2014 (2) TMI 225 - AT - Income Tax

Invalid Tax Assessments: Notice Requirement Key

Shri Narinder Singh Kohli And Others Versus DCIT, New Delhi and Others

Shri Narinder Singh Kohli And Others Versus DCIT, New Delhi and Others - TMI Issues:Initiation of proceedings under Chapter XIV-B without jurisdiction due to non-issuance of notice u/s 143(2) - Validity of assessment orders under Section 158BC.Analysis:The judgment pertains to the assessees' appeals for the block period from 01.04.1986 to 01.11.1996, involving common facts across five cases. The primary contention revolved around the jurisdictional issues raised in ground Nos. 2 and 10. The central argument focused on the initiation of proceedings under Chapter XIV-B of the IT Act and the completion of assessment without satisfying the mandatory requirements of the said Chapter, specifically the non-issuance of notice u/s 143(2) prior to framing the assessment. The assessees argued that the assessments were without jurisdiction, citing the Supreme Court ruling in 'ACIT & Anr. Vs. Hotel Blue Moon', emphasizing the necessity of complying with procedural requirements. The assessing officer's failure to issue notice u/s 143(2) before framing the assessment under Section 158BC was deemed crucial in establishing the assessments as illegal and without jurisdiction.The Hon'ble Supreme Court's interpretation of Section 158BC(b) was pivotal in the judgment, highlighting the procedural intricacies involved in completing block assessments under Chapter XIV-B. The Court's analysis underscored the significance of adhering to the provisions of Sections 142, 143(2), and 143(3) for a valid assessment under Section 158BC. The absence of a notice u/s 143(2) was deemed a critical procedural irregularity, as clarified by the legislative intent and judicial precedents. The judgment emphasized that the requirement of notice under Section 143(2) cannot be dispensed with for completing assessments under Chapter XIV-B, reiterating the importance of procedural compliance in such cases.Consequently, the Tribunal, in line with the Supreme Court's ruling and the legal principles discussed, held that the assessments in all five cases were without jurisdiction due to the non-issuance of notice u/s 143(2) before framing the assessment under Section 158BC. The assessments were quashed as illegal, emphasizing the fundamental nature of jurisdictional issues in the validity of tax assessments. The judgment nullified the assessments based on the jurisdictional flaw, rendering further adjudication unnecessary. The decision to allow the appeals filed by the assessees was based on the foundational issue of jurisdiction, precluding the need for arguments on other aspects such as limitation.