Reassessment Order Under Section 147 Invalid Without Valid Section 143(2) Notice Service

The ITAT Ahmedabad held that the reassessment order under section 147 was invalid due to the non-service of a valid notice under section 143(2) prior to finalization. The Revenue failed to prove that the notice dated 11.07.2018 was served on the assessee, and no such notice was found on official portals. Citing binding precedents, the tribunal concluded that non-issuance and non-service of the section 143(2) notice renders the reassessment order null and void. The assessee's appeal was allowed.

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ISSUES:

Whether the addition of Rs. 36,29,000/- on account of sale consideration of agricultural land sustained under section 56(2)(vii)(a) of the Income-tax Act, 1961 is valid.Whether the reassessment order passed under section 147 of the Income-tax Act, 1961 is valid without issuance and service of notice under section 143(2).Whether the reasons recorded under section 147 are valid and sufficient for reopening the assessment.Whether penalty under section 271(1)(c) is justified in absence of taxable income.Whether interest charged under sections 234A, 234B and 234C is justified in absence of default in payment of advance tax or filing of return.

RULINGS / HOLDINGS:

The addition of Rs. 36,29,000/- sustained under section 56(2)(vii)(a) was not adjudicated upon as the reassessment proceedings were held invalid due to procedural defect.The reassessment order passed under section 147 without issuance and service of notice under section 143(2) is null and void, in view of binding precedents requiring mandatory issuance of such notice even in reassessment proceedings.The reasons recorded under section 147 were not examined on merits because the reassessment proceedings were quashed on procedural grounds.Penalty under section 271(1)(c) was not adjudicated as the reassessment proceedings themselves were invalidated.Interest under sections 234A, 234B and 234C was not adjudicated for the same reason.

RATIONALE:

The Court applied the mandatory procedural requirement under the Income-tax Act, 1961, that notice under section 143(2) must be issued and served even in reassessment proceedings initiated under section 147.Reliance was placed on binding Supreme Court precedent holding that non-issuance of notice under section 143(2) renders reassessment order invalid and void.The jurisdictional High Court decision was also cited to reinforce the mandatory nature of section 143(2) notice in reassessment cases.Due to this procedural defect, the Court did not proceed to examine substantive additions or penalties, rendering those issues academic.The Court granted liberty to the Revenue to approach the Tribunal afresh upon proof of valid issuance and service of notice under section 143(2).

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