2023 (3) TMI 1033 - AT - Income Tax

ITAT Delhi: Notice under sec 143(2) is crucial for valid assessment

The ITAT Delhi ruled in favor of the assessee, quashing the assessment due to the non-service of notice u/s 143(2) being a critical procedural requirement ... Validity of assessment - non-service of notice u/s 143(2) - scope of curable defect u/s 292BB - CIT(A) dismissed the appeal by observing that the case of the assessee is squarely covered by section 292BB - HELD THAT:- As decided in case of Silver Line [2015 (11) TMI 809 - DELHI HIGH COURT] with the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the assessee u/s 143(2) ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable. Hon’ble Supreme Court in the case of ACIT vs Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] held that Omission on the part of the assessing authority to issue notice u/s 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. Thus assessment framed by the AO is held to be bad in law, the same is hereby quashed - Decided in favour of assessee. Issues:1. Non-service of notice u/s 143(2) of the Income Tax Act.2. Addition of Rs. 19,90,949/- u/s 69 of the I.T. Act as alleged unexplained purchases.Issue 1: Non-service of notice u/s 143(2) of the Income Tax ActThe assessee appealed against the order of the Ld. CIT(A) claiming non-receipt of notice u/s 143(2) and contesting an addition of Rs. 19,90,949/- as unexplained purchases. The Ld. CIT(A) initially dismissed the claim of non-service of notice u/s 143(2) stating it was raised for the first time during appeal proceedings. The case was then sent back to the Ld. CIT(A) by the ITAT Bench for adjudication on the notice issue. The Ld. CIT(A) in the subsequent order supported the dismissal of the notice non-service claim by referring to section 292BB of the I.T. Act. The Tribunal cited legal precedents emphasizing the necessity of notice u/s 143(2) for a valid assessment. It was held that non-service of such notice is a fatal flaw and renders the assessment legally unsustainable. Relying on the judgment in Pr.CIT vs Silver Line, the Tribunal quashed the assessment, stating that failure to issue notice u/s 143(2) is not a procedural irregularity and cannot be cured.Issue 2: Addition of Rs. 19,90,949/- u/s 69 of the I.T. ActThe Ld. A.O. had made an addition of Rs. 19,90,949/- u/s 69 of the I.T. Act as unexplained purchases. However, the ITAT Bench did not provide a finding on this issue in their order and focused solely on the non-service of notice u/s 143(2). The Ld. CIT(A) confirmed this addition in his initial order, and the Tribunal did not address it in the subsequent proceedings as the focus shifted to the notice issue. The Tribunal's decision to allow the appeal was primarily based on the non-service of notice u/s 143(2) and the legal implications of such non-compliance, leading to the quashing of the assessment.In conclusion, the ITAT Delhi ruled in favor of the assessee, allowing the appeal due to the non-service of notice u/s 143(2) being a critical procedural requirement for a valid assessment. The Tribunal emphasized the legal significance of this notice and cited relevant judgments to support its decision to annul the assessment. The issue of the addition of Rs. 19,90,949/- u/s 69 of the I.T. Act was not directly addressed in the final decision, as the focus remained on the non-service of the statutory notice.