Failure to Issue Notice under Section 143(2) Renders Assessment Orders Invalid

The Tribunal allowed the appeals filed by the assessees due to the absence of notice u/s. 143(2) in the reassessment proceedings, rendering the assessment orders legally unsustainable. The judgment emphasized the mandatory requirement of issuing such notice before finalizing reassessment orders, as established by legal precedents. Consequently, the assessment orders were set aside, and the appeals were allowed on this basis, without addressing other arguments challenging the validity of the assessment or additions made on merits.

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Issues involved:
Appeal against separate orders of the Commissioner of Income Tax (Appeals) - Reassessment proceedings without issuance of notice u/s. 143(2) - Legality of assessment based on Long Term Capital Gains - Identical issues in both appeals.

Analysis:
The appeals were filed against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment year 2011-12, under the Income Tax Act, 1961. The assessees' cases were reopened based on information from ADIT(Investigation) regarding a scam involving bogus Long Term Capital Gain entries. The assessees challenged the assessment, which treated the gains as undisclosed income, on legal and merit grounds. The main issue raised was the non-issuance of notice u/s. 143(2) in the reassessment proceedings. The absence of such notice was noted, rendering the assessment unsustainable in law.

The judgment cited the mandatory requirement of issuing notice u/s. 143(2) in reassessment proceedings, as established by legal precedents, including the Hon'ble High Court of Delhi's decision in Pr. CIT vs Silver Line. The absence of this notice was deemed crucial for making adjustments to the return filed by the assessee in response to the notice u/s. 148. The judgment emphasized that the AO must issue a notice u/s. 143(2) before finalizing reassessment orders, even if the assessee participates in the proceedings.

Given the clear legal position that reassessment orders cannot be passed without complying with the notice requirement u/s. 143(2), the Tribunal concluded that the reassessment orders were legally unsustainable due to the absence of such notice in the present case. Consequently, the assessment orders were set aside, and the appeals by the assessees were allowed on this basis. Other arguments challenging the validity of the assessment under section 147 were not addressed as the assessment was deemed invalid. The grounds of appeal regarding additions made on merits were also not considered, as the assessment was held to be invalid.

In conclusion, the Tribunal allowed the appeals filed by the assessees due to the lack of notice u/s. 143(2) in the reassessment proceedings, rendering the assessment orders unsustainable in law. The judgment highlighted the mandatory nature of issuing such notice before finalizing reassessment orders, as established by legal precedents.

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