Assessing Officer's Jurisdiction Overturned Due to Late Notice

The High Court held that the Assessing Officer lacked jurisdiction to proceed with the assessment as the notice under s. 143(2) of the IT Act was issued beyond the prescribed 12-month period. Consequently, the assessment order, along with the orders of the first appellate authority and the Tribunal, were deemed unsustainable. The Court rejected the Department's argument regarding the preclusion of challenging the notice's service and allowed the appeal in favor of the assessee, quashing the previous orders and assessment due to the absence of a timely notice under s. 143(2) of the Act.

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Issues:
- Jurisdiction of AO to make an assessment order without serving a notice under s. 143(2) of the IT Act within the stipulated period.

Analysis:
1. The High Court considered whether the Assessing Officer (AO) was justified in making an assessment order without serving a notice under s. 143(2) of the IT Act within the prescribed time limit. The appellant raised substantial questions of law, but the Court focused on this specific issue regarding the timeline for issuing the notice.

2. The case pertained to the assessment year 1997-98 when the law required a notice under s. 143(2) of the Act to be issued within 12 months from the end of the month when the return was filed. The appellant filed the return on 28th Nov., 1997, and the 12-month period expired on 30th Nov., 1998.

3. The assessment order revealed that the notice under s. 143(2) of the Act, along with a questionnaire, was issued on 21st June, 1999, which was almost 7 months after the expiration of the stipulated period. The assessment order was subsequently made on 27th July, 2000.

4. Referring to a Supreme Court judgment, the Court emphasized that the AO must issue the notice within the prescribed time limit to inform the assessee of the scrutiny process. In this case, the notice was issued beyond the limitation period, depriving the AO of jurisdiction to proceed with the assessment.

5. The Court concluded that after the expiry of 12 months, the AO lacked jurisdiction to proceed with the assessment and should have accepted the return as filed by the assessee. Therefore, the assessment order by the AO, as well as the orders of the first appellate authority and the Tribunal, were deemed unsustainable.

6. The Department argued that the appellant's failure to raise the issue before the Tribunal precluded its consideration at the High Court. However, the Court referenced a Supreme Court decision to assert that if a substantial question of law is evident from the records, it can be raised before the High Court, even if not previously argued before the lower authorities.

7. The Court disagreed with the Department's contention that the provision of s. 292BB of the Act precluded the assessee from questioning the notice's service. The Court clarified that the AO's jurisdiction commences upon issuing the notice within the stipulated period, irrespective of the notice's service.

8. Rejecting the Department's preliminary objection, the Court quashed the orders of the Tribunal and the first appellate authority, along with the assessment order, due to the absence of a notice under s. 143(2) of the Act. The appeal was allowed in favor of the assessee.

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