Failure to Serve Notice Under Section 143(2) Renders Proceedings Time-Barred

The High Court held that failure to serve a notice under section 143(2) of the Income Tax Act within the stipulated period rendered subsequent proceedings time-barred and without jurisdiction. Emphasizing the mandatory nature of the provision, the court ruled that if the Assessing Officer accepts undisclosed income without investigation, a notice under section 143(2) is unnecessary. Consequently, the court dismissed the appeal, finding no substantial question of law warranting consideration.

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The High Court judgment in 2009 (9) TMI 139 - DFLHI HIGH COURT, delivered by A. K. SIKRI and VALMIKI J. MEHTA JJ., involves an in-depth analysis of a case where the Assessing Officer failed to serve a notice under section 143(2) of the Income Tax Act within the required 12-month period. Despite the appellant's appearance in the assessment proceedings, the court ruled that the subsequent proceedings were time-barred and without jurisdiction due to the improper service of the notice. The judgment also discusses the mandatory nature of section 143(2) and the implications for block assessment proceedings under Chapter XIV-B. The court concluded that the provision is mandatory, and if the Assessing Officer accepts the return of undisclosed income without further investigation, a notice under section 143(2) is not required. Ultimately, the court dismissed the appeal, stating that no substantial question of law arises for consideration.

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