Appeal allowed for assessee, Revenue appeal dismissed due to invalid reassessment without notice under Income Tax Act.

The Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue, as the reassessment made by the Assessing Officer without issuing notice under section 143(2) of the Income Tax Act was deemed invalid. The judgment underscored the mandatory requirement of issuing such notice before completing reassessment under section 147, emphasizing the significance of procedural compliance in such matters.

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Issues:
Validity of reassessment without issuing notice u/s 143(2) - Whether reassessment made by the A.O. without issuing notice u/s 143(2) of the Act is valid.

Analysis:
The judgment involves two cross-appeals directed against the order of the ld. CIT(A). The assessee, a Co-Op. Housing Society, had initially filed a return declaring total income at "nil" for the relevant year. However, the Assessing Officer (A.O.) found that the assessee had not disclosed a transaction involving the transfer of development rights. Subsequently, the A.O. reopened the assessment and brought the profit from the transfer of development rights to tax under the head "capital gains." The ld. CIT(A) upheld the validity of the reassessment and the taxability of the profit as capital gains. However, considering that the entire consideration from the sale of development rights had been shared by the 12 members who were the actual owners, the ld. CIT(A) deleted the addition made by the A.O. on account of capital gain. Both the assessee and the Revenue appealed to the Tribunal.

In the appeal of the assessee, a preliminary issue was raised challenging the validity of the reassessment made by the A.O. without issuing notice u/s 143(2) of the Act. The Tribunal directed the ld. D.R. to produce assessment records, which revealed that no notice u/s 143(2) was issued. Citing relevant case laws, including decisions by various High Courts, the Tribunal held that the reassessment completed without issuing notice u/s 143(2) is void ab initio. Consequently, the reassessment made by the A.O. was canceled. As a result, the other issues raised in the appeals of both the assessee and the Revenue were deemed infructuous, and the Tribunal did not adjudicate on them.

Therefore, the Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue, based on the finding that the reassessment without issuing notice u/s 143(2) was invalid. The judgment emphasizes the mandatory nature of issuing notice u/s 143(2) before completing reassessment under section 147 of the Income Tax Act, highlighting the importance of procedural compliance in such cases.

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