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2014 (8) TMI 279 - AT - Income TaxNon-issuance of notice u/s 143(2) for the purpose of reassessment u/s 147 validation u/s 292BB - Held that - Any legal ground even if it was not raised before any authorities can be raised for the first time in case no further investigation of facts is required relying upon NTPC Vs. CIT 1996 (12) TMI 7 - SUPREME Court - the Tribunal has jurisdiction to examine the question of law which arises from facts as found by the Income tax authority and has bearing on the tax liability of the assessee, the additional grounds taken by the assessee are to be admitted - Without issuance of notice, no further proceedings can be pursued and completed by the AO - the AO has failed to issue requisite notice u/s 143(2) of the Act and this defect is not rectifiable u/s 292BB of the Act - the plea that the AO was not intimated about the vacation of the stay order and dismissal of the writ petition is of no avail Decided in favour of Assessee.
Issues Involved:
1. Validity of reassessment order without issuance of notice under section 143(2) of the Income Tax Act. 2. Applicability of section 292BB to rectify the defect of non-issuance of notice under section 143(2). 3. Calculation of interest under sections 234 and 234B during the period of stay granted by the Hon'ble High Court. Issue-Wise Detailed Analysis: 1. Validity of reassessment order without issuance of notice under section 143(2) of the Income Tax Act: The primary issue in these appeals was whether the reassessment orders passed under section 143(3) read with section 147 of the Income Tax Act were valid without the issuance of a mandatory notice under section 143(2). The Tribunal held that the issuance of notice under section 143(2) is mandatory for the completion of assessment proceedings. The Tribunal cited various judicial precedents, including the Hon'ble Supreme Court's decision in Asstt. CIT v. Hotel Blue Moon [2010] 321 ITR 362, which affirmed that the issuance of notice under section 143(2) within the prescribed time is mandatory. Other relevant cases cited include CIT vs. Rajeev Sharma (2011) 336 ITR 678 (Allahabad High Court) and CIT v. Cebon India Ltd. [2012] 347 ITR 583 (Punjab & Haryana High Court). The Tribunal concluded that the failure to issue such a notice rendered the reassessment orders null and void ab initio. 2. Applicability of section 292BB to rectify the defect of non-issuance of notice under section 143(2): The Tribunal also addressed the argument that the defect of non-issuance of notice under section 143(2) could be rectified under section 292BB of the Act. The Tribunal rejected this argument, stating that section 292BB, being procedural in nature, cannot rectify the defect of non-issuance of a mandatory notice. The Tribunal relied on several judicial decisions, including CIT v/s SALMAN KHAN (Bombay High Court) and the Special Bench of Delhi ITAT in Kuber Tobacco Products Pvt. Ltd. vs. DCIT, which held that the absence of notice under section 143(2) is not a curable defect under section 292BB. 3. Calculation of interest under sections 234 and 234B during the period of stay granted by the Hon'ble High Court: The appellant contended that the authorities below erred in calculating excessive interest under sections 234 and 234B without excluding the period of stay proceedings granted by the Hon'ble Rajasthan High Court. However, this issue became moot as the Tribunal quashed the reassessment orders on the primary ground of non-issuance of notice under section 143(2). Conclusion: The Tribunal allowed the appeals of the assessee for all the assessment years in question (1994-95 to 1996-97), holding that the reassessment orders were null and void ab initio due to the failure of the Assessing Officer to issue the mandatory notice under section 143(2) after the stay was vacated by the High Court. The Tribunal emphasized that the legal issue of non-issuance of notice under section 143(2) goes to the root of the case and cannot be rectified under section 292BB. Consequently, the assessment orders were quashed, and the appeals were allowed.
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