Tribunal directs fresh assessment, considers impact of High Court stay orders

The Tribunal set aside the orders of the Commissioner of Income Tax (Appeals) and directed a fresh consideration, emphasizing the need to assess the impact of the High Court's stay orders on the time limit for issuing the notice under Section 143(2) of the Income Tax Act. The appeals were allowed for statistical purposes, indicating a procedural victory for the Revenue in this case.

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Issues Involved:
1. Validity of notice under Section 143(2) of the Income Tax Act.
2. Compliance with the time limit for issuing notice under Section 143(2).
3. Impact of High Court's stay orders on the assessment proceedings.
4. Application of Section 292BB of the Income Tax Act.

Detailed Analysis:

1. Validity of Notice under Section 143(2):
The primary issue in these appeals is whether the notice under Section 143(2) of the Income Tax Act was issued within the prescribed time limit. The Revenue filed appeals against the orders of the Commissioner of Income Tax (Appeals)-7, Hyderabad, which quashed the assessments on the grounds that the notice under Section 143(2) was not issued within the prescribed time.

2. Compliance with the Time Limit for Issuing Notice under Section 143(2):
The factual matrix reveals that the original return of income was filed on 02.01.2008. A survey under Section 133A was conducted on 26.10.2010, and a notice under Section 148 was issued on 24.11.2011. The assessee requested that the original return be treated as filed in response to the notice under Section 148, which was deemed to have been filed on 29.12.2011. The special audit under Section 142(2A) was ordered on 27.12.2011, and the assessee challenged this order in the High Court, which stayed further proceedings on 23.02.2012. The High Court disposed of the writ petitions on 23.01.2014, directing the Assessing Officer to pass a speaking order after giving an opportunity to the assessee. The special auditor submitted their report on 06.09.2014. The Assessing Officer issued a notice under Section 143(2) on 07.10.2014, and the assessment was completed on 31.10.2014.

The CIT(A) concluded that the notice under Section 143(2) was not issued within the prescribed time limit, rendering the assessment order invalid. This conclusion was based on the Supreme Court's decision in ACIT vs. Hotel Blue Moon, which mandates that the notice under Section 143(2) must be served within the statutory time period.

3. Impact of High Court's Stay Orders on the Assessment Proceedings:
The Revenue argued that the time for issuing the notice under Section 143(2) should exclude the period during which the High Court's stay was in effect. The High Court granted an interim stay on 23.02.2012, and the final order was passed on 10.06.2014. The CIT(A) did not consider the impact of the stay orders on the time limit for issuing the notice under Section 143(2).

4. Application of Section 292BB of the Income Tax Act:
Section 292BB of the Income Tax Act deems that any notice required to be served upon the assessee has been duly served if the assessee has appeared in any proceeding or cooperated in any inquiry. However, the proviso to this section states that this does not apply if the assessee has raised an objection before the completion of the assessment or reassessment. In this case, the assessee raised an objection regarding the non-issuance of the notice under Section 143(2) within the prescribed time during the course of the assessment proceedings. Therefore, Section 292BB does not apply.

Conclusion:
The Tribunal concluded that the CIT(A) did not consider the impact of the High Court's stay orders on the time limit for issuing the notice under Section 143(2). The Tribunal set aside the orders of the CIT(A) and restored the appeals for fresh consideration, directing the CIT(A) to examine the issue afresh, including the impact of the High Court's stay orders and the objections on merits. The appeals were allowed for statistical purposes.

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