Invalid notice under section 143(2) leads to successful appeal

The tribunal ruled in favor of the appellant, setting aside the lower authorities' orders regarding the notice under section 143(2) and assessment under section 143(3) for the assessment year 1989-90. The tribunal found that the notice was not served within the prescribed timeline, as claimed by the appellant, and there was a lack of evidence supporting the timely service of the notice. Consequently, the assessment made based on the invalid notice was deemed legally incorrect and invalid, leading to the tribunal allowing the appeal.

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Issues:
1. Validity of the notice under section 143(2) of the IT Act, 1961 and the subsequent assessment under section 143(3) for the assessment year 1989-90.
2. Whether the notice under section 143(2) was served within the prescribed time limit.
3. Whether the assessment made under section 143(3) was legally correct.

Detailed Analysis:
The appellant-firm filed an appeal against the order of the CIT (Appeals) regarding the issuance of a notice under section 143(2) and the assessment under section 143(3) for the assessment year 1989-90. The appellant argued that the notice under section 143(2) was served on them on 14-5-1990, which they claimed was beyond the limitation period. The appellant contended that the assessment made under section 143(3) was without jurisdiction and hence invalid. They also raised an objection regarding the absence of any mention of their objection in the assessment order. The assessing authority failed to prove the timely issuance and service of the notice, as per the appellant's representative. The appellant urged the tribunal to decide the appeal solely on this preliminary ground.

The departmental representative supported the order of the CIT (Appeals) asserting that the notice was correctly issued and served on the appellant. The tribunal decided to focus on the preliminary ground of the notice's legality under section 143(2) and not delve into the merits of the appeal. The appellant contended that the notice should have been served before the expiry of the financial year or within six months from the end of the month in which the return was filed. The appellant claimed that the notice was served on 14-5-1990, which was beyond the prescribed timeline.

The CIT (Appeals) noted that the notice was issued on 6-4-1990 but found no evidence of its service on 14-5-1990. The tribunal disagreed with the CIT (Appeals) and upheld the appellant's objection, emphasizing that the objection raised in ground No. 2 negated the observation that the appellant did not object to the assessment proceedings. Due to the lack of evidence establishing the timely service of the notice, the tribunal inferred that the notice was issued after the financial year had expired. The departmental representative failed to provide evidence supporting the timely service of the notice, leading the tribunal to conclude that the assessment made based on such notice was legally incorrect and invalid.

Ultimately, the tribunal set aside the orders of the lower authorities, ruling in favor of the appellant and allowing the appeal.

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