Validity of assessment under sections 147 and 144 when no notice under section 143(2): non-issuance vitiates reassessment and renders order void

Failure to serve the mandatory notice under section 143(2) when initiating reassessment under section 147 renders subsequent assessment proceedings void; the mandatory nature of section 143(2) means omission is not a curable procedural irregularity, and an assessment completed under section 144 read with section 147 without that notice is null. Reliance on binding precedent supports that where the assessee filed a return under section 139 and sought to treat it as response to a section 148 notice, absence of the statutory 143(2) notice is fatal and results in decision against the revenue.

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Issues: Whether the assessment proceedings completed under section 147 read with section 144 of the Income-tax Act, 1961 are vitiated for non-issuance of statutory notice under section 143(2) when the assessee had filed a return under section 139 and had requested that the same be treated as the return filed in response to notice under section 148.

Analysis: The dispute concerns the mandatory requirement of issuing notice under section 143(2) where the Assessing Officer considered it necessary or expedient to verify the correctness of a return filed under section 139 or in response to notice under section 148. Reliance was placed on the Supreme Court's decision in ACIT vs. Hotel Blue Moon establishing that omission to issue notice under section 143(2) is not a curable procedural irregularity and that where a return is to be checked, section 143(2) notice must be issued. The Tribunal followed its coordinate decision in Intact Developers which applied that principle to hold assessments completed under section 147/144 invalid for want of section 143(2) notice. Applying these precedents, the Tribunal found that the Assessing Officer omitted to issue the statutory notice under section 143(2) despite the assessee having filed a return under section 139 and having sought that it be treated as response to section 148, and that such omission is fatal to the assessment completed under section 147 read with section 144.

Conclusion: The non-issuance of notice under section 143(2) rendered the assessment proceedings under section 147 read with section 144 null and void; the appeal is allowed in favour of the assessee.

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