ITAT Quashes S. 158BC Assessment since Notice u/s 143(2) was not Issued [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) nullified the case of Assessee and quashed the assessment under section 158BC of the Income Tax Act, 1961 since notice under section 143(2) was not issued.

In the instant case, the assessee Ashok Kumar Aggarwal derived income from purchase and sale of shares for himself as well as behalf of his customers. Consequent to the search and seizure operation, a notice under section 158BC of the Act was issued but Assessee in response to the notice did not offer any income instead furnished the details of income, returned and assessed, falling within the block period.

However, the AO completed assessment under section 158BC and declared the undisclosed income to the tune of 13,13,49,778/-. Accordingly, the AO challenged the validity of Assessment since the mandatory requirement of Chapter XIVB of the Act had not been fulfilled as the Assessing Officer had failed to issue the statutory notice u/s 143(2) of the Act.

C.S. Aggarwal, senior Advocate for Assessee drew the attention of tribunal that said the assessment is bad in law and in absence of any notice being issued u/s 143(2), the Assessing Officer could not have made any addition in the hands of the assessee.

On the counterpart, the Revenue argued that Assessee should not take the merit of the technical ground of the statutory notice not having been issued.

The bench heard both parties’ recitals and observed the admitted fact of revenue regarding their inability to produce the assessment records at this stage. In absence of such proof tribunal bench constrained to hold that the statutory notice, u/s 143(2) was not issued upon the assessee prior to the assessment proceedings having been taken up.

The Tribunal bench comprising Sudhanshu Srivastava, Judicial Member and R.K. Panda, accountant member were endorsed the decision of Apex Court in the case of ACIT & Another vs. Hotel Blue Moon wherein finalized that for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, no assessment could be made without issuing notice under Section 143(2) of the Act.

Accordingly, following the same bench quashed the assessment since the assessment as being void ab initio.