2017 (8) TMI 80 - HC - Income Tax

Tribunal dismisses appeal due to lack of notice compliance, Assessing Officer's jurisdiction questioned

Commissioner of Income Tax (Central) Kanpur Versus Sri Moins Iqbal, Sri Siraj Iqbal

The Tribunal dismissed the Revenue's appeal, emphasizing the non-compliance with the mandatory requirement of issuing a notice under Section 143(2). It ... Validity of assessment order - Wrong mention of section as u/s 153A instead of 143(3)/153A - non compliance of mandatory issue of notice u/s 143(2) - curable defect u/s 292B - Held that:- this fact is not disputed that no notice under Section 143(2) was ever issued - Revenue did not dispute seriously that mention of Section 153A was an error and that will not vitiate the assessment order but since assessment was claimed to have been completed under Section 143(3) and if that be so, notice under Section 143(2) was mandatory and non-compliance thereof vitiates assessment, therefore, we answer Question-I in favour of Assessee and against Revenue holding that Tribunal was justified in dismissing appeal of Revenue not for quoting wrong provision but, in substance, for non-compliance of a mandatory provision which was not treated to be a mere procedural irregularity in various authorities as discussed above. - Decided in favour of assessee. Issues Involved:1. Validity of assessment order under the wrong section.2. Jurisdiction of the Assessing Officer under Section 153A.3. Requirement of notice under Section 143(2) for assessment.Detailed Analysis:1. Validity of Assessment Order under the Wrong Section:The primary issue was whether the Income Tax Appellate Tribunal (ITAT) was justified in dismissing the appeal of the Revenue by ignoring that quoting a wrong section does not render the assessment order void. The Revenue argued that the assessment order was passed under Section 143(3) after serving notice under Section 142(1), and the mention of Section 153A was merely precautionary. The Tribunal upheld the CIT(A)’s decision that the assessment should have been under Section 143(3) and not Section 153A, despite the AO mentioning both sections.2. Jurisdiction of the Assessing Officer under Section 153A:The Tribunal found that the AO did not have the jurisdiction to pass an order under Section 153A for the assessment year under consideration. The Tribunal noted that Section 153A, read with Section 153C, empowers the AO to proceed with assessments in search cases. However, the provisions of Section 143(2) are obligatory for making an assessment under Section 143(3) or Section 144. The Tribunal concluded that the AO’s jurisdiction under Section 153A was not applicable in this case, as the assessment should have been made under Section 143(3) following the issuance of a notice under Section 142(1).3. Requirement of Notice under Section 143(2) for Assessment:The Tribunal emphasized that no notice under Section 143(2) was issued to the Assessee in both cases. The Tribunal cited the Supreme Court's decision in ACIT vs. Hotel Blue Moon, which held that the omission to issue a notice under Section 143(2) is not a procedural irregularity and cannot be cured. The Tribunal also referred to the Allahabad High Court’s decision in Commissioner of Income Tax vs. Rajeev Sharma, which underscored the mandatory nature of Section 143(2) before proceeding with an assessment under Section 143(3). Consequently, the Tribunal upheld the CIT(A)’s decision that the assessment orders were invalid due to the non-issuance of the mandatory notice under Section 143(2).In conclusion, the Tribunal's decision to dismiss the Revenue's appeal was based on the non-compliance with the mandatory procedural requirement of issuing a notice under Section 143(2). The Tribunal found that the AO did not have jurisdiction under Section 153A for the assessment year in question, and the assessment should have been made under Section 143(3) following the issuance of a notice under Section 142(1). The Tribunal’s findings were consistent with the legal precedents that mandate the issuance of a notice under Section 143(2) before making an assessment under Section 143(3).