY FOLLOWED. THE EXPRE SSION 'SO FAR AS MAY BE' HAS ALWAYS BEEN CONSTRUED TO MEAN THAT THOSE PROVIS IONS MAY BE GENERALLY FOLLOWED TO THE EXTENT POSSIBLE. THE LEARNED COUNSE L FOR THE RESPONDENT HAS BROUGHT TO OUR NOTICE THE OBSERVATIONS MADE BY THIS COURT IN THE CASE OF MAGANLAL VS. JAISWAL INDUSTRIES, NEEMACH AND ORS., [(1989) 4 SCC 344], WHEREIN THIS COURT WHILE DEALING WITH THE SCOPE AND IMPORT OF THE EXPRESSION 'AS FAR AS PRACTICABLE' HAS STATED 'WITHOUT ANYTHIN G MORE THE EXPRESSION `AS FAR AS POSSIBLE' WILL MEAN THAT THE MANNER PROVIDED IN THE CODE FOR ATTACHMENT OR SALE OF PROPERTY IN EXECUTION OF A DECREE SHALL BE APPLICABLE IN ITS ENTIRETY EXCEPT SUCH PROVISION THEREIN WHICH MAY NOT BE PRAC TICABLE TO BE APPLIED.' 16. THE CASE OF THE REVENUE IS THAT THE EXPRESSION 'SO FAR AS MAY BE APPLY' INDICATES THAT IT IS NOT EXPECTED TO FOLLOW THE PRO VISIONS OF SECTION 142, SUB- SECTIONS (2) AND (3) OF SECTION 143 STRICTLY FOR TH E PURPOSE OF BLOCK ASSESSMENTS. WE DO NOT AGREE WITH THE SUBMISSIONS O F THE LEARNED COUNSEL FOR THE REVENUE, SINCE WE DO NOT SEE ANY REASON TO REST RICT THE SCOPE AND MEANING OF THE EXPRESSION 'SO FAR AS MAY BE APPLY'. IN OUR VIEW, WHERE THE ASSESSING OFFICER IN REPUDIATION OF THE RETURN FILED UNDER SE CTION 158BC( A ) PROCEEDS TO MAKE AN ENQUIRY, HE HAS NECESSARILY TO FOLLOW THE P ROVISIONS OF SECTION 142, SUB-SECTIONS (2) AND (3) OF SECTION 143. 17. SECTION 158BH PROVIDES FOR APPLICATION OF THE OTHE R PROVISIONS OF THE ACT. IT READS : 'SAVE AS OTHERWISE PROVIDED IN THIS CHAP TER, ALL THE OTHER PROVISIONS OF THIS ACT SHALL APPLY TO ASSESSMENT MADE UNDER TH IS CHAPTER'. THIS IS AN ENABLING PROVISION, WHICH MAKES ALL THE PROVISIONS OF THE ACT, SAVE AS OTHERWISE PROVIDED, APPLICABLE FOR PROCEEDINGS FOR BLOCK ASSESSMENT. THE 10 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. PROVISIONS WHICH ARE SPECIFICALLY INCLUDED ARE THOS E WHICH ARE AVAILABLE IN CHAPTER XIV-B OF THE ACT, WHICH INCLUDES SECTION 14 2 AND SUB-SECTIONS (2) AND (3) OF SECTION 143. 18. ON A CONSIDERATION OF THE PROVISIONS OF CHAPTER XI V-B OF THE ACT, WE ARE IN AGREEMENT WITH THE REASONING AND THE CONCLUSION REACHED BY THE HIGH COURT. THE HONBLE APEX COURT HAS HELD THAT THE NOTICE UND ER SECTION 143(2) IS A MANDATORY CONDITION AND CANNOT BE DISPENSED WITH AN D OMISSION ON THE PART OF THE AO TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND SAME IS NOT CURABLE. A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE SUPREME COURT IN CASE OF CIT VS. LAXMAN DAS KHANDELWAL (SUPRA) AND H ELD IN PARA 9 AND 10 AS UNDER :- 9. ACCORDING TO SECTION 292BB OF THE ACT, IF THE ASSE SSEE HAD PARTICIPATED IN THE PROCEEDINGS, BY WAY OF LEGAL FICTION, NOTICE WO ULD BE DEEMED TO BE VALID EVEN IF THERE BE INFRACTIONS AS DETAILED IN SAID SE CTION. THE SCOPE OF THE PROVISION IS TO MAKE SERVICE OF NOTICE HAVING CERTA IN INFIRMITIES TO BE PROPER AND VALID IF THERE WAS REQUISITE PARTICIPATION ON P ART OF THE ASSESSEE. IT IS, HOWEVER, TO BE NOTED THAT THE SECTION DOES NOT SAVE COMPLETE ABSENCE OF NOTICE. FOR SECTION 292BB TO APPLY, THE NOTICE MUST HAVE EMANATED FROM THE DEPARTMENT. IT IS ONLY THE INFIRMITIES IN THE MANNE R OF SERVICE OF NOTICE THAT THE SECTION SEEKS TO CURE. THE SECTION IS NOT INTENDED TO CURE COMPLETE ABSENCE OF NOTICE ITSELF. 10 . SINCE THE FACTS ON RECORD ARE CLEAR THAT NO NOTIC E UNDER SECTION 143(2) OF THE ACT WAS EVER ISSUED BY THE DEPARTMENT, THE FIND INGS RENDERED. BY THE HIGH COURT AND THE TRIBUNAL AND THE CONCLUSION ARRIVED A T WERE CORRECT. WE, THEREFORE, SEE NO REASON TO TAKE A DIFFERENT VIEW I N THE MATTER. THUS SECTION 292BB OF THE ACT CAN BE PRESSED INTO S ERVICE ONLY WHEN THE NOTICE IS ISSUED BY THE AO BUT THE SERVICE OF THE SAME IS DIS PUTED BY THE ASSESSEE AFTER COMPLETION OF THE ASSESSMENT. THEREFORE, WE DO NOT FIND ANY FORCE IN THE CONTENTION OF THE LD. D/R THAT THE ASSESSEE HAS PARTICIPATED I N THE PROCEEDINGS AND DID NOT RAISE 11 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. ANY OBJECTION BECAUSE IN THE CASE IN HAND WHAT IS A BSENT IS THE ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT AND NOT THE SERVICE OF THE NOTICE ISSUED BY THE AO. THE PROVISIONS OF SECTION 292BB CAN BE INVOKED ONLY IN CASE WHERE NOTICE IS DULY ISSUED BY THE AO UNDER SECTION 143(2) BUT THE SERVI CE OF THE SAID NOTICE IS DISPUTED BY THE ASSESSEE AFTER COMPLETION OF THE ASSESSMENT AND AFTER PARTICIPATION IN THE ASSESSMENT PROCEEDINGS. THEREFORE, IN SUCH CASES W HERE THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS IN RESPO NSE TO NOTICE UNDER SECTION 143(2), THE ASSESSEE IS NOT ALLOWED TO TAKE OBJECTI ON OF SERVICE OF THE NOTICE ISSUED UNDER SECTION 143(2) AFTER COMPLETION OF ASSESSMENT . IT IS A CASE OF NON ISSUANCE OF NOTICE UNDER SECTION 143(2), THEREFORE, THE INITIAT ION OF PROCEEDINGS ITSELF WAS WITHOUT JURISDICTION CONFERRED BY THE PROVISIONS OF SECTION 143 OF THE ACT. THE HONBLE DELHI HIGH COURT IN CASE OF PCIT VS. SILVER LINE (SUPRA) HAS AGAIN CONSIDERED THIS ISSUE IN PARA 18 TO 20 AS UNDER :- 18. THE WORDING OF SECTION 143(2)(II) OF THE ACT, WHIC H IS APPLICABLE IN THE PRESENT CASE, REQUIRES THE AO TO BE SATISFIED ON EX AMINING THE RETURN FILED THAT PRIMA FACIE THE ASSESSEE HAS 'UNDERSTATED THE INCOME' OR HAS 'C OMPUTED EXCESSIVE LOSS' OR HAS 'UNDERPAID THE TAX IN ANY MA NNER'. THE AO HAS THE DISCRETION TO ISSUE A NOTICE UNDER SECTION 143 (2) IF HE CONSIDERS IT 'NECESSARY OR EXPEDIENT' TO DO SO. THIS EXERCISE BY THE AO UND ER SECTION 143 (2) OF THE ACT IS QUALITATIVELY DIFFERENT FROM THE ISSUANCE OF A NOTICE UNDER SECTION 142(1) OF THE ACT, WHICH AS NOTED HEREINBEFORE, IS IN A STANDARD PROFORMA. 19. THE COURT IS UNABLE TO ACCEPT THE SUBMISSION OF TH E REVENUE THAT IN THE PRESENT CASE, NO RETURN WAS FILED BY THE ASSESSEE P URSUANT TO THE NOTICE ISSUED TO IT UNDER SECTION 148 OF THE ACT. IF AFTER RECEIV ING THE LETTER DATED 1ST APRIL 2011 OF THE ASSESSEE THE AO WAS OF THE VIEW THAT TH E RETURN ORIGINALLY FILED IN THE SARAL FORM COULD NOT BE TREATED AS THE RETURN P URSUANT TO THE NOTICE UNDER SECTION 148 OF THE ACT, THEN HE SHOULD HAVE DRAWN T HE ATTENTION OF THE ASSESSEE TO THAT FACT. IN THE PRESENT CASE ALL THAT THE AO DID WAS TO SEND A NOTICE UNDER SECTION 142 (1) OF THE ACT. THE ASSESS EE WAS NOT MADE AWARE AS TO WHY HE WAS REQUIRED TO FILE A RETURN. HAD A NOTI CE BEEN ISSUED TO HIM UNDER SECTION 143 (2) OF THE ACT, THE AO WOULD HAVE BEEN OBLIGED TO LET THE 12 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. ASSESSEE KNOW WHY HE WAS BEING ASKED TO FILE A RETU RN NOTWITHSTANDING HIS LETTER DATED 1ST APRIL 2011. IN THE CIRCUMSTANCES, THE ASSESSEE WAS JUSTIFIED IN PROCEEDING ON THE BASIS THAT IT HAD NOT COMMITTED A NY DEFAULT IN COMMUNICATING TO THE AO THAT THE RETURN ALREADY FIL ED SHOULD BE TREATED AS THE RETURN FILED PURSUANT TO THE NOTICE UNDER SECTION 1 48 OF THE ACT. 20. THE PROPOSAL TO REOPEN AN ASSESSMENT UNDER SECTION 147 OF THE ACT IS TO BE BASED ON REASONS TO BE RECORDED BY THE AO. SUCH REA SONS HAVE TO BE COMMUNICATED TO THE ASSESSEE. HOWEVER, MERELY BECAU SE THE ASSESSEE PARTICIPATES IN THE PROCEEDINGS PURSUANT TO SUCH NO TICE UNDER SECTION 148 OF THE ACT, IT DOES NOT OBVIATE THE MANDATORY REQUIREM ENT OF THE AO HAVING TO ISSUE TO THE ASSESSEE A NOTICE UNDER SECTION 143(2) OF THE ACT BEFORE FINALISING THE ORDER OF THE REASSESSMENT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WHERE THE REASSESSMENT WAS COMPLETED WITHOUT ISSUING A NOTICE UNDER SECTION 14 3(2), THEN THE REASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW AND THE SAME IS INV ALID. HENCE, FOLLOWING THE BINDING PRECEDENTS OF HONBLE SUPREME COURT AS WELL AS THE HONBLE HIGH COURTS AS REFERRED ABOVE, WE QUASH THE IMPUGNED REASSESSMENT ORDER PAS SED BY THE AO. THE REASSESSMENT ORDERS PASSED BY THE AO IN BOTH THE CA SES ARE BASED ON IDENTICAL FACTS AND WE FIND THAT THERE IS NO NOTICE UNDER SECTION 1 43(2) IN THE OTHER CONNECTED APPEAL IN ITA NO. 347/JP/2017 AND THE AO HAS MADE I DENTICAL STATEMENT BEING NOTICE UNDER SECTION 143(2)/142(1) OF THE ACT WAS I SSUED ON 30 TH MAY, 2014. HOWEVER, FROM THE ASSESSMENT RECORD IT IS CLEAR THA T NO SUCH NOTICE WAS FOUND TO BE ISSUED AS NOTHING IS RECORDED IN THE PROCEEDING SHE ET ABOUT SUCH NOTICE, NOR ANY OTHER RECORD SHOWING ANY NOTICE UNDER SECTION 143(2 ) WAS ACTUALLY SENT BY THE AO TO THE ASSESSEE. ACCORDINGLY BOTH THE REASSESSMENT OR DERS PASSED BY THE AO WITHOUT ISSUING NOTICE UNDER SECTION 143(2) ARE INVALID AND QUASHED. 5. THOUGH THE ASSESSEE HAS ALSO RAISED LEGAL GROUND S REGARDING VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT AND HAS PLACED RELIANCE ON 13 ITA NOS. 347 & 348/JP/2017 M/S. MANGALA ISPAT (INDIA) LTD & M/S. MANGALA PRODUCT PVT. LTD., JAIPUR. VARIOUS JUDGMENTS IN SUPPORT OF THE CONTENTION, HOW EVER, SINCE WE HAVE QUASHED THE REASSESSMENT ORDERS ON THE ISSUE OF NON ISSUANC E OF NOTICE UNDER SECTION 143(2), THEREFORE, WE DO NOT PROPOSE TO GO INTO THE OTHER LEGAL ISSUE AS WELL AS THE GROUNDS RAISED ON THE MERITS OF THE ADDITION. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/12/201 9. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/12/2019. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. MANGALA ISPAT (JAIPUR) LTD., JAI PUR & M/S. MANGLA PRODUCT PVT. LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT CIRCLE-4, JAIPUR. 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. 347 & 348/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR