IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" Bench, Mumbai
Before Shri D. Manmohan, Vice President
ITA No. 2714/Mum/2014
(Assessment Year: 2005-06)
Nikesh A. Gada (HUF) Income Tax Officer -15(2)(2)
A-11, Sardar Patel Society Mumbai
Vs.
Nehru Road, Opp. Petrol Pump
Vile Parle (E), Mumbai 400057
PAN - AADHG5425J
Appellant Respondent
Appellant by: Shri Rahul Sarda
Respondent by: Shri Satyajit Mandal
Date of Hearing: 08.09.2014
Date of Pronouncement: 08.09.2014
ORDER
Per D. Manmohan, V.P.
This appeal by the assessee is directed against the order passed by the
CIT(A)-26, Mumbai and it pertains to AY 2005-06.
2. Brief facts, necessary for the purpose of disposal of the appeal, are
stated below. Consequent to search and seizure action under section 132 in
the case of M/s. Mahasagar Securities Pvt. Ltd. (now Alag Securities Pvt. Ltd.)
it was noticed that the assessee is also one of the beneficiaries in the
accommodation bills provided by the said company through its Directors Shri
Mukesh M. Choksi and Jayesh K. Sampat and hence the income of the
assessee also escaped assessment. In response to the notice issued under
section 148 of the Act, assessee, vide letter dated 30.06.2011, requested the
AO to consider the original return of income filed as return filed in pursuance
of notice under section 148. Though the AO issued a notice under section
142(1), the mandatory notice to be issued under section 143(2) was omitted to
be issued and assessment was completed by computing the total income at
`2,26,930/- under section 143(3) of the Act r.w.s. 147 of the Act. The CIT(A)
having dismissed the appeal of the assessee a further appeal is filed before
the Tribunal. Apart from the original grounds annexed to Form No. 36
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Nikesh A. Gada (HUF)
assessee raised another ground before the Tribunal challenging the validity of
the assessment made under section 143(3) of the Act; the case of the assessee
is that the AO had not issued the mandatory notice under section 143(2) of
the Act and hence the assessment made by the AO is liable to be quashed.
Since the issue goes to the root of the matter and the facts are already on
record, the additional ground is admitted and the learned D.R. is directed to
verify the claim of the assessee, as affirmed in the affidavit, by verifying the
assessment record. The case was accordingly posted for hearing today.
3. At the time of hearing the learned D.R. fairly conceded that notice was
neither prepared nor issued to the assessee under section 143(2) of the Act.
He, however, contended that the assessee cooperated with the AO during the
course of assessment proceedings and hence issuance of notice under
section 143(2) of the Act should only be treated as procedural, and hence
assessment will not become a nullity in the light of the provisions of section
292B of the Act.
4. The learned counsel for the assessee, on the other hand, submitted
that section 292B is applicable only when notice is issued which contains a
mistake, defect or omission whereas in the instant case no notice at all was
issued. Further it was submitted that issuance of notice under section
143(2) is mandatory; since it is a machinery provision, failure to issue such
notice would invalidate the assessment proceedings. In this regard he relied
upon the decision of the Apex Court in the case of ACIT vs. Hotel Blue Moon
321 ITR 362. He also relied upon the decision of the Hon'ble Gujarat High
Court in the case of CIT vs. Pratapbhai K. Soni 261 ITR 201 and an
unreported decision of the jurisdictional High Court in the case of CIT vs.
Geno Pharmaceuticals Ltd. (TA No. 75, 76, 77 & 78 of 2012).
5. The learned D.R. submitted that in the case of Areva T and D India
Ltd. vs. ACIT 294 ITR 233 the Hon'ble Madras High Court considered
identical issue and observed that if there is a valid reopening of assessment
and the assessee participated in the assessment proceedings, merely
because there are procedural irregularities in completing the assessment the
assessment would not become null and void but the AO can be directed to
give an opportunity to the assessee to raise all contentions relating to the
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Nikesh A. Gada (HUF)
reopening of assessment as well as merits of the case by remanding the
matter to the file of the AO. He mainly stressed that the assessee never
raised this issue either before the AO or before the CIT(A) and voluntarily
participated in the proceedings. Because of mere omission to follow the
procedural provision the assessment should not be treated as null and void.
6. Joining the issue the assessee submitted that when a notice is issued
under section 142(1) of the Act and directs the assessee to appear, non-
appearance may result in penalty and summons and hence assessee has no
other alternative but to appear before the AO and cooperate in the
assessment proceedings whereas section 143(2) is a machinery provision
which has to be mandatorily followed by the AO and such an irregularity is
not curable.
7. I have carefully considered the rival submissions and perused the
record. In the case of Hotel Blue Moon (supra) the Hon'ble Supreme Court
observed, vis-a-vis the block assessment, that non-issuance of notice under
section 143(2) cannot be considered as procedural irregularity and the same
is not curable; requirement of notice under section 143(2) cannot be
dispensed with and failure to issue notice would result in holding the
assessment as null and void. Similar view was taken by the Hon'ble Gujarat
High Court in the case of Pratapbhai K. Soni (supra). In particular, the
Hon'ble Bombay High Court, in an unreported decision placed before this
Bench, observed that notice under section 143(2) of the Act is mandatory
and omission to issue a notice is vital to assessment proceedings under
section 143(3) r.w.s. 147 of the Act. Consistent with the view taken in the
aforementioned case I am of the view that the assessment made in the
instant case is null and void. I therefore quash the assessment proceedings
and allow the appeal filed by the assessee.
Order pronounced in the open court on 8th September, 2014.
Sd/-
(D. Manmohan)
Vice President
Mumbai, Dated: 8th September, 2014
4 ITA No. 2714/Mum/2014
Nikesh A. Gada (HUF)
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) 26, Mumbai
4. The CIT IX, Mumbai City
5. The DR, "SMC" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.
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