2018 (2) TMI 1863 - AT - Income Tax

Reopening of assessment - notice u/s. 143(2) issued prior to the date of the filing of the return - assessment completed without issuing valid notice u/s. 143(2) - HELD THAT - Whatever may be date of the issue of notice u/s. 148 of the Act, the notice issued u/s. 143(2) dated 12.03.2010 is prior to the date of filing of the return which is 19.07.2010. This means that the notice u/s. 143(2) has been issued by the A.O. prior to the date of the filing of the return. In our understanding of the fact and the law, notice issued before filing of the return of income has no meaning and deserves to be treated as invalid. This also means that the assessment has been completed without issuing valid notice u/s. 143(2) of the Act and therefore the assessment has to be treated as invalid and deserves to be annulled. - Decided against revenue.

Summary

Issues:
1. Validity of assessment proceedings due to lack of a valid notice u/s. 143(2)
2. Reopening of assessment u/s. 147 based on income escaping assessment

Analysis:
The appeal by the Revenue challenges the order of the Ld. CIT(A)- VIII, Ahmedabad dated 03.02.2014 concerning A.Y. 2005-06. The core contention of the Revenue is that the assessment proceedings were annulled by the Ld. CIT(A) due to the absence of a valid notice issued u/s. 143(2), despite the A.O. validly reopening the assessment u/s. 147 of the Act. The original assessment was conducted u/s. 143(3) of the Act on 31.12.2007. Subsequently, the assessment was reopened based on the belief that income chargeable to tax had escaped assessment, leading to a short levy of tax. The reasons for reopening were recorded on 20.07.2010, with prior identical reasons recorded on 21.01.2010. Three notices u/s. 148 were issued on different dates, with the last notice issued on 04.10.2010. Notably, the notices u/s. 148 predated the reasons recorded for reopening. However, a notice u/s. 143(2) was dated 12.03.2010, issued before the return filing on 19.07.2010. The Tribunal concluded that issuing a notice u/s. 143(2) before the return filing rendered the assessment invalid, as per the law. Consequently, the assessment was deemed invalid, and the appeal by the Revenue was dismissed.

In summary, the judgment revolved around the validity of assessment proceedings in light of the absence of a valid notice u/s. 143(2) and the subsequent reopening of assessment u/s. 147 due to income escaping assessment. The Tribunal emphasized the significance of procedural compliance, highlighting that issuing a notice u/s. 143(2) before the return filing renders the assessment invalid. The decision to dismiss the Revenue's appeal was based on the finding that the assessment was completed without a valid notice u/s. 143(2), warranting annulment.