2015 (1) TMI 1352 - AT - Income Tax

Service of notice - case of assessee is that notice u/s 143(2) of the Act was not served on him before passing the order u/s 153A of the Act - Held that - the FAA held that the assessee had participated in assessment proceedings, that as per the provisions of section 292BB the assessment made by the AO had to be held valid assessment even if there was non-service of notice as per the provisions of the Act - there is no proof of service of notice allegedly issued by the AO u/s. 143(2) of the Act. In these circumstances, the order passed by the AO for the year under consideration was invalid order and not sustainable in the eyes of law. Application of Section 292BB of the Act - Held that - the section do not cure the virus of non-issuance of the notice u/s 143(2) of the notice especially when the assessee had raised objection before completion of assessment proceedings. In absence of service of notice issued u/s. 143(2) of the Act the order passed by the AO were not maintainable - assessment held as invalid - appeal dismissed.

Summary

Issues involved:
1. Validity of assessment order under section 153A of the Income Tax Act, 1961 based on the service of notice under section 143(2).
2. Applicability of section 292BB in case of non-service of notice under section 143(2) of the Act.

Detailed Analysis:

Issue 1: Validity of assessment order under section 153A based on the service of notice under section 143(2)
The assessee challenged the assessment order passed under section 153A of the Income Tax Act, 1961, claiming that the notice under section 143(2) was not served before the assessment. The First Appellate Authority (FAA) directed the Assessing Officer (AO) to offer comments on the non-service of notice. The AO provided an acknowledgment slip bearing the AR's signature, which the AR denied. The FAA observed that the notice lacked the addressee's details and held the service as doubtful. The AR mentioned the objection raised by the assessee regarding non-service of the notice. The FAA, however, concluded that the assessment was valid under section 292BB as the assessee participated in the proceedings.

Issue 2: Applicability of section 292BB in case of non-service of notice under section 143(2)
The AR contended that without proper service of notice under section 143(2), the assessment order under section 153 was void ab initio. The AR argued that the provisions of section 292BB were not applicable as the objection was raised before the completion of assessment proceedings. The AR highlighted discrepancies in the AO maintaining two order sheets and the lack of evidence proving the notice's service. The ITAT agreed that the burden of proof lies with the AO to establish both issuance and service of notice. The ITAT found no evidence of service and deemed the order invalid. Referring to a previous year's decision, the ITAT ruled in favor of the assessee, stating that section 292BB does not cure the absence of notice issuance, especially when objections were raised before the assessment completion.

In conclusion, the ITAT decided in favor of the assessee, holding the assessment invalid due to the lack of proof of notice service under section 143(2). The ITAT referenced a previous decision where similar issues led to assessment orders being deemed invalid. As a result, the appeal was not decided on its merits due to the jurisdictional issue being resolved in favor of the assessee.