2014 (9) TMI 1008 - AT - Income Tax

Non-issuance of notice under section 143(2) - Reopening of assessment - Held that - In the case of Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA ) the Hon'ble Supreme Court observed, vis-a-vis the block assessment, that non-issuance of notice under section 143(2) cannot be considered as procedural irregularity and the same is not curable; requirement of notice under section 143(2) cannot be dispensed with and failure to issue notice would result in holding the assessment as null and void. Similar view was taken by the Hon'ble Gujarat High Court in the case of Pratapbhai K. Soni (2014 (3) TMI 806 - GUJARAT HIGH COURT ). In particular, the Hon'ble Bombay High Court, in the case of CIT vs. Geno Pharmaceuticals Ltd. 2013 (10) TMI 218 - BOMBAY HIGH COURT observed that notice under section 143(2) of the Act is mandatory and omission to issue a notice is vital to assessment proceedings under section 143(3) r.w.s. 147 of the Act. Consistent with the view taken in the aforementioned case it is of the view that the assessment made in the instant case is null and void. - Decided in favour of assessee

Summary

Issues:
Validity of assessment made under section 143(3) of the Act without issuing mandatory notice under section 143(2).

Analysis:
The appeal pertains to the assessment year 2005-06 and is against the order passed by the CIT(A)-26, Mumbai. The case involves the assessee being a beneficiary in accommodation bills provided by a company, leading to the income of the assessee escaping assessment. The AO completed the assessment under section 143(3) of the Act without issuing the mandatory notice under section 143(2). The assessee challenged the validity of the assessment on this ground before the Tribunal, which admitted the additional ground for consideration.

During the hearing, the learned D.R. acknowledged that no notice was issued to the assessee under section 143(2) of the Act. The D.R. argued that the non-issuance of the notice should be considered procedural, citing section 292B of the Act, and contended that the assessment should not be deemed null and void. On the contrary, the counsel for the assessee argued that the failure to issue the mandatory notice under section 143(2) would invalidate the assessment proceedings, relying on legal precedents such as the case of ACIT vs. Hotel Blue Moon and decisions of the Gujarat High Court and the jurisdictional High Court.

The Tribunal considered the arguments presented by both parties and reviewed relevant legal precedents. Referring to the decision in the case of Hotel Blue Moon, the Tribunal emphasized that the notice under section 143(2) is mandatory and failure to issue such notice renders the assessment null and void. The Tribunal also cited the stance of the Gujarat High Court on this matter. In alignment with the legal principles established in these cases, the Tribunal concluded that the assessment made without issuing the mandatory notice under section 143(2) is null and void. Consequently, the Tribunal quashed the assessment proceedings and allowed the appeal filed by the assessee.

In conclusion, the Tribunal's decision was based on the mandatory nature of the notice under section 143(2) of the Act, as established by legal precedents, leading to the assessment being deemed null and void due to the failure to issue such notice. The Tribunal's ruling highlights the importance of adhering to procedural requirements in assessment proceedings to ensure their validity and legality.