Tribunal affirms invalid service of notice leads to quashing assessment order

The Tribunal upheld the CIT(A)'s decision to quash the assessment order due to the invalid service of notice under section 143(2) of the Income Tax Act, 1961. The Department's appeal was dismissed, emphasizing the importance of adhering to procedural requirements for the validity of assessment orders. The Tribunal affirmed that failure to serve the statutory notice within the prescribed time limit cannot be cured and invalidates the assessment proceedings.

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Issues Involved:
1. Quashing of the assessment order passed under section 143(3) of the Income Tax Act, 1961.
2. Validity of the service of notice under section 143(2) of the Income Tax Act, 1961.
3. Application of section 292BB of the Income Tax Act, 1961.

Detailed Analysis:

1. Quashing of the assessment order passed under section 143(3) of the Income Tax Act, 1961:
The Department appealed against the order of the CIT(A) quashing the assessment order dated 29/07/2013. The primary grievance was that the CIT(A) erred in quashing the assessment order by holding that the signature on the first notice under section 143(2) dated 23/09/2010 was not of the assessee, despite similar signatures being available on other documents. The CIT(A) quashed the assessment on the basis of invalid notice under section 143(2) of the Act. The Department contended that the assessee's participation in the assessment proceedings implied the presumption of receipt of the statutory notice as per section 292BB of the Act.

2. Validity of the service of notice under section 143(2) of the Income Tax Act, 1961:
The assessee claimed that the notice dated 23/09/2010 was not received, and the signature on the notice was forged. The Assessing Officer (AO) argued that the notice was served on 24/09/2010 by the Notice Server, but the assessee did not respond. The CIT(A) observed variations in the signature on the notice and other documents and noted that the AO mentioned the persons on whom other notices were served were not identifiable. The CIT(A) concluded that the statutory notice under section 143(2) was not served within the prescribed time limit, thereby quashing the assessment.

3. Application of section 292BB of the Income Tax Act, 1961:
The Department argued that as per section 292BB, the assessee's participation in the assessment proceedings should lead to the presumption that the notice was duly served. However, the Tribunal referred to the case of ITO, Ward-1(2), Udaipur Vs. Shri Bhuvanesh Maheshwari, where it was held that the omission to issue notice under section 143(2) within the stipulated time is not a procedural irregularity and cannot be cured. The Tribunal affirmed that the requirement of notice under section 143(2) cannot be dispensed with, and the failure to serve the notice within the prescribed time limit invalidates the assessment.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to quash the assessment order due to the invalid service of notice under section 143(2) of the Act. The Department's appeal was dismissed, and the Tribunal reiterated that the failure to serve the statutory notice within the prescribed time limit cannot be cured and invalidates the assessment proceedings. The judgment emphasized the importance of adhering to procedural requirements for the validity of assessment orders.

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