Tribunal sets aside assessment order, emphasizes notice requirement under section 143(2)

The Tribunal set aside the assessment order and directed the Assessing Officer to issue a valid notice under section 143(2) before proceeding with the assessment. The Tribunal emphasized the mandatory nature of the notice under section 143(2) and distinguished between jurisdictional and procedural irregularities, stating that procedural errors can be rectified. The case was remanded for a fresh decision without adjudicating on the merits, and the appeal was allowed for statistical purposes.

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Issues Involved:
1. Admission of additional grounds.
2. Validity of assessment order u/s 143(3) without notice u/s 143(2).
3. Procedural vs. jurisdictional irregularities.
4. Time limit for issuance of notice u/s 143(2).

Summary:

1. Admission of additional grounds:
The assessee moved an application for admission of two additional grounds. The first ground challenging the issuance of notice by the Assessing Officer u/s 148 as violative of section 151 was not pressed by the ld. A.R at the time of hearing. The second additional ground was that the assessment order passed u/s 143(3) is invalid and deserves to be quashed. The Tribunal admitted this additional ground for disposal on merits.

2. Validity of assessment order u/s 143(3) without notice u/s 143(2):
The assessee contended that the Assessing Officer had not issued notice u/s 143(2), which is mandatory, and only notice u/s 142(1) was issued. The ld. Departmental Representative admitted that no notice u/s 143(2) was served. The Tribunal noted that the issuance of notice u/s 143(2) is mandatory, and its absence is an irregularity but not a jurisdictional defect. The Tribunal relied on several decisions, including the Special Bench decision in Raj Kumar Chawla v. ITO, which held that notice u/s 143(2) must be served within the stipulated period.

3. Procedural vs. jurisdictional irregularities:
The Tribunal distinguished between jurisdictional and procedural irregularities, stating that a fault in assuming jurisdiction cannot be corrected later, but procedural irregularities can be cured. The Tribunal cited the Special Bench decision in Smt. Krishna Verma v. Asstt. CIT, which held that procedural errors do not render an assessment null and void but require correction. The Tribunal also referred to the Hon'ble Madras High Court decision in Areva T&D India Ltd. v. Asstt. CIT, which held that non-issuance of notice u/s 143(2) is a procedural irregularity.

4. Time limit for issuance of notice u/s 143(2):
The ld. A.R. argued that no notice u/s 143(2) can be issued after the expiry of 12 months from the end of the month in which the return is furnished. The Tribunal rejected this contention, stating that the limitation period applies to the initial assessment order and not to the correction of procedural irregularities. The Tribunal cited the Hon'ble Madras High Court decisions in Lakshmi Jewellery v. Dy. CIT and Sakthivel Bankers v. Asstt. CIT, which held that the limitation period does not fetter the appellate authorities' power to remand matters for fresh assessment.

Conclusion:
The Tribunal set aside the impugned order and restored the matter to the file of the Assessing Officer with the direction to issue a valid notice u/s 143(2) before making the assessment. The Tribunal did not adjudicate on the merits of the case as the matter was being sent back for a fresh decision. The appeal was allowed for statistical purposes.

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