2014 (1) TMI 991 - HC - Income Tax

Validity of notice issued u/s 143(2) r.w.s 147 - period of limitation - Held that - Decision in Assistant Commissioner of Income Tax and Anr vs. Hotel Blue Moon and others 2010 (2) TMI 1 - SUPREME COURT OF INDIA followed - The learned ITAT has not committed any error in confirming the order passed by the learned CIT(A) - The Assessing Officer has issued notice under Section 143(2) of the Act after expiry of the time limit provided in subsection (2) of Section 143 of the Act - The order passed under Section 143(3) r/w Section 147 of the Act is invalid - Decided against Revenue.

Summary

Issues:
1. Validity of order passed by the ITAT confirming the CIT(A) decision regarding the notice issued under Section 143(2) of the Income Tax Act.
2. Assessment reopening and subsequent proceedings based on the notice under Section 148 of the Act.

Analysis:
1. The appellant challenged the ITAT's decision affirming the CIT(A)'s ruling on the validity of the notice issued under Section 143(2) of the Income Tax Act. The primary question was whether the ITAT was correct in confirming the CIT(A)'s finding that the order under Section 148 read with Section 143(1) was legally flawed due to the delayed issuance of the notice. The appellant contended that the notice was issued after the expiry of 12 months, affecting the assessment's validity. The CIT(A) had quashed the assessment order on these grounds.

2. The assessment process involved the assessee initially declaring a total income, which was then processed under Section 143(1)(a) of the Act. Subsequently, the assessment was reopened by a notice under Section 148, leading to the assessee filing a return of income. The Assessing Officer completed the assessment under Section 143(3) read with Section 147, resulting in a revised total income. The CIT(A) later invalidated this assessment order due to the delayed issuance of the notice under Section 143(2), which the Assessing Officer failed to comply with within the specified time limit.

3. The High Court, after hearing arguments from both parties and examining the judgments of the ITAT and CIT(A), referred to a precedent set by the Supreme Court in a similar case (Assistant Commissioner of Income Tax vs. Hotel Blue Moon) to determine the present case's legality. The Court applied the Supreme Court's ruling to the current scenario and concluded that the ITAT had not erred in upholding the CIT(A)'s decision. The Court held that based on the precedent, the appeal raised by the revenue was not valid, leading to the dismissal of the appeal.

In conclusion, the High Court upheld the decisions of the lower authorities regarding the validity of the notice issued under Section 143(2) of the Income Tax Act, following a precedent set by the Supreme Court. The appeal brought by the revenue was dismissed, affirming the rulings of the CIT(A) and ITAT in the context of the assessment proceedings.