Reassessment u/s 147 r.w.s. 144B quashed for failure to issue mandatory notice u/s 143(2) after 148 response

The Tribunal allowed the assessee's appeal and quashed the reassessment framed u/s 147 r.w.s. 144/144B as invalid. It held that once the assessee, in response to notice u/s 148, informed the AO that the original return filed u/s 139(1) be treated as the return in compliance and furnished its acknowledgement, the AO was mandatorily required to issue notice u/s 143(2). Non-issuance of such notice was held to be a fatal jurisdictional defect, rendering the reassessment order a nullity in law.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the delay of 61 days in filing the appeal before the Tribunal ought to be condoned.

1.2 Whether an additional legal ground challenging the validity of the reassessment for non-issuance of notice under section 143(2) of the Act, though not raised before the lower authorities, is admissible at the appellate stage.

1.3 Whether reassessment proceedings under section 147 read with sections 144/144B of the Act are invalid and without jurisdiction for failure to issue mandatory notice under section 143(2) of the Act, where the assessee requested that the original return under section 139(1) be treated as return in response to notice under section 148.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Condonation of delay in filing appeal

Interpretation and reasoning: The Tribunal noted that the appeal was barred by limitation by 61 days. The assessee explained the reasons for delay, which were examined along with the record. The Revenue did not object to condonation. The Tribunal found the delay to be for bona fide and genuine reasons.

Conclusions: The delay of 61 days in filing the appeal was condoned and the appeal was admitted for adjudication on merits.

Issue 2 - Admissibility of additional legal ground before the Tribunal

Legal framework: The Tribunal referred to the principles laid down by the Supreme Court in decisions including Jute Corporation of India Ltd. v. CIT and National Thermal Power Co. Ltd. v. CIT, and by the High Court in PCIT v. Britannia Industries Ltd., recognizing the right of an assessee to raise a pure question of law for the first time before an appellate authority.

Interpretation and reasoning: The additional ground challenged the validity of the reassessment on the basis of non-issuance of notice under section 143(2) of the Act. The Tribunal found it to be a purely legal issue, for which all relevant facts were already available in the appeal folder, and no further factual verification was required.

Conclusions: The Tribunal held that the assessee was at liberty to raise such a pure legal issue at the appellate stage and admitted the additional ground for adjudication.

Issue 3 - Validity of reassessment for non-issuance of notice under section 143(2)

Legal framework: The Tribunal proceeded on the basis that issuance of notice under section 143(2) of the Act is mandatory where a return is filed (or treated as filed) in response to a notice under section 148, and relied on the decision of the jurisdictional High Court in PCIT v. Shri Jai Shiv Shankar Traders (P.) Ltd., holding that failure to issue such notice is fatal to a reassessment order.

Interpretation and reasoning: - The assessee had originally filed a return of income under section 139(1). - In reassessment proceedings initiated under section 147 by notice under section 148, the Assessing Officer recorded that no return was filed in response. - The assessee, by letter dated 24.01.2022, specifically requested the Assessing Officer to treat the original return filed on 29.09.2013 under section 139(1) as the return in response to notice under section 148 and enclosed the acknowledgment of the original return. - It was undisputed before the Tribunal, and candidly admitted by the Departmental Representative, that no notice under section 143(2) was ever issued after receipt of this communication. - The Tribunal held that the assessee's letter constituted sufficient compliance with the notice under section 148 and, once such compliance existed, it became obligatory and mandatory for the Assessing Officer to issue notice under section 143(2). - Following the binding precedent of the jurisdictional High Court, the Tribunal held that the absence of a section 143(2) notice, in these circumstances, rendered the reassessment order under section 147 read with sections 144/144B invalid.

Conclusions: The reassessment order passed under section 147 read with sections 144/144B, without issuance of a mandatory notice under section 143(2) after the assessee's letter treating the original return as filed in response to section 148, was held to be invalid and a nullity in law. The assessment was quashed and the appeal was allowed on this ground.

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