2015 (12) TMI 706 - AT - Income Tax

Invalid Assessment Orders Quashed Due to Absence of Valid Notices

Ms Meenakshi Aggarwal C/o Kapil Goel, Adv. Ms Savitri Aggarwal, Mr Yogesh Aggarwal, Mr Jhabermal Aggarwal, Baby Lakshya Gupta Versus Income Tax Officer

The Tribunal found that the absence of valid notices under section 143(2) rendered the assessment orders under section 143(3) read with section 147 ... Reopening of assessment - assessee has taken up the ground that no valid notice u/s. 143(2) was served upon him - Held that:- Non-issue of notice u/s. 143(2) after filing of the return of the Assessee, by way of letter, makes the assessment order passed u/s. 143(3) r.w.s. 147 bad in law. See ITO vs. Naseman Farms Pvt. Ltd. & Ors. [2015 (4) TMI 764 - ITAT DELHI ] - Decided in favour of assessee. Issues Involved:1. Validity of notice under section 143(2) of the Income Tax Act.2. Jurisdictional validity of the assessment order under section 143(3) read with section 147 of the Income Tax Act.Issue-wise Detailed Analysis:1. Validity of notice under section 143(2) of the Income Tax Act:The primary contention of the assessee was that no valid notice under section 143(2) of the Income Tax Act was served upon them after filing the return under section 148 of the Act. The CIT(A) held that the service of notice under section 143(2) is merely an administrative requirement and not a legal one. However, the Tribunal found that no notice under section 143(2) was issued after the assessee filed a letter requesting the AO to treat the original return of income (ROI) as the ROI filed in response to the notice under section 148.The Tribunal referenced several precedents, including the ITAT Bangalore Bench in the case of Shri GN Mohan Raju vs. ITO, where it was held that the issue of notice under section 143(2) is mandatory even in a re-assessment proceeding initiated under section 148. The Tribunal also cited the Hon'ble Delhi High Court in the case of M/s Alpine Electronics Asia PTE Ltd., which clarified that section 143(2) applies to proceedings under sections 147/148, and the issuance of such notice is not merely procedural but mandatory.The Tribunal emphasized that the absence of a valid notice under section 143(2) renders the subsequent assessment proceedings invalid. It was further supported by the decision of the ITAT Delhi Bench in the case of ITO vs. Naseman Farms Pvt. Ltd., where it was held that the non-issuance of notice under section 143(2) is a failure on the part of the AO, making the reassessment unsustainable in law.2. Jurisdictional validity of the assessment order under section 143(3) read with section 147 of the Income Tax Act:The Tribunal found that the AO did not issue a notice under section 143(2) after the assessee's request to treat the original return as filed in response to the notice under section 148. This omission was deemed to invalidate the subsequent assessment proceedings. The Tribunal referenced multiple judicial pronouncements, including the Supreme Court's decision in ACIT vs. Hotel Blue Moon, which underscored the mandatory nature of issuing a notice under section 143(2) for the validity of reassessment proceedings.The Tribunal also cited the Hon'ble Punjab & Haryana High Court in CIT vs. Vishu & Co. Ltd., which held that the non-service of notice under section 143(2) within the stipulated time invalidates the assessment. Similarly, the Hon'ble Bombay High Court in CIT vs. Mr. Salman Khan ruled that reassessment orders are invalid in the absence of a notice under section 143(2) after the issuance of a notice under section 148.Based on these precedents, the Tribunal concluded that the assessment orders in question were invalid due to the non-issuance of mandatory notices under section 143(2) after the filing of the return by the assessee. Consequently, the Tribunal quashed the assessment orders and allowed the appeals in favor of the assessee.Conclusion:The Tribunal held that the non-issuance of notice under section 143(2) after the filing of the return renders the assessment orders under section 143(3) read with section 147 invalid. As a result, all the appeals filed by the assessees were allowed, and the assessment orders were quashed. The Tribunal did not find it necessary to adjudicate other grounds raised by the assessee, as it would be an academic exercise. The order was pronounced in the open court on 16.10.2015.