2024 (11) TMI 681 - AT - Income Tax

Tribunal Declares Assessment Null Due to Missed Notice Deadline; Appeal Allowed, Order Set Aside.

Rameshkumar Kanaiyalal Patel Versus The Income Tax Officer, Ward-2, Mehsana. (Gujarat).

The Tribunal ruled in favor of the assessee, declaring the assessment null and void ab initio due to the failure to issue a notice under Section 143(2) of ... Validity of assessment without issuing notice u/s 143(2) - HELD THAT:- As regards the notice u/s 143(2) of the Act, it has been categorically mentioned in the statute that the AO shall serve on the assessee a notice requiring him on the date to be specified therein either to attend the Office of the AO or to produce or cause to be produced before the AO any evidence on which the assessee may rely in support of the return, provided that notice under Sub-section shall be served on the assessee after the expiry of six months from the end of the Financial Year in which the return is furnished. In the present case, return was furnished by the assessee in response to the notice u/s 148 of the Act on 22.03.2019 as mentioned in paragraph no.2 of the Assessment Order. Thus, the statutory notice to be issued u/s 143(2) has to be by 30th September, 2019. But, in the same paragraph of the Assessment Order, the notice under Section 143(2) of the Act was issued on 07.11.2019 which was delayed by more than one month and thus the statutory limit was not adhered by the Assessing Officer as per the provisions of Section 143(2) of the Act. The decision of Hon’ble Supreme Court in case of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] as well as the decisions of Nirali Specific Family Trust and Jignesh Bhagwandas Patel [2019 (7) TMI 751 - GUJARAT HIGH COURT] which are applicable in the present case to the extent that the statutory limit prescribed was not followed by the Assessing Officer. Assessee appeal allowed. Issues:- Validity of charging interest under Section 234B of the Act- Validity of charging interest under Section 234C of the Act- Validity of assessment without issuing notice under Section 143(2) of the ActAnalysis:Validity of Charging Interest under Section 234B and 234C:The appellant contested the charging of interest under Sections 234B and 234C of the Act. The appellant argued that the cash seized during a search was offered for tax in the return of income filed in response to a notice under Section 148 of the Act. The appellant contended that since the cash was available with the Department, no interest payment was required. Additionally, the appellant asserted that the seized amount should have been adjusted towards advance tax for interest computation under Sections 234A, 234B, and 234C of the Act. The appellant supported their argument with relevant case laws. However, the Department disagreed, relying on the Assessing Officer's and CIT(A)'s orders.Validity of Assessment without Issuing Notice under Section 143(2) of the Act:Regarding the issue of assessment without issuing a notice under Section 143(2) of the Act, the appellant raised concerns about the timing of the notice. The appellant argued that the notice under Section 143(2) should have been issued within six months of filing the return, which was not adhered to in this case. The appellant cited various legal precedents to support their position. The Department, on the other hand, supported the CIT(A)'s finding that the notice was issued within the prescribed time.The Tribunal analyzed the statutory requirements of issuing a notice under Section 143(2) of the Act. It was noted that the notice must be served after six months from the end of the Financial Year in which the return is furnished. In this case, the notice under Section 143(2) was issued after the statutory deadline, rendering the assessment null and void ab initio. The Tribunal referred to relevant legal decisions, including those of the Hon'ble Supreme Court and Gujarat High Court, to support this conclusion.In light of the assessment being declared void ab initio due to the procedural irregularity in issuing the notice under Section 143(2) of the Act, the Tribunal did not delve into the merits of the appellant's grounds related to the charging of interest under Sections 234B and 234C. Consequently, the Tribunal allowed the appeal of the assessee.In conclusion, the Tribunal ruled in favor of the assessee, declaring the assessment null and void ab initio due to the failure to adhere to the statutory deadline for issuing the notice under Section 143(2) of the Act. The appeal was allowed, and the assessment order was set aside.