2017 (4) TMI 1637 - AT - Income Tax

Reassessment orders under sections 143(3)/147 invalid without mandatory section 143(2) notice

ITAT Cuttack held that reassessment orders under sections 143(3)/147 passed without issuing mandatory notice under section 143(2) are invalid. Following ... Reopening of assessment u/s 147 - no notice u/s.143(2) was issued - mandatory or procedural irregularity - contracting decisions - HELD THAT:- It is a settled position of law that where there are contrary decisions of Hon’ble High Courts on an issue and none of which is Hon’ble Jurisdictional High court, then the decision in favour of the assessee should be followed in view of the decision in the case of CIT vs. Vegetable Products Ltd [1973 (1) TMI 1 - SUPREME COURT] Therefore, respectfully following the decision of M/s. Travancore Diagnostics (P) Ltd [2016 (11) TMI 76 - KERALA HIGH COURT] and the decision of Sri Jai Shiv Shankar Trades Pvt Ltd [2015 (10) TMI 1765 - DELHI HIGH COURT] we hold that the impugned reassessment orders passed u/s.143(3)/147 without issuing notice u/s.143(2) is bad in law and, therefore, we quash the reassessment order for both the assessment years under consideration and allow the ground of appeal of the assessee. Issues:Reopening of assessment without issuing notice u/s.143(2) of the Act.Analysis:The appeals were filed by the assessee against separate orders of CIT(A)-1, Bhubaneswar, for the assessment years 2008-09 & 2009-2010. The primary contention was regarding the reopening of assessment without issuing notice u/s.143(2) of the Act. The Assessing Officer completed the assessment without issuing the said notice, which the assessee argued was a procedural irregularity. The assessee relied on judicial precedents to support the argument that reassessment u/s.147 would be invalid if no notice u/s.143(2) was issued.The assessee cited the decision of the Hon’ble Kerala High Court in a specific case and the Hon’ble Delhi High Court in another case to emphasize the importance of issuing notice u/s.143(2) before passing a reassessment order u/s.147. The Departmental Representative, on the other hand, relied on different judicial decisions to counter the argument that notice u/s.143(2) was mandatory for finalizing assessments under certain sections of the Act.After hearing both sides and examining the orders of lower authorities, the Tribunal delved into the legal aspects of the issue. The Tribunal referred to the judgments of the Hon’ble Kerala High Court and the Hon’ble Delhi High Court, which highlighted the mandatory nature of issuing notice u/s.143(2) before finalizing reassessment orders. The Tribunal found that the failure to issue such notice rendered the reassessment orders invalid in the present case.Considering the conflicting decisions of different High Courts, the Tribunal followed the principle that in the absence of a decision from the Jurisdictional High Court, the decision in favor of the assessee should be upheld. Consequently, the Tribunal held that the reassessment orders passed without issuing notice u/s.143(2) were bad in law and quashed them for both assessment years. As a result, the other grounds of appeal on the merits of additions became irrelevant and were dismissed. Ultimately, both appeals of the assessee were allowed by the Tribunal.In conclusion, the Tribunal's detailed analysis and reliance on relevant legal precedents led to the decision to quash the reassessment orders due to the failure to issue notice u/s.143(2), highlighting the mandatory nature of such notice in the reassessment process.