2013 (10) TMI 283 - HC - Income Tax

Reassessment u/s 147 without service of Notice u/s 143(2) of the Income tax Act - whether Notice under section 143(2) to be directory and not mandatory as held by Hon ble Tribunal Held that - Relying upon the judgment in the case of CIT Versus Mukesh Kumar Agrawal 2012 (7) TMI 543 - Allahabad High Court , it has been held that non-service of notice under section 143(2) of the Act and the assessment so made in absence thereof is void ab initio. Any assessment made in absence of notice under section 143(2) is void ab initio - The service of the notice under section 143(2) is being disputed, the stand taken by the Revenue that notice was in fact served and the stand taken by the learned counsel for the appellant that no notice was served - Directed the Tribunal to decide the appeal a fresh in accordance with law. It will be open for the Revenue to make an application for filing additional evidence, which shall be decided in accordance with law Decided in favor of Assessee.

Summary

Issues:
1. Validity of upholding assessment order without notice under Section 143 of the Income Tax Act.
2. Justification of upholding notice under Section 148 and assessment order while the one-year period from the return date is unexpired.
3. Validity of reassessment order in absence of notice under Section 143(2) of the Income Tax Act.

Analysis:
1. The appeal was filed against the order passed by the Income Tax Appellate Tribunal, Allahabad, under Section 260A of the Income Tax Act, 1961. The primary contention was the legality of upholding the assessment order without a notice under Section 143 of the Act. The Commissioner of Income Tax (Appeals) had set aside the reassessment order, stating that the Assessing Officer lacked valid reasons for reopening the assessment. Additionally, it was noted that no notice under Section 143(2) of the Act was issued after reopening the assessment under Section 148.

2. The Tribunal, through its order, reversed the decision of the Commissioner of Income Tax (Appeals) and remanded the matter for a fresh decision on merits. The Tribunal clarified that there was prima facie material available for the Assessing Officer to reopen the assessment, specifically regarding gifts received and loans mentioned in the assessment order. The Tribunal deemed the reopening of the assessment as valid, contrary to the Commissioner's findings.

3. During the hearing, the issue of the notice under Section 143(2) of the Act arose. The Revenue claimed that the notice was issued and served on the assessee, while the appellant disputed this fact. The Court referred to a previous case where it was held that non-service of notice under Section 143(2) renders any assessment void ab initio. As there was a dispute regarding the service of the notice in the present case, the Court set aside the Tribunal's order and directed a fresh decision. The Court emphasized the importance of complying with legal procedures and allowed the Revenue to apply for additional evidence, to be decided in accordance with the law.

In conclusion, the appeal was allowed, and the Tribunal's order was set aside for a fresh decision, highlighting the significance of procedural compliance in tax assessments.