2012 (5) TMI 766 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the cancellation of assessment made u/s 143(3) due to the absence of a valid notice u/s 143(2) of the Income Tax Act, 1961.

Issue 1: Validity of assessment without proper notice
The Revenue appealed against the CIT(A)'s decision to quash the assessment, citing section 292BB of the Act which deems notice served if the assessee has cooperated in the proceedings. The CIT(A) annulled the assessment due to lack of valid notice u/s 143(2), supported by the Punjab & Haryana High Court's ruling. The Revenue argued that sec. 292BB applies to pending proceedings as of 1.04.2008, and since the notice was served on 30.09.2008, the assessment should stand.

Issue 2: Jurisdiction based on notice service
The AO completed the assessment without serving a valid notice u/s 143(2), leading to the challenge by the assessee on both merit grounds and jurisdiction. The CIT(A) agreed that the absence of a proper notice invalidated the assessment, in line with legal precedents. The Revenue contended that sec. 292BB should apply, as the assessee participated in the proceedings.

Issue 3: Application of sec. 292BB
The Tribunal noted that the assessee did not object to the notice service during assessment, rendering sec. 292BB's proviso inapplicable post-assessment. Referring to CBDT Circular No.1 of 2009, the Tribunal upheld that sec. 292BB applies to pending proceedings as of 1.04.2008. Following the Punjab & Haryana High Court's decision, the Tribunal concluded that the assessment could not be annulled based on notice service grounds.

Separate Judgment:
The Tribunal restored the Assessing Officer's order on jurisdictional grounds and remanded the case to the CIT(A) for a decision on merits, as the latter had not addressed the issue. The appeal filed by the Revenue was allowed, emphasizing the importance of proper notice service in assessment procedures.