2023 (6) TMI 220 - AT - Income Tax

Assessee wins appeal due to invalid notice under Income Tax Act; Revenue's appeal dismissed.

The Tribunal partly allowed the Cross Objection filed by the assessee, primarily due to the invalidity of the notice issued under Section 143(2) of the ... Validity of the notice issued u/s. 143(2) - statutory time limit to issue notice - notice after expiry of six months from the end of the financial year - HELD THAT:- As per the proviso to section 143(2), no notice shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. In the present case, the assessee has filed his return of income for the AY 2019-20 (FY-2018-19) on 18/08/2019 and the notice U/s. 143(2) ought to have been served on or before 30/09/2020. Whereas the AO has issued notice u/s. 143(2) on 12/10/2020 after expiry of six months from the end of the financial year (FY 2019-20) in which the return is furnished. It therefore, in our considered view, attracts the proviso to section 143(2) in which case the assessment made based on such notice becomes void ab intio. As relying on Harman Singh Dhingra [2021 (11) TMI 854 - ITAT DELHI] since the notice U/s. 143(2) was not issued within the statutory time limit, the assessment order passed by the Ld. AO itself becomes null and void ab initio. Decided in favor of assessee. Issues Involved:1. Validity of the notice issued under Section 143(2) of the Income Tax Act.2. Addition of Rs. 91,50,000/- under Section 69A of the Income Tax Act.3. Assumption of jurisdiction under Section 143(2) and the legality of the assessment order.4. Legality of the seizure of money and invocation of Section 132A of the Income Tax Act.5. Initiation of penalty proceedings under Sections 271AAC and 271AAB(1A) of the Income Tax Act.Summary:Issue 1: Validity of Notice under Section 143(2)The Tribunal found that the notice under Section 143(2) was issued beyond the statutory limit of six months from the end of the financial year in which the return was filed. Specifically, the return was filed on 18/08/2019, and the notice should have been served by 30/09/2020, but it was issued on 12/10/2020. The Tribunal held that this delay rendered the assessment void ab initio, citing the case of Harman Singh Dhingra vs. ACIT, where a similar delay invalidated the assessment.Issue 2: Addition under Section 69AThe Revenue's appeal contested the deletion of the addition of Rs. 91,50,000/- under Section 69A by the CIT(A). The CIT(A) had deleted the addition based on the assessee's submissions and supporting affidavits. The Tribunal did not address the merits of this issue directly, as the invalidity of the notice under Section 143(2) rendered the assessment itself null and void.Issue 3: Assumption of JurisdictionThe Tribunal examined whether the Assessing Officer (AO) correctly assumed jurisdiction under Section 143(2). The assessee argued that the assessment should have been completed under Section 153A following a requisition under Section 132A. The Tribunal found that the AO's notice under Section 143(2) was issued beyond the permissible period, thus invalidating the jurisdiction assumed by the AO.Issue 4: Legality of Seizure and Invocation of Section 132AThe assessee contended that the execution of the search warrant and the invocation of Section 132A were illegal. However, the Tribunal's decision on the invalidity of the notice under Section 143(2) made it unnecessary to adjudicate this issue on its merits.Issue 5: Penalty ProceedingsThe AO had initiated penalty proceedings under Sections 271AAC and 271AAB(1A). Since the Tribunal found the assessment itself to be void ab initio, the initiation of penalty proceedings was rendered infructuous.Conclusion:- The Cross Objection filed by the assessee was partly allowed, primarily on the grounds of the invalidity of the notice under Section 143(2).- The Revenue's appeal was dismissed as the assessment order was deemed null and void ab initio due to the delayed notice.- Other grounds raised by the assessee and the Revenue were dismissed as infructuous.Pronounced in the open Court on the 01st June, 2023.