2015 (8) TMI 601 - AT - Income Tax

Assessment Order Invalidated Due to Procedural Error

Dy. Commissioner of Income Tax, Central Circle-12, New Delhi Versus Shri Vijay Kumar Aggarwal

The Tribunal dismissed the revenue's appeal against the CIT(A)'s decision regarding the invalidity of the assessment order for AY 2006-07. The failure to ... Validity of assessment - failure to issue notice under section 143(2) within stipulated time - whether such procedural deficiency being curable under section 292 BB ? - Held that:- Undisputedly, notice u/s 143(2) of the Act should have been issued and served on or before 30.6.2007 as the return of income for the relevant AY 2006-07 was filed on 15.6.2006 but the same was issued on 12.11.2007 and served on 14.11.2007 and the same was issued and served beyond the prescribed time limit as per proviso to section 143(2) of the Act. In this situation, we reach to a logical conclusion that the CIT(A) was right in holding that section 292BB of the Act is not applicable to the present case and omission on the part of AO to issue notice u/s 143(2) of the Act within prescribed time limit is not a procedural irregularity and the same is not curable, therefore, the CIT(A) was justified in holding that the assessment made without notice u/s 143(2) of the Act within prescribed limit was void ab initio. Decided against revenue. Issues Involved:Appeal against order of CIT(A)-I for AY 2006-07 - Failure to issue notice under section 143(2) of Income Tax Act within stipulated time - Assessment order declared void ab initio - Applicability of section 292BB of Income Tax Act - Procedural irregularity - Relief granted to the assessee - Legal and factual grounds raised by the revenue.Analysis:1. Failure to Issue Notice under Section 143(2) within Stipulated Time:The appeal was filed by the revenue against the order of CIT(A)-I for AY 2006-07, challenging the declaration of the assessment order as void ab initio due to the failure to issue notice under section 143(2) of the Income Tax Act within the prescribed time limit. The revenue contended that the AO was unable to issue the notice within the stipulated time due to centralization of cases. However, the CIT(A) held that the defect was not curable under section 292BB of the Act. The Tribunal agreed with the CIT(A) and dismissed the appeal, upholding that the omission to issue the notice within the prescribed time was not a procedural irregularity and was not curable.2. Applicability of Section 292BB of Income Tax Act:The revenue argued that the procedural irregularity of not issuing the notice under section 143(2) within the stipulated time was curable under section 292BB of the Act. However, the Tribunal noted that section 292BB was not applicable to the case for AY 2006-07, as it was inserted by the Finance Act, 2008, effective from 1.4.2008. Therefore, the Tribunal concluded that section 292BB did not apply to the assessment completed in 2007, and the omission to issue the notice within the prescribed time was not a curable procedural defect.3. Relief Granted to the Assessee:The Tribunal referred to the decision of the Hon'ble Supreme Court in ACIT vs. Hotel Blue Moon, emphasizing that the requirement of notice under section 143(2) cannot be dispensed with. The CIT(A) allowed relief to the assessee based on this judgment, stating that the assessment made without the notice u/s 143(2) in time was void ab initio. The Tribunal concurred with this view, upholding the CIT(A)'s decision and dismissing the revenue's appeal on the grounds that the assessment order was invalid due to the failure to issue the notice within the prescribed time limit.4. Legal and Factual Grounds Raised by the Revenue:The revenue raised various legal and factual grounds challenging the CIT(A)'s decision. However, the Tribunal carefully considered the arguments presented by both sides and ultimately upheld the CIT(A)'s order, emphasizing that the omission to issue the notice under section 143(2) within the prescribed time rendered the assessment order void ab initio, and the procedural irregularity was not curable under the provisions of the Income Tax Act.In conclusion, the Tribunal dismissed the revenue's appeal and affirmed the decision of the CIT(A) regarding the invalidity of the assessment order due to the failure to issue the notice under section 143(2) within the stipulated time, highlighting the non-curability of this procedural defect under the relevant provisions of the Income Tax Act.