Assessment proceedings challenged for lack of mandatory notice under section 143(2) before invoking sections 147, 144, 144B

ITAT Raipur remanded the case to CIT(Appeals) after finding that the appellate authority failed to adjudicate the assessee's challenge to the validity of assessment proceedings. The assessee had contested the AO's jurisdiction for framing assessment under sections 147 read with 144 and 144B without issuing mandatory notice under section 143(2), citing SC precedents in Hotel Blue Moon and Laxman Das Khandelwar cases. CIT(Appeals) merely acknowledged this contention without deciding on it. ITAT criticized this evasive approach and directed CIT(Appeals) to specifically adjudicate the jurisdictional validity issue. Appeal allowed for statistical purposes.

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1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the assessment order passed under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961 is invalid due to the lack of issuance of a mandatory notice under Section 143(2) after the assessee filed the return of income in response to a notice under Section 148.
• Whether the Assessing Officer (A.O) properly assumed jurisdiction for the assessment without issuing the notice under Section 143(2).
• Whether the CIT(Appeals) erred in not adjudicating the specific ground regarding the validity of the jurisdiction assumed by the A.O.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Validity of Assessment Order Due to Lack of Notice Under Section 143(2)

Relevant Legal Framework and Precedents: The legal framework involves the procedural requirements under the Income Tax Act, particularly the necessity of issuing a notice under Section 143(2) when a return of income is filed in response to a notice under Section 148. The precedents cited include the judgments of the Hon'ble Apex Court in ACIT & Anr. Vs. Hotel Blue Moon and CIT Vs. Laxman Das Khandelwar, which underscore the mandatory nature of the notice under Section 143(2) for valid jurisdiction in assessment proceedings.

Court's Interpretation and Reasoning: The Tribunal noted that the assessee had indeed filed a return of income in response to the notice under Section 148, yet the A.O did not issue the required notice under Section 143(2). The Tribunal emphasized that the issuance of this notice is a jurisdictional requirement, and its absence renders the assessment order invalid.

Key Evidence and Findings: The Tribunal observed that the assessee had filed the return of income electronically on 03.02.2023 in compliance with the notice under Section 148. However, the A.O proceeded with the assessment without issuing the mandatory notice under Section 143(2), which was a critical procedural lapse.

Application of Law to Facts: Applying the legal requirement of Section 143(2) to the facts, the Tribunal concluded that the A.O's failure to issue the notice invalidated the jurisdiction assumed for the assessment. This procedural defect was not addressed by the CIT(Appeals), leading to the Tribunal's decision to remand the matter.

Treatment of Competing Arguments: The Tribunal acknowledged the Departmental Representative's reliance on the orders of the lower authorities but found that the procedural lapse regarding the notice under Section 143(2) was a fundamental issue that needed rectification.

Conclusions: The Tribunal concluded that the assessment order was invalid due to the lack of issuance of the notice under Section 143(2) and remanded the matter to the CIT(Appeals) for adjudication on this specific issue.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal stated, "I am unable to comprehend as to why the CIT(Appeals) had failed to adjudicate the aforesaid material aspect, based on which, the validity of the assessment was challenged before him. The aforesaid evasive approach on the part of the CIT(Appeals) needs to be deprecated."

Core Principles Established: The necessity of issuing a notice under Section 143(2) when a return is filed in response to a notice under Section 148 is reaffirmed as a jurisdictional requirement, without which the assessment order is rendered invalid.

Final Determinations on Each Issue: The Tribunal remanded the matter to the CIT(Appeals) with directions to adjudicate the issue of jurisdiction based on the lack of notice under Section 143(2), allowing the assessee to present additional evidence if necessary. The appeal was allowed for statistical purposes, indicating that the procedural aspect was the primary focus for resolution.

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