2021 (3) TMI 990 - AT - Income Tax

Invalidated reassessment proceedings due to missing notice; reassessments quashed, appeals allowed. (2)

The tribunal invalidated reassessment proceedings under Sections 144 and 147 of the Income Tax Act, 1961, due to the non-issuance of mandatory Section ... Reopening of assessment u/s 147 - As argued AO not issued any notice u/s 143(2) - HELD THAT:- There is no dispute that as per these case records, no notice had been issued and also the Assessing officer’s corresponding assessments do not reveal that he had taken recourse to sec. 143(2) process at all. All these facts corroborate and support the assessees’ stand that the impugned assessments have been framed without issue of sec.143(2) notices ad therefore not sustainable in law as settled in Hotel Blue Moon caseN [2010 (2) TMI 1 - SUPREME COURT] Assesses have not filed any return in response to Assessing officer’s sec.148 notice(s) issued to them in all these assessment years - It goes against the records since the assessment order(s) in all these cases take note of the assessee’s letter(s) dated 4.1.2010 that the original returns be treated as those filed in response to re-opening mechanism. Assessee’s letter seeking to treat the original returns as in furtherance to sec.148 notice(s) culminates in filing of a valid return requiring issue of sec.143(2) notices thereafter and failure on Assessing Officer’s part in such a situation leads to the assessment in question be declared a nullity. See M/S. MEHTA EMPORIUM JEWELLERS [2018 (6) TMI 898 - ITAT MUMBAI], SHRI JAI SHIV SHANKAR TRADERS PVT. LTD. [2015 (10) TMI 1765 - DELHI HIGH COURT], M/S SAPTHAGIRI FINANCE & INVESTMENTS [2012 (8) TMI 523 - MADRAS HIGH COURT] We take into account all these facts and circumstances and hold that these eleven assessments framed on 30.12.2011 are invalid ones. The same stand quashed therefore. - Decided in favour of assessee. Issues Involved:1. Validity of reassessment proceedings under Sections 144 and 147 of the Income Tax Act, 1961.2. Requirement and issuance of notice under Section 143(2) in reassessment proceedings.3. Admission of additional grounds of appeal by the assessee.Detailed Analysis:1. Validity of reassessment proceedings under Sections 144 and 147 of the Income Tax Act, 1961:The appeals pertain to reassessments framed under Sections 144 and 147 based on a survey action conducted on 21.12.2009. The reassessments resulted in additions of unexplained/unaccounted incomes, which were upheld by the CIT(A). The tribunal examined whether the reassessments were validly framed, particularly focusing on the procedural compliance required under the Act.2. Requirement and issuance of notice under Section 143(2) in reassessment proceedings:The core issue raised by the assessees was the non-issuance of notices under Section 143(2) before framing the reassessments. The tribunal noted that the issuance of a Section 143(2) notice is a mandatory condition precedent for framing an assessment or reassessment, including best judgment assessments under Section 144. The tribunal referenced the Supreme Court's decision in Hotel Blue Moon, which emphasizes the necessity of such notice. The tribunal found that the Assessing Officer (AO) did not issue Section 143(2) notices in these cases, as confirmed by the AO's letter dated 29.01.2021 and the absence of such notices in the assessment records. Consequently, the tribunal held that the reassessments were invalid due to non-compliance with the mandatory procedural requirement.3. Admission of additional grounds of appeal by the assessee:The assessees sought to raise additional grounds of appeal, arguing that the reassessments were invalid due to the non-issuance of Section 143(2) notices. The tribunal considered the Supreme Court's ruling in NTPC vs. CIT, which allows the tribunal to entertain additional legal grounds if the relevant facts are already on record. The tribunal found that the facts regarding the non-issuance of Section 143(2) notices were part of the record and thus admitted the additional grounds raised by the assessees. The tribunal rejected the Revenue's objections, which contended that the additional grounds should not be admitted as they were not raised earlier and that the assessments were framed under Section 144 due to non-compliance by the assessees.Conclusion:The tribunal concluded that the reassessments were invalid due to the non-issuance of mandatory Section 143(2) notices. Consequently, the tribunal quashed the reassessments and allowed the assessees' appeals. All other grounds on merits were rendered infructuous as the reassessments themselves were invalidated. The tribunal directed that a copy of the order be placed in respective files and the original assessment records be returned to the CIT-DR's office.Order Pronouncement:The order was pronounced in the open court on 15th March 2021.