2022 (2) TMI 399 - HC - Income Tax

High Court allows appeal despite delay, deems assessment order invalid due to lack of Section 143(2) notice. (2)

Principal Commissioner Of Income Tax-11, Kolkata Versus M/s. Nopany & Sons

The High Court condoned a 55-day delay in filing the appeal and allowed it to proceed. It held that the assessing officer did not issue a mandatory notice ... ITO Jurisdiction over the assessee to issue notice u/s 143(2) - rectifiable error u/s 292BB - HELD THAT:- The proviso to Section 292BB would not stand attracted and the said Section cannot be made applicable to the assessee’s case. The Tribunal, thereafter, analysed as to the correctness of the submission of the revenue seeking to sustain their stand by referring to a notice issued by the assessing officer, who at the relevant point had no jurisdiction over the assessee and, on facts, found that there is no valid compliance of Section 143(2) of the Act as the notice issued u/s 143(2) of the Act by the assessing officer/Income Tax Officer, Ward-3(1) had no jurisdiction over the assessee at the relevant time. Tribunal to support its conclusion placed reliance in the case of CIT & Another Vs. Mukesh Kumar Agarwal [2012 (7) TMI 543 - ALLAHABAD HIGH COURT] wherein it was held that the assessing officer did not have jurisdiction to proceed further and make assessment since notice under Section 143(2) of the Act was admittedly not issued. As in the case on hand, the revenue sought to take coverage under Section 292BB of the Act which was rejected on the ground that the very foundation of the jurisdiction of the assessing officer was on the issuance of notice under Section 143(2) and the same having been complied with, the revenue cannot take shelter under the provisions of Section 292BB - Decided in favour of assessee. Issues:Delay in filing appeal condonation, Jurisdiction of assessing officer under Section 143(2) of the Income Tax Act, 1961, Validity of assessment order without notice under Section 143(2), Interpretation of Section 292BB of the Act.Delay Condonation:The High Court heard the appeal despite a delay of 55 days in filing it and exercised discretion to condone the delay, allowing the appeal to proceed.Jurisdiction of Assessing Officer under Section 143(2):The main issue revolved around whether the assessing officer had issued a notice under Section 143(2) of the Income Tax Act before conducting the scrutiny assessment under Section 143(3). The Court referred to legal precedents, including the Supreme Court's decision in Asst. CIT vs. Hotel Blue Moon, emphasizing the mandatory nature of issuing such notices. The definition of an assessing officer under Section 2(7A) was also highlighted. The Court analyzed the facts and concluded that the assessing officers had not issued the required notice within the prescribed period, rendering the assessment order invalid.Validity of Assessment Order without Notice under Section 143(2):The Court examined the contention that the absence of a notice under Section 143(2) rendered the assessment order null and void. It referenced the Supreme Court's stance that non-issuance of such a notice is not a procedural irregularity and cannot be cured. The Tribunal's decision to reject the revenue's appeal was upheld based on the lack of valid compliance with Section 143(2) and the inapplicability of Section 292BB of the Act to the case.Interpretation of Section 292BB of the Act:The Court addressed the revenue's attempt to rely on Section 292BB to validate the notice issuance. However, it noted that the assessee had objected to the notice under Section 142(1) without valid service under Section 143(2). The Tribunal's rejection of the revenue's reliance on Section 292BB was upheld, emphasizing the foundational importance of complying with Section 143(2) for jurisdiction.In conclusion, the High Court dismissed the revenue's appeal, upholding the Tribunal's decision and answering the substantial question of law against the revenue. The stay application was also dismissed, affirming the Tribunal's ruling.