2009 (2) TMI 514 - AT - Income Tax

Tribunal invalidates assessments without proper notice under Income Tax Act

The Tribunal ruled in favor of the assessees, holding that assessments made without serving notice under section 143(2) of the Income Tax Act for the ... Assessment Issues:Appeals and cross-objections in block assessment period for asst. yrs. 1996-97 to 2002-03; Non-issuance of notice under section 143(2) of the Act; Validity of assessments in absence of notice; Condonation of delay in filing cross-objections; Interpretation of legal requirements for notice under section 143(2); Jurisdictional and procedural errors in assessment orders.Analysis:The appeals and cross-objections in this case pertain to block assessment periods for two different assessees for asst. yrs. 1996-97 to 2002-03. The primary issue revolves around the non-issuance of notice under section 143(2) of the Income Tax Act. The assessees contended that the assessments are bad in law due to the absence of such notices, citing precedents and legal provisions mandating the issuance of these notices for a valid assessment. The assessees sought condonation of delay in filing cross-objections, which was allowed after due consideration. The core argument presented was that the absence of notice under section 143(2) rendered the assessments legally invalid.The assessees argued that the assessments were flawed as statutory notices under section 143(2) were not issued to them, relying on judgments emphasizing the mandatory nature of such notices for valid assessments. They highlighted that while notices were issued to directors of the companies, they were not served on the assessees directly, leading to jurisdictional and procedural errors in the assessment process. The assessees contended that the assessments should be quashed based on these legal grounds and precedents supporting their position.On the other hand, the Departmental Representative argued that the notices served on the directors of the companies should be considered as notices served on the companies themselves. They contended that technical irregularities in the assessment process could be cured and that the absence of notice under section 143(2) did not render the assessments null and void. The representative cited legal precedents and interpretations to support the position that procedural errors could be rectified and did not invalidate the assessments.The Tribunal, after hearing both parties and examining the legal provisions, upheld the contention of the assessees. It ruled that the assessments framed without the service of notice under section 143(2) of the Act were indeed bad in law. The Tribunal relied on previous decisions, including those of the Hon'ble Gauhati High Court, to support its decision to quash the assessments due to the absence of mandatory notices. The Tribunal dismissed the appeals filed by the Revenue and allowed the cross-objections filed by the assessees, ultimately ruling in favor of the assessees based on the legal requirements and precedents regarding notice under section 143(2) for valid assessments.