Reassessment proceedings quashed under Section 147 for failure to issue mandatory Section 143(2) notice

The ITAT Mumbai quashed reassessment proceedings under Section 147 due to jurisdictional defect. The AO failed to issue mandatory notice under Section 143(2) before finalizing reassessment order. Following Delhi HC precedent in Paramount Biotech Industries Ltd., the tribunal held that notice under Section 143(2) is mandatory even in reassessment proceedings, despite assessee's participation pursuant to Section 148 notice. The reassessment was declared invalid and proceedings were quashed in favor of the assessee.

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Issues involved:
1. Reopening of the case u/s 147 without issuing notice u/s 148
2. Addition made by the Assessing Officer
3. Completing assessment without disposing of objections filed by the appellant
4. Non-issuance of notice u/s 143(2) in reassessment proceedings

1. Reopening of the case u/s 147 without issuing notice u/s 148:
The assessee challenged the jurisdiction of the Assessing Officer in completing the reassessment proceedings without issuing notice u/s 143(2) of the Act. The Hon'ble Delhi High Court in the case of Pr. CIT v. M/s Paramount Biotech Industries Ltd. held that the issuance of notice u/s 143(2) of the Act is mandatory even in reassessment proceedings. The Court emphasized that the requirement of such notice is jurisdictional and goes to the root of the matter. The reassessment proceedings were deemed invalid due to the absence of the mandatory notice, leading to the quashing of the reassessment proceedings u/s 147 of the Act.

2. Addition made by the Assessing Officer:
The Assessing Officer made an addition of Rs. 32,41,640 (11.81% of Rs. 2,74,48,260), which the Ld. CIT (Appeals) confirmed. However, the focus of the appeal shifted towards the procedural irregularities, particularly the lack of statutory notices, leading to the quashing of the reassessment proceedings. As a result, the addition made by the Assessing Officer was not the primary subject of the final decision.

3. Completing assessment without disposing of objections filed by the appellant:
The appellant raised objections regarding the completion of the assessment without addressing their concerns. This issue was intertwined with the broader challenge to the reassessment proceedings due to procedural deficiencies. The failure to dispose of the objections filed by the appellant was part of the overall jurisdictional defect identified by the Hon'ble Court, resulting in the invalidation of the reassessment proceedings.

4. Non-issuance of notice u/s 143(2) in reassessment proceedings:
The absence of a notice u/s 143(2) in the reassessment proceedings was a critical point of contention. The appellant argued that the reassessment scrutiny order was invalid in law due to the Assessing Officer's failure to issue the mandatory notice after the return was filed. Citing legal precedents, the appellant contended that the lack of such notice rendered the reassessment proceedings legally infirm. The Hon'ble Court's decision emphasized the mandatory nature of the notice u/s 143(2) even in the context of reassessment, leading to the quashing of the reassessment proceedings.

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