2010 (4) TMI 1079 - AT - Income Tax

Summary

Issues involved: Failure to issue notice u/s 143(2) of the IT Act leading to the assessment being considered ab initio void.

The judgment by the Appellate Tribunal ITAT Hyderabad involved an appeal by the assessee for the block assessment period from 1997-98 to 2003-04 against the order of the CIT (A)-I, Hyderabad dated 25-8-2008. The assessee, a partnership firm engaged in the purchase and sale of gold jewellery and gems, faced search operations in its business premises in 2003. Subsequently, a notice u/s 158BC of the Act was issued, and the assessee filed the block period return declaring nil undisclosed income. However, after a notice u/s 143(2) was issued nearly 20 months later, the assessing officer treated an amount as undisclosed income and levied tax thereon. The CIT (A) upheld the assessing officer's order, leading to the assessee's appeal before the ITAT Hyderabad.

The primary issue raised by the assessee before the ITAT Hyderabad was the failure of the assessing officer to issue a notice u/s 143(2) of the IT Act, which was deemed a violation of statutory provisions. The assessee contended that this failure rendered the assessment ab initio void. While this ground was not initially raised before the CIT (A), the ITAT Hyderabad acknowledged its significance, stating that it goes to the root of the matter. In the interest of justice, the ITAT Hyderabad remitted this issue to the file of the CIT (A) for fresh adjudication in accordance with the law. Consequently, the ITAT Hyderabad did not adjudicate on the other grounds raised by the assessee in the appeal, and the appeal was treated as allowed for statistical purposes.

In conclusion, the ITAT Hyderabad's judgment highlighted the critical issue of the failure to issue a notice u/s 143(2) of the IT Act, leading to the assessment's validity being questioned. The ITAT Hyderabad's decision to remit this issue for fresh adjudication underscored the importance of adhering to statutory provisions in conducting assessments, ensuring fairness and compliance with the law.