Court upholds notice requirement under section 143(2) for assessments under section 147. Non-issuance not curable.

The Court upheld the mandatory requirement of notice under section 143(2) for assessments under section 147, deeming non-issuance as not curable and vitiating the assessment process. The appeals were dismissed, with substantial questions of law answered in favor of the assessee.

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Issues involved: Assessment proceedings u/s 143 (1) and 148, non-issuance of notice u/s 143 (2), validity of assessments u/s 147, compliance with Sections 148 to 153, mandatory nature of notice u/s 143 (2), effect of non-issuance of notice on assessment validity.

The judgment pertains to assessment proceedings of a Company running a Hospital, where income tax returns for 1998-99 and 1999-2000 initially showed a loss. Subsequently, assessments for both years were reopened u/s 148, with notice u/s 148 issued. A notice u/s 142 (1) was also issued, and assessments were completed u/s 147/148 resulting in revised total incomes. The assessee raised a plea regarding non-issuance of notice u/s 143 (2), contending that it vitiates the assessment process. The Tribunal allowed the appeal based on this ground, leading to the Revenue filing present appeals.

The substantial questions of law admitted by the High Court included the justification of the Tribunal's decision regarding the validity of assessments u/s 143 (3)/147 without notice u/s 143 (2). The appellant argued that compliance with Sections 148 to 153 should suffice, without an additional requirement of notice u/s 143 (2). The issue of whether the assessee's participation in assessment proceedings without challenging the non-issuance of notice u/s 143 (2) constitutes acquiescence or waiver was also raised.

The appellant contended that the plea regarding non-issuance of notice u/s 143 (2) was not raised before the assessing authority, citing relevant case law. On the other hand, the respondent emphasized the mandatory nature of notice u/s 143 (2), citing judgments including one by the Supreme Court which deemed non-issuance of such notice as not curable and vitiating the assessment process.

Considering the arguments and precedents, the Court upheld the mandatory requirement of notice u/s 143 (2) for assessments u/s 147, emphasizing its non-curability and impact on assessment validity. Consequently, the appeals were dismissed, with the substantial questions framed being answered in favor of the assessee.

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