Court clarifies assessment procedure: Notice under section 143(2) essential.

The High Court ruled that an assessment under section 143(3) without a notice under section 143(2) is not a nullity but can be set aside for procedural irregularity. The absence of the notice renders the assessment illegal, but it can be rectified by conducting a fresh assessment. The Court emphasized the mandatory nature of issuing the notice within the prescribed time and highlighted the legal consequences of non-compliance. The judgment directed the Assessing Officer to assess the availability of the period for issuing the notice under section 143(2 before proceeding further.

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Issues:
1. Validity of assessment made under section 143(3) without notice under section 143(2)
2. Procedural irregularity of non-issuance of notice under section 143(2) and its curability

Issue 1: Validity of assessment made under section 143(3) without notice under section 143(2):
The case involved an assessment under the Income Tax Act, 1961 for the year 1990-91. After a search operation, the income was estimated at a significantly higher amount than initially declared by the assessee. The subsequent assessment under section 143(3) was challenged on the grounds of not issuing a notice under section 143(2). The High Court analyzed the legal implications of such non-issuance of notice. The Tribunal held that an assessment without a notice under section 143(2) is not a nullity but can be set aside for procedural irregularity. The Court affirmed this position, stating that the absence of a notice under section 143(2) renders the assessment illegal, but it can be rectified by setting it aside for a fresh assessment. The Court referred to relevant case law and upheld the Tribunal's decision on this issue.

Issue 2: Procedural irregularity of non-issuance of notice under section 143(2) and its curability:
The Court further delved into the aspect of the non-issuance of a notice under section 143(2) and its implications. It was established that the notice under section 143(2) is a jurisdictional issue crucial for the validity of the assessment under section 143(3). Citing previous judgments, the Court emphasized that the failure to issue such a notice is a procedural irregularity that cannot be cured. The Court referenced specific cases to support this stance. It was clarified that the absence of the notice within the stipulated period results in the assessment proceedings being deemed final. The Court highlighted the mandatory nature of serving the notice within the prescribed time under section 143(2). The judgment reiterated that the requirement of notice under section 143(2) cannot be dispensed with and outlined the legal consequences of non-compliance with this procedural requirement.

In conclusion, the High Court addressed the issues concerning the validity of assessments made under section 143(3) without the requisite notice under section 143(2) and the curability of such procedural irregularities. The judgment provided a detailed analysis of the legal principles and precedents governing these issues, ultimately directing the Assessing Officer to assess the availability of the period for issuing the notice under section 143(2 before proceeding further.

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