Assessment U/s. 143(3) despite non compliance of Notices is valid: HC

Citation of the Case:  Subhash Chander vs. CIT (Punjab & Haryana High Court), Income Tax (Appeal) no. 14 of 2015, Date of Judgment: 03/08/2015

Brief of the Case

Punjab & Haryana High Court held In the case of Subhash Chander vs. CIT that it is open for the AO to complete assessment either u/s 144 or u/s 143(3), in case compliance of notice has not been done by the assessee.

Facts of the Case

In this case, the assessment order was made u/s 143(3) on the assessee for not replying the notice issued u/s 142. It was contended by the assessee that it should be issued u/s 144 instead of u/s 143(3) and accordingly it is not valid in law. It was also submitted that the assessee was not served with the necessary documents.

Contention of the Assessee

The ld counsel of the assessee raised below questions:

1. Whether, the Tribunal was justified in holding that the assessment framed u/s 143(3) of the Act is valid in law, as admittedly appellant has not complied with the notices issued u/s 142(1) (a) and 142 (1)(b) of the Act, as such assessment should have been framed u/s 144 as against section 143(3) of the Income Tax Act, 1961?
2. Whether the Tribunal was justified in law in upholding the order of assessment framed under section 143(3) of the Act by taking recourse of section 292B of the Act?
   

Contention of the Revenue

The ld counsel of the revenue submitted that the assessee has not produced certain documents in reply to notice u/s 142(1).

Held by CIT (A)

CIT (A) dismissed the appeal of assessee and confirmed the AO order.

Held by ITAT

ITAT upheld the CIT (A) order.

Held by High CourtThe contention of the assessee that the documents were not given and that the assessee did not have the benefit of the documents on which the assessment order was made is unfounded. Firstly, there was a survey on 13.02.1992 under Section 133A in which photocopies of four documents were taken. The documents were not seized. The record remained with the appellants. Four documents were put to the appellants. The appellants had the benefit of the documents including the originals thereof which remained with the appellants. The appellants’ books of accounts were also co-related with the returns filed. Discrepancies were found. The appellants were not prejudiced in any manner on the ground of the relevant record not having been brought to their notice. As noted in the impugned orders, the appellants were repeatedly given opportunities.

It is clear that notices were issued and questionnaires were served under Sections 142(1) and 143(2) of the Act on 07.02.1998. Even thereafter, an opportunity was granted to collect the photocopies but the appellants did not avail of the same. Notices under Section 142(1) and 143(2) were again served on 11.03.1998 and the hearing of the case was adjourned. The appellants were informed that if they did not attend, the case would be decided in their absence.

The Contention of the revenue is that the appellants did not produce certain documents. In the circumstances, it may well have been open to the appellants to proceed on the basis of Section 144 in view of provisions of Section 144(1) (b). Under Section 144(1)(b), the Assessing Officer is entitled to make a best judgment assessment if the assessee fails to comply with all the terms of a notice issued under Section 142(1).

We will assume, therefore, that the Assessing Officer could have done so. However, despite the same, the Assessing Officer completed the assessment under Section 143(3) on the basis of the information provided by the assessee.

Accordingly, appeal of the assessee dismissed.

Regards

KK Singh
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