2009 (9) TMI 956 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order due to non-issuance of notice u/s 143(2) within the prescribed period.
2. Impact of procedural lapses on the validity of the assessment order.
3. Binding nature of High Court decisions on the Tribunal.

Summary:

Issue 1: Validity of the assessment order due to non-issuance of notice u/s 143(2) within the prescribed period.
The assessee contended that the assessment order should be set aside as notice u/s 143(2) was not issued within one year from the date of filing the block return. The return was filed on 14-05-1999, and the notice u/s 143(2) was issued on 18-07-2000, beyond the prescribed period. The Tribunal referred to the Gujarat High Court decision in DCIT v Mahi Valley Hotels and Resorts [2006] 287 ITR 360 (Guj), which held that the limitation prescribed in the proviso to section 143(2) is mandatory. The Tribunal also cited the Gauhati High Court in Smt. Bandana Gogoi v CIT [2007] 289 ITR 28 (Gau), which emphasized the mandatory nature of notice u/s 143(2) in block assessments. Consequently, the Tribunal quashed the assessment order as invalid and void ab initio due to the non-service of notice within the prescribed time.

Issue 2: Impact of procedural lapses on the validity of the assessment order.
The learned DR argued that non-issuance of notice u/s 143(2) is a procedural lapse and does not render the assessment order void, citing the Special Bench decision in Nawal Kishore & Sons Jewellers vs. DCIT [2003] 87 ITD 407 (Lucknow) (SB). However, the Tribunal, relying on the jurisdictional High Court's decision, held that the procedural lapse of not issuing the notice within the prescribed period invalidates the assessment order.

Issue 3: Binding nature of High Court decisions on the Tribunal.
The Tribunal discussed the binding nature of High Court decisions, stating that the decision of one High Court is not binding on another High Court or Tribunals outside its territorial jurisdiction. However, the Tribunal must follow the jurisdictional High Court's decision. In this case, the Gujarat High Court's decision in DCIT v Mahi Valley Hotels and Resorts was binding, leading to the quashing of the assessment order.

Conclusion:
The Tribunal allowed the assessee's appeal, quashing the assessment order due to the invalidity arising from the non-issuance of notice u/s 143(2) within the prescribed period. Consequently, the Revenue's cross-appeal was dismissed as infructuous. The order was pronounced in the open court on 25-09-2009.