Reassessment proceedings under section 147 invalid without mandatory section 143(2) notice issuance

ITAT Mumbai held that reassessment proceedings under section 147 read with section 143(3) were invalid due to non-issuance of mandatory notice under section 143(2). Following precedents from Bombay HC in Geno Pharmaceuticals Ltd. and SC in Laxman Das Khandelwal, the tribunal ruled that assessment officer cannot proceed with enquiry without issuing section 143(2) notice. The reassessment order was quashed as procedurally defective and legally bad. Assessee's appeal was allowed.

---

---

Issues:
1. Validity of notice under Section 148 of the Act
2. Reassessment of income under Section 147 of the Act
3. Withdrawal of deduction for depreciation
4. Non-issuance and non-service of statutory notice under Section 143(2) of the Act

Analysis:

Issue 1: Validity of notice under Section 148 of the Act
The assessee challenged the validity of the notice under Section 148 of the Act. The Appellate Tribunal admitted the additional ground raised by the assessee as it was a jurisdictional and legal issue. The Tribunal referred to various judicial decisions supporting the admission of the additional ground. The Tribunal ultimately quashed the assessment order as it was found to be without jurisdiction due to the non-issuance of the notice under Section 143(2) of the Act.

Issue 2: Reassessment of income under Section 147 of the Act
The assessee contended that the reassessment order passed under Section 143(3) read with Section 147 of the Act was invalid due to the non-issuance of the statutory notice under Section 143(2) of the Act. The Tribunal, after considering the arguments of both parties and the assessment records, held that the assessment framed by the Assessing Officer (AO) without issuing the notice under Section 143(2) was invalid and liable to be quashed. The Tribunal relied on various judicial precedents to support its decision.

Issue 3: Withdrawal of deduction for depreciation
The assessee also challenged the withdrawal of deduction for depreciation. However, this issue was not specifically addressed in the detailed analysis provided in the judgment.

Issue 4: Non-issuance and non-service of statutory notice under Section 143(2) of the Act
The core issue in this case was the non-issuance and non-service of the statutory notice under Section 143(2) of the Act. The Appellate Tribunal, after multiple hearings and considering the arguments of both parties, concluded that the assessment proceedings and the reassessment order were bad in law due to the failure to issue the mandatory notices under Section 143(2). Consequently, the Tribunal quashed the proceedings initiated by the AO under Section 147 and the consequent reassessment order. The additional ground raised by the assessee was allowed, and the appeal was partly allowed.

Conclusion:
The Appellate Tribunal's decision primarily focused on the jurisdictional issue of non-issuance of the statutory notice under Section 143(2) of the Act, leading to the quashing of the assessment and reassessment orders. The Tribunal relied on various legal precedents to support its decision, ultimately favoring the assessee on the jurisdictional issue.

---