2018 (7) TMI 1913 - HC - Income Tax

Reopening of assessment u/s 147 - non issuing the mandatory notice u/s. 143(2) - HELD THAT - The issue raised herein stands concluded in favour of assessee by the decision of the Supreme Court in ACIT v. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA wherein held that the issuance of notice under Section 143(2) is mandatory before making assessment u/s 143(2). Admittedly no notice under Section 143(2) has been issued. Therefore, the substantial question of law for all the three assessment years stands concluded in favour of the assesseee

Summary

Issues:
Challenge to impugned order under Income-tax Act for Assessment Years 1992-93, 1993-94, and 1994-95 based on absence of mandatory notice under Section 143(2) of the Act.

Analysis:
The judgment delivered by the High Court of Bombay pertained to three Appeals challenging a common impugned order dated 23rd November, 2016, concerning Assessment Years 1992-93, 1993-94, and 1994-95 under the Income-tax Act, 1961. The primary question of law raised in these Appeals was whether an assessment made under Section 143(3) read with Section 147 of the Income Tax Act is void ab-initio without issuing the mandatory notice under Section 143(2) of the Act. Despite the respondent waiving service, no appearance was made on their behalf during the proceedings. The appellant's counsel highlighted that the issue at hand had been settled in favor of the appellant-assessee by the Supreme Court in the case of ACIT v. Hotel Blue Moon, 321 ITR 362 (SC).

The High Court referred to the Supreme Court's decision in Hotel Blue Moon, where it was held that the issuance of a notice under Section 143(2) of the Act is imperative before conducting an assessment under Section 143(2) of the Act. Notably, in the present case, no such notice had been issued, leading to a clear violation of the mandatory requirement. Consequently, the substantial question of law for all three assessment years was deemed to be resolved in favor of the appellant-assessee and against the respondent-Revenue based on the precedent set by the Supreme Court in the Hotel Blue Moon case. The Court, therefore, answered the substantial question of law in the affirmative, favoring the appellant-assessee and ruling against the respondent-Revenue.

In conclusion, the Appeals were allowed based on the above findings, emphasizing the significance of adhering to the mandatory procedural requirements outlined in the Income Tax Act. The judgment reiterates the essential nature of issuing a notice under Section 143(2) before conducting assessments to ensure the validity and legality of the assessment process, as established by the Supreme Court's authoritative interpretation in the Hotel Blue Moon case.