2017 (11) TMI 1552 - AT - Income Tax

Assessment proceedings invalidated for lack of notice under Income Tax Act; appeal allowed, order quashed.

The Tribunal quashed the assessment proceedings due to the absence of a mandatory notice under Section 143(2) of the Income Tax Act, rendering the ... Validity of assessment - no valid notice u/s. 143(2) was served upon the assessee - Held that:- The issue is squarely covered in favour of the Assessee and against the Revenue as relied on case of Ms. Meenakshi Aggarwal vs. ITO & Ors [2015 (12) TMI 706 - ITAT DELHI] wherein held that non-issue of notice u/s. 143(2) after filing of the return of the Assessee, by way of letter, makes the assessment order passed u/s. 143(3) r.w.s. 147 bad in law. - Decided in favour of assessee. Issues Involved:1. Validity of Notice under Section 143(2) of the Income Tax Act.2. Applicability of Section 292BB of the Income Tax Act.3. Jurisdictional validity of assessment proceedings under Section 147/143(3).Detailed Analysis:1. Validity of Notice under Section 143(2):The primary issue in this case is whether a valid notice under Section 143(2) of the Income Tax Act was served upon the assessee. The assessee contended that no valid notice was served, which is a mandatory requirement for reassessment proceedings. The Tribunal, after examining the records and previous judgments, found that the issue is covered in favor of the assessee. It was noted that the absence of a valid notice under Section 143(2) renders the reassessment proceedings invalid. This position is supported by several precedents, including the ITAT, SMC-2, Delhi Bench decision in the case of Ms. Meenakshi Aggarwal vs. ITO, and the Hon'ble Delhi High Court in the case of M/s Alpine Electronics Asia PTE Ltd.2. Applicability of Section 292BB:The CIT(A) held that under Section 292BB of the Income Tax Act, if an assessee has appeared in any proceeding or cooperated in any inquiry, it is deemed that the notice required under any provision of the Act has been duly served. However, this provision does not apply if the objection to the notice is raised before the completion of the assessment or reassessment. The Tribunal found that the assessee had cooperated during the reassessment proceedings and did not challenge the delay in issuing the notice under Section 143(2) before the completion of the reassessment. Therefore, the CIT(A) concluded that the notice under Section 143(2) was valid and could not be challenged post the reassessment proceedings.3. Jurisdictional Validity of Assessment Proceedings:The Tribunal also addressed the jurisdictional validity of the assessment proceedings under Section 147/143(3). It was observed that the issuance of a notice under Section 143(2) is mandatory even in reassessment proceedings initiated under Section 148. The Tribunal cited various judicial pronouncements, including the Hon'ble Supreme Court's decision in the case of ACIT vs. Hotel Blue Moon, which emphasized the mandatory nature of issuing a notice under Section 143(2). The Tribunal concluded that the non-issuance of a notice under Section 143(2) after the filing of the return by the assessee invalidates the assessment order passed under Section 143(3) read with Section 147.Conclusion:The Tribunal quashed the assessment proceedings on the ground that the mandatory notice under Section 143(2) was not issued, thereby rendering the assessment order invalid. The appeal of the assessee was allowed, and the other grounds raised were not adjudicated as they were deemed academic in nature.Order Pronounced:The appeal of the assessee was allowed, and the assessment order was quashed. The judgment was pronounced on 27-11-2017.