2022 (12) TMI 1080 - AT - Income Tax

Appeal Granted: Notice Absence Invalidates Assessment

The Appellate Tribunal allowed the appeal, quashing the assessment order due to the absence of a notice under section 143(2) of the Income Tax Act. The ... Validity of assessment in absence of notice under section 143(2) - jurisdictional requirement of issuance of notice under Section 143(2) - limitations of Section 292BB in curing absence of notice - quashing of reassessment under section 143(3) read with section 147 for want of 143(2) noticeValidity of assessment in absence of notice under section 143(2) - limitations of Section 292BB in curing absence of notice - Assessment under section 143(3) read with section 147 is vitiated for want of notice under section 143(2) and is quashed. - HELD THAT: - The Tribunal found, on the record and after seeking confirmation from the Assessing Officer, that no notice under section 143(2) had been issued or the record did not contain any such notice. Reliance was placed on the ratio of the Hon'ble Supreme Court in CIT v. Laxman Das Khandelwal which holds that Section 292BB can cure infirmities in service of a notice but does not operate to cure the complete absence of a notice which must have emanated from the Department. Since the Department could not produce any 143(2) notice and the requirement of issuance of such notice is a jurisdictional precondition to the validity of the assessment framed under section 143(3) read with section 147, the reassessment proceedings and the consequent assessment order were held to be without jurisdiction and accordingly quashed. [Paras 8, 9, 10]Quashed the assessment order passed under section 143(3) read with section 147 for AY 2009-10 on account of absence of notice under section 143(2); allowed the ground challenging validity of assessment.Other issues left open for adjudication - Issues other than the validity of assessment were not decided and are left open. - HELD THAT: - Because the assessment was quashed on the short issue of absence of the section 143(2) notice, the Tribunal did not adjudicate the merits of the additions or other contentions raised by the assessee and expressly kept those issues open for consideration as may be appropriate in law. [Paras 11]Other issues are kept open for fresh consideration.Final Conclusion: The assessment order for AY 2009-10 under section 143(3) read with section 147 is quashed for want of a notice under section 143(2); the appeal is allowed on that ground and other issues are left open for future adjudication. Issues involved:Validity of notice u/s 143(2) for assessment proceedings, Challenge to initiation of reassessment proceedings under section 147, Additions made by the Assessing OfficerValidity of notice u/s 143(2) for assessment proceedings:The appeal challenged the validity of the assessment proceedings due to the absence of a notice under section 143(2) of the Income Tax Act. The Revenue argued that the participation of the assessee in the proceedings waived the requirement of the notice under section 143(2) as per section 292BB. However, the Appellate Tribunal noted that the absence of the notice itself cannot be cured by section 292BB. Citing the Supreme Court's decision in CIT vs Laxman Das Khandelwal, the Tribunal emphasized that section 292BB only addresses infirmities in the service of notice and does not cure the complete absence of notice under section 143(2). As the department failed to produce the notice or provide details, the Tribunal held that the assessment proceedings were null and void without the requisite notice. Consequently, the assessment order under section 143(3) read with section 147 was quashed, and the appeal on this ground was allowed.Challenge to initiation of reassessment proceedings under section 147:The assessee contested the initiation of reassessment proceedings under section 147 of the Act. The Appellate Tribunal upheld the initiation of reassessment proceedings, stating that the AO had jurisdiction to proceed under section 147 based on information received regarding fictitious profits and losses misused by some brokers, including the assessee. The Tribunal found the initiation of reassessment proceedings valid in this context.Additions made by the Assessing Officer:The Assessing Officer made additions to the assessee's income, including an alleged bogus loss and commission paid on the fictitious loss. The Appellate Tribunal reviewed the additions but did not delve into a detailed analysis as the assessment order was quashed solely based on the absence of the notice under section 143(2). Since the assessment order was set aside, the Tribunal did not provide a specific ruling on the additions made by the Assessing Officer, keeping those issues open for future consideration.In conclusion, the Appellate Tribunal allowed the appeal by the assessee, quashing the assessment order due to the absence of a notice under section 143(2) of the Act. The Tribunal emphasized the importance of proper notice issuance and clarified that section 292BB does not cure the complete absence of notice. As a result, the other issues raised in the appeal, including challenges to the initiation of reassessment proceedings and additions made by the Assessing Officer, were left unresolved for future consideration.