2025 (9) TMI 1236 - AT - Income Tax

Assessment framed by jurisdictional AO without fresh s.143(2) notice after transfer is invalid and void ab initio

Surya Agro products Pvt. ltd. Versus Income Tax Officer, Ward 9 (1), Kolkata

ITAT (Kol.) held that where a non-jurisdictional ITO issued the s.143(2) notice and the case was transferred, the jurisdictional ITO who framed assessment ... Invalid notice issued u/s 143(2) - case has been transferred from ITO Ward 10(2), Kolkata who has issued notice u/s 143(2) to ITO Ward 9(4), Kolkata - HELD THAT:- We also note that the ITO Ward 9(4), Kolkata has framed the assessment de hors any notice u/s 143(2) of the Act and therefore, the ITO Ward 9(4), lacks the jurisdiction to frame the assessment. This is a statutory notice which gives jurisdiction to the ld. AO to pass the order in absence of which the assessment framed is nullity and cannot be sustained. The case of the assessee find support from the decision of ARS Financial Consultants Pvt. ltd.[2025 (9) TMI 99 - ITAT KOLKATA] assessment framed by the jurisdictional AO without issuing notice u/s 143(2) of the Act is invalid while notice u/s 143(2) was issued by the non-jurisdictional AO - Appeal of the assessee is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment order framed by an Assessing Officer who did not issue the statutory notice under section 143(2) of the Income-tax Act (after transfer of the case from an officer who had issued such notice) is valid and within jurisdiction. 2. Whether a notice under section 143(2) issued by a non-jurisdictional Assessing Officer vests jurisdiction in a subsequently dealing jurisdictional Assessing Officer who did not himself issue a fresh section 143(2) notice. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of assessment framed by AO who did not issue section 143(2) notice Legal framework: Section 143(2) is a statutory notice that confers jurisdiction on an Assessing Officer to proceed with and complete scrutiny assessment under section 143(3). The issuance of the statutory notice is a jurisdictional requirement; absence of such notice renders subsequent assessment invalid. Precedent treatment: The Tribunal relied on decisions of a co-ordinate bench and the High Court which held that where notice under section 143(2) is issued by a non-jurisdictional AO and the jurisdictional AO frames assessment without issuing a fresh section 143(2) notice, the assessment is invalid. Those authorities cited include co-ordinate-bench decisions (e.g., ARS Financial Consultants Pvt. Ltd.) and High Court authority (Raghvendra Mohta), which were followed. Interpretation and reasoning: The Tribunal examined the factual sequence - return filed with one ward, notice under section 143(2) issued by that ward, subsequent transfer of file to another ward, and assessment framed by the receiving ward without issuing its own section 143(2) notice. The Tribunal found that the receiving AO framed assessment de hors any section 143(2) notice and therefore lacked jurisdiction. The court regarded issuance of section 143(2) as a precondition to confer jurisdiction on the AO who proposes to make assessment; a transferred/receiving AO must issue or be shown to have issued the statutory notice to validly exercise jurisdiction. The Tribunal held that failure to issue a notice by the AO who ultimately framed the assessment is a 'serious lapse' going to the root of the matter and renders the assessment a nullity. Ratio vs. Obiter: Ratio - An assessment framed by an AO who has not issued the statutory notice under section 143(2) (where the section 143(2) notice was issued by a different/non-jurisdictional AO) is invalid for want of jurisdiction. The Tribunal explicitly treated this principle as determinative. The discussion of supporting authority is applied as ratio. No separate obiter pronouncements affecting the ratio were made. Conclusion: The Tribunal quashed the assessment framed by the AO who had not issued the section 143(2) notice and allowed the taxpayer's appeal on jurisdictional grounds. Issue 2 - Effect of prior section 143(2) notice issued by a different AO on jurisdiction of receiving AO Legal framework: Allocation of jurisdiction among AOs and the role of statutory notices in conferring authority to proceed; statutory notice under section 143(2) confers the power to make a scrutiny assessment and is not merely a procedural formality. Precedent treatment: The Tribunal followed co-ordinate-bench decisions and High Court rulings holding that a section 143(2) notice issued by an AO who is not the assessing AO competent to complete the assessment does not validate an assessment completed by a different AO unless the latter issues its own section 143(2) notice or otherwise validly assumes jurisdiction. The Tribunal cited ARS Financial Consultants and Raghvendra Mohta as controlling authorities and respected their holdings. Interpretation and reasoning: The Tribunal accepted the reasoning of the cited precedents that jurisdiction cannot be transferred merely by issuance of a notice by one AO if the statutory competence lies with another. The Tribunal noted that the notice under section 143(2) is 'statutory' and its absence in the record of the AO who passed the assessment means that the statutory precondition to exercise jurisdiction was missing. The Tribunal rejected the Revenue's contention that no fresh notice was required after an earlier section 143(2) had been issued by a different AO. Ratio vs. Obiter: Ratio - A prior section 143(2) notice issued by one AO does not confer jurisdiction on another AO who frames the assessment unless the latter has itself issued the requisite section 143(2) notice or otherwise validly acquires jurisdiction; where such issuance is absent, the assessment is a nullity. The Tribunal's adoption of co-ordinate and High Court authorities makes this principle central to its decision. Conclusion: The Tribunal held that the earlier notice issued by a different AO could not cure the jurisdictional defect where the AO who completed the assessment had not issued a section 143(2) notice; accordingly the assessment was quashed. Cross-reference and application The Tribunal explicitly followed and applied the holdings of the co-ordinate-bench and High Court authorities in concluding that the absence of a section 143(2) notice by the AO who framed the assessment is jurisdictional and fatal. The decision treats those authorities as directly on point and controlling for the facts of the matter, thereby disposing of the appeal in favour of the assessee.