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Issues: (i) Whether a reassessment can survive without issuance of notice under Section 143(2) of the Income-tax Act, 1961; (ii) Whether revision under Section 263 of the Income-tax Act, 1961 can be sustained where the underlying reassessment order is invalid.
Issue (i): Whether a reassessment can survive without issuance of notice under Section 143(2) of the Income-tax Act, 1961.
Analysis: The undisputed finding was that no notice under Section 143(2) was issued. Issuance of that notice is mandatory before completion of reassessment, and its omission is not a curable procedural irregularity. Participation in proceedings following notice for reassessment does not dispense with this statutory requirement.
Conclusion: The reassessment order was void and non-existent in law for want of notice under Section 143(2), in favour of the assessee.
Issue (ii): Whether revision under Section 263 of the Income-tax Act, 1961 can be sustained where the underlying reassessment order is invalid.
Analysis: A valid assessment order is the condition precedent to exercise of revisionary jurisdiction. Since the reassessment order was void, it could not furnish a legal foundation for a finding that it was erroneous and prejudicial to the interests of Revenue or for consequential revision proceedings.
Conclusion: The revision order could not be sustained because it was founded on a non-existent reassessment order, in favour of the assessee.
Final Conclusion: The invalidity of the reassessment deprived the revisionary proceedings of their jurisdictional foundation.
Ratio Decidendi: Failure to issue the mandatory notice under Section 143(2) renders a reassessment void, and a void assessment cannot validly be subjected to revision under Section 263.
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