No Section 143(2) notice Requirement if Valid Section 148 Notice issued

Gautam Labdhi Con Corp LLP Vs ITO (ITAT Ahmedabad)

The case involves Gautam Labdhi Con Corp LLP (the assessee) filing an appeal against an order dated 19.12.2023, passed by the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. The assessment relates to the Assessment Year (AY) 2018-19. The case primarily addresses two major issues: the legality of the assessment under Section 147 of the Income Tax Act, 1961, and the addition of Rs. 62.50 lakhs under Section 68 of the Act.

Background of the Case: The assessee filed its return of income for AY 2018-19 on 25.07.2018, declaring a total income of Rs. 45,664. Based on certain information, the Assessing Officer (AO) observed that the assessee received accommodation entries from entities controlled by Shri Vasant Darji and others. The AO concluded that these were non-genuine transactions and issued a notice under Section 148 of the Income Tax Act on 24.01.2022.

Upon further inquiry, including issuing notices under Sections 142(1) and 148, the AO made two additions:

1. Rs. 12,94,507 under capital gains.
2. Rs. 62,50,000 under Section 68 of the Act for unsecured loans.

Grounds of Appeal: The assessee raised two key grounds in their appeal:

1. The assessment under Section 147 was completed without issuing a mandatory notice under Section 143(2).
2. The addition of Rs. 62.50 lakhs under Section 68 was made without properly considering the documentary evidence submitted.

Assessee’s Arguments: The learned Authorized Representative (AR) for the assessee argued that:

• The AO issued the assessment order without serving the mandatory notice under Section 143(2) of the Act, which is required when reopening assessments under Section 147.
• The AO did not consider the documentary evidence provided by the assessee regarding the unsecured loans.

The AR cited several judgments, including the Supreme Court’s decision in ACIT vs Hotel Blue Moon and the Delhi High Court’s decision in CIT vs Pawan Gupta, to argue that non-issuance of a notice under Section 143(2) renders the assessment void.