2018 (5) TMI 2030 - AT - Income Tax

Assessment void without notice under IT Act: ITAT rules in favor of assessee for AY 2007-08

The Appellate Tribunal ITAT Jaipur allowed the appeal filed by the assessee against the order of CIT (A) for the assessment year 2007-08. The Tribunal ... Validity of assessment u/s 147/143(3) - issuing notice u/s 143(2) before completion the assessment - HELD THAT:- AO has not stated either in the assessment order or in the order sheets of the assessment proceedings that any notice u/s 143(2) was issued to the assessee. Even the assessment record produced before us by the ld. DR does not contain any notice issued u/s 143(2). Thus, it is clear that there is no notice u/s 143(2) of the act issued by the AO and the reassessment proceedings in the case of the assessee were competed without issuing a notice u/s 143(2). The Hon'ble Supreme Court in case of ACIT vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] has held that failure on the part of the assessing authority to issue notice u/s 143(2) cannot be a mere procedural irregularity and the same is not curable. It is not a mere formality but it gives the jurisdiction to the Assessing officer to complete the assessment u/s 143(3) therefore, non issuance of notice u/s 143(2) vitiates the assessment proceedings. Also see CIT vs. Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT] the assessment proceedings completed without issuing notice u/s 143(2) of the act are void ab-initio and liable to be quashed. Appeal filed by the assessee is allowed. Issues:1. Validity of assessment proceedings without issuing notice under section 143(2) of the Income Tax Act, 1961.Analysis:The appeal before the Appellate Tribunal ITAT Jaipur was directed against the order of CIT (A) for the assessment year 2007-08. The assessee raised multiple grounds, including the contention that the assessment was completed without serving notice or providing an opportunity to be heard. The additional ground raised by the assessee questioned the validity of the assessment proceedings under section 147/143(3) without issuing notice under section 143(2) of the Income Tax Act, 1961.The Tribunal considered the additional ground raised by the assessee, noting that it involved a pure question of law without requiring further investigation of facts. Citing the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT, the Tribunal admitted the additional ground for consideration.Regarding the merit of the additional ground, the Tribunal observed that the assessment order was passed without issuing the mandatory notice under section 143(2) of the Act. The assessee's representative relied on legal precedents, including the Supreme Court decision in ACIT vs. Hotel Blue Moon and the Allahabad High Court decision in CIT vs. Rajeev Sharma, to support the argument that assessment without issuing notice under section 143(2) is not valid.The Departmental Representative contended that since the assessee did not raise the issue before the Assessing Officer, the objection regarding the legality of the assessment order could not be raised later. However, upon examination of the assessment record, it was confirmed that no notice under section 143(2) was issued to the assessee.The Tribunal, after considering the submissions and reviewing the record, concluded that the assessment proceedings were completed without issuing the required notice under section 143(2) of the Act. Citing the Supreme Court decision in ACIT vs. Hotel Blue Moon and the Allahabad High Court decision in CIT vs. Rajeev Sharma, the Tribunal held that such proceedings are void ab-initio and quashed the assessment as illegal. Consequently, the Tribunal allowed the appeal filed by the assessee, and the order was pronounced in open court on 31/05/2018.