Tribunal Upholds CIT(A) Decision Quashing Reassessment Order for Lack of Section 143(2) Notice (2)

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to quash the reassessment order due to the non-issuance of the mandatory notice under section 143(2). The Tribunal emphasized the mandatory nature of the notice under section 143(2) in reassessment proceedings and clarified that section 292BB does not apply to the non-issuance of such notice.

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Issues Involved:
1. Condonation of delay in filing the appeal by the revenue.
2. Validity of reassessment order due to non-issuance of notice under section 143(2) of the Income-tax Act, 1961.
3. Applicability of section 292BB in the context of non-issuance of notice under section 143(2).

Detailed Analysis:

1. Condonation of Delay:
The appeal by the revenue was time-barred by 11 days. A condonation petition was filed, and there was no objection from the respondent. The delay was condoned, and the appeal was admitted for hearing.

2. Validity of Reassessment Order:
The primary issue was whether the reassessment order dated 22.12.2017 was valid given that no notice under section 143(2) was issued to the assessee after reopening the assessment.

- Facts and Arguments:
- The assessee is engaged in commodity broking, trading in shares and securities, and trading in derivatives.
- The case was reopened for reassessment due to information about a bogus loss of Rs. 334.36 lakhs.
- The AO issued a notice under section 148 on 31.03.2017, but the assessee did not file a return within the specified 30 days.
- The AO proceeded to disallow the loss and passed the reassessment order ex parte under section 144.
- The CIT(A) quashed the reassessment order due to the non-issuance of a mandatory notice under section 143(2).

- Legal Precedents and CIT(A) Decision:
- The CIT(A) relied on various judicial precedents, including the Supreme Court's decision in Hotel Blue Moon, which mandates the issuance of notice under section 143(2) in reassessment proceedings.
- The CIT(A) concluded that the reassessment order was invalid due to the non-issuance of the mandatory notice under section 143(2).

- Revenue's Contention:
- The revenue argued that since the assessee did not file a return within the time specified in the notice under section 148, the AO was justified in passing the reassessment order under section 144 without issuing a notice under section 143(2).
- The revenue cited the Jammu & Kashmir High Court's decision in PCIT Vs. M/s. Broadway Shoe Co., which held that a return filed after the prescribed time limit is non-est.

- Assessee's Argument:
- The assessee argued that the notice under section 143(2) is mandatory and that the reassessment order without such notice is invalid.
- The assessee relied on the Allahabad High Court's decision in U.P. State Industrial Development Corporation Ltd. Vs. CIT and other judicial precedents supporting the mandatory nature of notice under section 143(2).

- Tribunal's Findings:
- The Tribunal noted that the assessee had filed a return on 21.09.2017 and 20.11.2017, albeit belatedly.
- The Tribunal emphasized that once a return is filed, even if belatedly, the AO is required to issue a notice under section 143(2) before proceeding with the assessment.
- The Tribunal upheld the CIT(A)'s decision, quashing the reassessment order due to the non-issuance of the mandatory notice under section 143(2).

3. Applicability of Section 292BB:
The revenue argued that under section 292BB, the failure to issue a notice under section 143(2) is a procedural irregularity and does not invalidate the assessment.

- Tribunal's Analysis:
- The Tribunal referred to the Allahabad High Court's decision in Mukesh Kumar Agrawal, which clarified that section 292BB does not cure the jurisdictional defect of non-issuance of notice under section 143(2).
- The Tribunal concluded that section 292BB applies to the service of notice and not to the issuance of notice. Therefore, the non-issuance of a notice under section 143(2) cannot be cured by section 292BB.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to quash the reassessment order due to the non-issuance of the mandatory notice under section 143(2). The Tribunal emphasized the mandatory nature of the notice under section 143(2) in reassessment proceedings and clarified that section 292BB does not apply to the non-issuance of such notice.

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