Reassessment order quashed for lack of notice, all additions deleted (2)

The ITAT held that the absence of a notice u/s 143(2) rendered the reassessment order illegal and void ab initio. Citing a Supreme Court judgment, the ITAT quashed the reassessment proceedings and deleted all additions. The appeal was allowed, and the lower authorities' orders were set aside.

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Issues:
1. Validity of reassessment proceedings without issuance of notice u/s 143(2) of the Income Tax Act.

Analysis:
The appeal was against the order of Ld. CIT(Appeals)-Faridabad for AY 2010-11. The assessee did not press ground no. 1 & 2 regarding the initiation of reassessment proceedings. The AO had issued a notice u/s 148 after recording reasons related to an accommodation entry received by the assessee. The AO made an addition of Rs. 4 lakhs u/s 68 of the Act in the reassessment order. The assessee challenged the addition and the legality of the assessment order, arguing that no notice u/s 143(2) was issued, making the reassessment illegal. The Ld. CIT(A) noted that as the assessee participated in the proceedings without raising objections to the absence of notice u/s 143(2), it was not fatal to the reassessment proceedings, and dismissed the appeal.

The assessee contended that the assessment order was illegal due to the absence of jurisdiction as no notice u/s 143(2) was issued. The counsel referred to a Supreme Court judgment highlighting the importance of the notice. The Ld. DR argued that since the assessee participated in the proceedings without raising the notice issue, Section 292BB would apply, validating the reassessment order. The ITAT analyzed the provisions of Section 143(2) and the Supreme Court judgment in the case cited by the assessee. The Supreme Court's decision emphasized that the absence of a notice u/s 143(2) cannot be cured by Section 292BB, which only addresses infirmities in the manner of service. As no notice u/s 143(2) was issued, the reassessment order was deemed illegal.

In conclusion, the ITAT upheld the assessee's argument, ruling that the absence of a notice u/s 143(2) rendered the reassessment order illegal and void ab initio. Citing the Supreme Court judgment, the ITAT quashed the reassessment proceedings and deleted the entire additions. The appeal of the assessee was allowed, and the orders of the authorities below were set aside.

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