2013 (4) TMI 261 - AT - Income Tax

Invalid notice under Section 143(2) leads to quashed assessment: ITAT Delhi decision.

The ITAT Delhi dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the assessment due to the invalidity of the notice under Section ... Maintainability of notice under Section 143(2) - CIT(A) quashed the assessment holding that the first notice u/s 143(2) was issued on 12/11/2007 beyond the statutory period of 12 months which expired on 31.07.2007 - Held that:- As from the remand report dated 23rd April, 2010 where the AO had intimated the date - wise details of the proceedings in this case it is evident that notice under Section 143(2) was issued on 12th November, 2007 as mentioned by the CIT(A) in his order. The Revenue could not produce any evidence for issue of notice under Section 143(2) on 29th June, 2007. The order of CIT(A) is based upon the facts given by the AO himself in the remand report. In view of the above, wno infirmity in the order of CIT(A). The same is sustained and the Revenue's appeal is dismissed. Issues:1. Validity of notice under Section 143(2) issued by the Assessing Officer.2. Opportunity given to the assessee for hearing before best judgment assessment under Section 144.Analysis:1. The main issue in this case revolves around the validity of the notice under Section 143(2) issued by the Assessing Officer. The Revenue contended that the notice was issued within the statutory period, while the learned CIT(A) found that the notice dated 12th November, 2007, was beyond the 12-month limit from the expiry of the statutory period on 31st July, 2007. The CIT(A) deemed the proceedings initiated based on this notice as invalid ab-initio. The Assessing Officer confirmed this fact in the remand report, leading to the dismissal of the Revenue's appeal by the ITAT Delhi.2. Another crucial issue raised was regarding the opportunity given to the assessee for a hearing before the best judgment assessment under Section 144. The Revenue argued that since a notice under Section 142(1) had been issued, the requirement for a show cause notice under Section 144 was not necessary. However, the CIT(A) quashed the assessment on the grounds that the AO did not provide an opportunity to the assessee by issuing a show cause notice, which is a prerequisite for a best judgment assessment. The ITAT Delhi upheld the CIT(A)'s decision, emphasizing the importance of following procedural requirements before making a best judgment assessment under Section 144.In conclusion, the ITAT Delhi dismissed the Revenue's appeal, affirming the CIT(A)'s decision to quash the assessment due to the invalidity of the notice under Section 143(2) and the failure to provide a proper opportunity for a hearing before the best judgment assessment under Section 144. The judgment highlights the significance of adhering to statutory timelines and procedural requirements in income tax assessments to ensure fairness and compliance with the law.