2017 (1) TMI 1510 - AT - Income Tax

Non-issue of notice u/s. 143(2) - validity of reopening of assessment - Held that - From the findings of the Assessing Officer and ld. CIT(A), one thing is apparent that no notice u/s. 143(2) was issued to the assessee as the ld. CIT(A) himself has held that mere non-issuance of notice u/s. 143(2) by itself cannot be said to vitiate the assessment proceedings. In a number of judgments delivered by various Courts and Tribunals, it has been held that service of notice u/s. 143(2) is mandatory requirement. Thus we hold that the reassessment order passed in this case is bad, void ab initio - Decided in favour of assessee.

Summary

Issues Involved:
1. Non-issue of notice under Section 143(2) of the Income Tax Act.
2. Validity of the reassessment order.

Issue-Wise Detailed Analysis:

1. Non-issue of notice under Section 143(2) of the Income Tax Act:

The primary issue raised by the assessee in the cross-objections was the non-issuance of notice under Section 143(2) of the Income Tax Act. The assessee argued that the absence of such notice vitiated the assessment proceedings. The ld. AR pointed out that neither the Assessing Officer nor the CIT(A) mentioned the issuance of this notice in their respective orders. The assessee relied on various judicial precedents, including ACIT & Anr. Vs. Hotel Blue Moon, Directorate of Income Tax vs. VR Educational Trust, and Alpine Electronics Asia Pvt. Ltd. Vs. DGIT, among others, which emphasized the mandatory nature of issuing a notice under Section 143(2).

The Revenue, represented by the ld. DR, contended that the issuance of notice under Section 142(1) sufficed and negated the necessity of a notice under Section 143(2). They relied on the Delhi High Court's decision in Madhya Bharat Energy Corporation.

However, the Tribunal noted that the Delhi High Court in subsequent judgments, including Alpine Electronics Asia Pvt. Ltd. Vs. DCIT and Indus Tower Limited vs. CIT, reiterated that the service of notice under Section 143(2) is mandatory, even in proceedings under Section 148. The Tribunal cited the Delhi High Court's observation: "the failure to issue notice under Section 143(2) of the Act pursuant to the notice under Section 148 of the Act before 30 September 2013, the last date by which the notice ought to have been issued," is fatal to the reassessment proceedings.

2. Validity of the reassessment order:

Given the non-issuance of the mandatory notice under Section 143(2), the Tribunal concluded that the reassessment order was invalid and void ab initio. The Tribunal referenced multiple cases, including CIT vs. Jai Shiv Shankar Traders Pvt. Ltd., which held that the absence of notice under Section 143(2) invalidates the reassessment process. The Tribunal emphasized that the requirement to issue this notice is a jurisdictional condition that cannot be bypassed.

The Tribunal also addressed the Revenue's reliance on Madhya Bharat Energy Corporation, clarifying that this decision had been reviewed and was not applicable in the present context. The Tribunal reiterated that the issuance of notice under Section 143(2) is indispensable for validating the reassessment proceedings.

Conclusion:

The Tribunal ruled in favor of the assessee, holding that the reassessment order was invalid due to the non-issuance of notice under Section 143(2). Consequently, the cross-objections filed by the assessee were partly allowed, and the appeal filed by the Revenue was dismissed as infructuous. The Tribunal's decision underscores the critical importance of adhering to procedural requirements in reassessment proceedings.