Reassessment order quashed for lack of notice. Commissioner's revision invalid.

The Tribunal held that the reassessment order was null and void due to the absence of a mandatory notice under section 143(2) of the Income Tax Act, 1961. Consequently, the Principal Commissioner of Income Tax's revision under section 263 was deemed invalid. The appellant's appeal was allowed, and the Principal Commissioner's order was quashed.

---

---

Issues Involved:

1. Validity of the reassessment order passed by the Assessing Officer (AO) under sections 147/143(3) of the Income Tax Act, 1961 without issuing a notice under section 143(2).
2. Jurisdiction and power of the Principal Commissioner of Income Tax (Pr. CIT) to revise the reassessment order under section 263 of the Income Tax Act, 1961.
3. Applicability of section 292BB of the Income Tax Act, 1961 in curing the defect of non-issuance of notice under section 143(2).

Detailed Analysis:

1. Validity of the reassessment order passed by the AO under sections 147/143(3) without issuing a notice under section 143(2):

The appeal was filed against the order of the Pr. CIT-2, Kolkata, which was passed under section 263 of the Income Tax Act, 1961. The primary contention of the appellant (assessee) was that the reassessment order passed by the AO under sections 147/143(3) was null and void as no notice under section 143(2) was issued after the assessee filed the return in response to the notice under section 148. The appellant argued that the issuance of a notice under section 143(2) is a mandatory requirement before making a scrutiny assessment under section 143(3), as held by the Supreme Court in CIT V Hotel Blue Moon (2010) 321 ITR 362 (SC). Since the AO failed to issue this mandatory notice, the reassessment order dated 25.07.2017 was without jurisdiction and thus null in the eyes of law.

2. Jurisdiction and power of the Pr. CIT to revise the reassessment order under section 263:

The appellant argued that since the reassessment order itself was null and void due to the non-issuance of the mandatory notice under section 143(2), the Pr. CIT could not have exercised his power under section 263 to interfere with a non-existent order. The Tribunal agreed with this contention, stating that the Pr. CIT's action to revise a non-est order is also null in the eyes of law. Consequently, the impugned order passed by the Pr. CIT was quashed.

3. Applicability of section 292BB in curing the defect of non-issuance of notice under section 143(2):

The respondent (Revenue) contended that the assessee, having participated in the reassessment proceedings, could not now challenge the non-issuance of notice under section 143(2) due to the provisions of section 292BB. However, the Tribunal rejected this argument, clarifying that section 292BB only cures defects related to the service of notice and not the complete absence of a mandatory notice. The Tribunal relied on the Supreme Court's decision in CIT Vs. Laxman Das Khandelwal, which held that section 292BB does not apply where there is a complete absence of notice under section 143(2). Since no such notice was issued in this case, the reassessment order was deemed to be without jurisdiction and thus non-est in the eyes of law.

Conclusion:

The Tribunal found merit in the appellant's contentions and concluded that the reassessment order dated 25.07.2017 was null and void due to the non-issuance of the mandatory notice under section 143(2). Consequently, the Pr. CIT's order under section 263 was also quashed. The appeal of the assessee was allowed, and the order was pronounced in the open court on 11th May, 2021.

---