2024 (7) TMI 657 - AT - Income Tax

Notice under Section 143(2) issued beyond six-month statutory limitation period renders assessment invalid

ITAT Delhi held that a notice issued under section 143(2) beyond the statutory limitation period of six months from the end of assessment year was ... Validity of notice issued u/s 143(2) after expiry of limitation period - HELD THAT:- The screen shot of the e-filing portal mentioned filing section 153A of the Act. Assessee failed to challenge the notice u/s. 143(2), after expiry of limitation before the AO and CIT(A) and she stopped from raising the arguments before the Bench. She submits that Section 292BB of the Act has dealt with the scope of the provision to make service of notice having certain infirmities to be proper and valid if there was requisite participation on the part of the assessee. From the perusal of the records and in light of the rival contentions, it is crystal clear that a search and seizure operation was carried out u/s. 132 on 28.7.2011. As per assessment order assessee filed the return of income on 28.6.2012. As matter of fact according to copy of acknowledgment of return of income of appellant/assessee and copy of screenshot appellant/assessee filed return of income for AY 2012-13 on 28.9.2012. A questionnaire alongwith notice u/s. 142(1) and 143(2) was issued to the assessee on 28.5.2012 and 15.10.2013 respectively were issued. As per provisions of Section 143(2) of the Act, the notice u/s. 143(2) had to be issued within six months from the end of the assessment year i.e. by 30.9.2013. Admittedly, in this case, the notice was issued on 15.10.2013 i.e., beyond the time limit prescribed under the Act. Therefore, the initiation of proceedings and the jurisdiction invoked by the AO suffers from infirmity. In such a situation, we have no option to hold the impugned assessment order as bad in law as the notice u/s. 143(2) of the Act was issued beyond the limit prescribed under the Act. Since we have decided the legal issue in favour of the assessee, the issue raised on merits have become academic and hence, do not require adjudication. Issues Involved:1. Jurisdictional validity of assessment order under section 143(3) of the Income Tax Act, 1961.2. Admissibility of additional grounds of appeal.3. Legality of additions made by the Assessing Officer.4. Validity of notice issued under section 143(2) of the Act.5. Applicability of Section 292BB of the Act.6. Decision on the quantum appeal.7. Decision on the penalty appeal.Jurisdictional Validity of Assessment Order:The appeals were against orders of the Ld. Commissioner of Income Tax (Appeals-25) arising from the ACIT's order under section 143(3) of the Income Tax Act, 1961. The assessee challenged the jurisdiction of the Assessing Officer due to a notice under section 143(2) not being issued within the statutory allowable period. The Appellate Tribunal admitted additional grounds raised by the assessee, as they were purely legal and crucial to the matter. The Tribunal held that the notice issued beyond the prescribed time limit rendered the assessment order bad in law, citing relevant legal precedents.Admissibility of Additional Grounds of Appeal:The assessee raised additional grounds challenging the jurisdiction of the Assessing Officer due to the delayed issuance of notice under section 143(2). The Tribunal admitted these grounds, considering them to be of legal significance and fundamental to the case. Legal judgments were cited to support the admissibility of these additional grounds, emphasizing their importance in addressing the root issue of jurisdictional validity.Legality of Additions Made by the Assessing Officer:The Authorized Representative argued against the additions made by the Assessing Officer, including alleged unexplained expenditure and undisclosed interest income. The Tribunal noted discrepancies in the balance sheet and the timing of the notice under section 143(2). The Tribunal found the assessment order to be bad in law due to the notice being issued beyond the prescribed time limit, rendering the issues raised on merits as academic and not requiring adjudication.Validity of Notice Issued Under Section 143(2) of the Act:The notice under section 143(2) was issued beyond the statutory time limit, which the Tribunal deemed as a jurisdictional infirmity. The Tribunal held that the initiation of proceedings and jurisdiction invoked by the Assessing Officer were flawed due to the untimely notice issuance. Citing legal precedents, the Tribunal concluded that the impugned assessment order was bad in law, leading to the allowance of the quantum appeal in favor of the assessee.Applicability of Section 292BB of the Act:The Department argued that the notice issued, despite certain infirmities, was valid under Section 292BB of the Act due to the assessee's participation. However, the Tribunal found the notice issuance beyond the prescribed time limit to be a critical flaw affecting the jurisdiction of the Assessing Officer, leading to the decision in favor of the assessee.Decision on the Quantum Appeal:The Tribunal allowed the quantum appeal in favor of the assessee due to the jurisdictional invalidity of the assessment order, rendering the additions and enhancements made by the Assessing Officer irrelevant. The Tribunal relied on legal judgments to support the decision, emphasizing the importance of adhering to statutory timelines for notice issuance under section 143(2).Decision on the Penalty Appeal:As the Tribunal had already deemed the assessment order as bad in law in the quantum appeal, the penalty imposed was also considered invalid and was consequently deleted. Both appeals of the assessee were allowed based on the findings related to the jurisdictional validity of the assessment order.Conclusion:The Appellate Tribunal, after detailed analysis and consideration of legal arguments, allowed both the quantum appeal and the penalty appeal in favor of the assessee, highlighting the critical importance of adhering to statutory timelines for notice issuance under the Income Tax Act, 1961.