2014 (9) TMI 1218 - AT - Income Tax

Validity of assessment - non issue of notice u/s 143(2) or 142(1) - HELD THAT - Hon ble Supreme Court in the case of ACIT v. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT and case of Sapthagiri Finance Investments 2012 (8) TMI 523 - MADRAS HIGH COURT the issuance of notice under section 143(2) of the Act is mandatory. In the present case, there is nothing available on record to show that the Assessing Officer had issued notice under section 143(2) or 142(1) CIT(Appeals) cancelled the reassessment as not valid. We, therefore, by following the decisions of the Hon ble Supreme Court as well as the Hon ble Jurisdictional High Court, hold that the ld. CIT(Appeals) rightly cancelled the reopening as invalid. Accordingly, the grounds raised by the Revenue are dismissed.

Summary

Issues Involved:
1. Validity of reassessment without issuing statutory notices under sections 143(2) or 142(1) of the Income Tax Act.
2. Applicability of Section 292BB of the Income Tax Act in the context of non-issuance of statutory notices.
3. Compliance with procedural requirements for reassessment under sections 143(2) and 142(1).

Detailed Analysis:

1. Validity of Reassessment Without Issuing Statutory Notices:
The primary issue in this case was whether the reassessment conducted by the Assessing Officer (AO) was valid without issuing statutory notices under sections 143(2) or 142(1) of the Income Tax Act. The assessee argued that the AO completed the assessment ex-parte without serving the required notices, which is mandatory for a valid reassessment. The CIT(Appeals) examined the assessment records and the order sheet, concluding that no such notices were issued or served. This conclusion was based on the absence of any evidence in the records indicating the issuance or service of notices under sections 143(2) or 142(1).

2. Applicability of Section 292BB:
The AO contended that the assessee's grounds regarding the non-issuance of notices were not maintainable under Section 292BB, which deals with the deemed service of notice if the assessee has cooperated in the reassessment proceedings. However, the CIT(Appeals) held that Section 292BB does not apply when no notice under section 143(2) was issued within the limitation period. The CIT(Appeals) referenced the Gujarat High Court's decision in CIT v. K.M. Ravji, which clarified that Section 292BB cures only defects in service, not the non-issuance of notices within the statutory period.

3. Compliance with Procedural Requirements:
The CIT(Appeals) and the Tribunal both emphasized the mandatory nature of issuing notices under sections 143(2) and 142(1) for a valid reassessment. The CIT(Appeals) relied on the decisions of the Hon'ble Jurisdictional High Court in Saptagiri Finance & Investments v. ITO and the Supreme Court in ACIT v. Hotel Blue Moon, which established that the omission to issue such notices is not a mere procedural irregularity but a fundamental requirement for jurisdiction. The Tribunal upheld this view, noting that the Department failed to provide any evidence to contradict the findings of the CIT(Appeals) regarding the non-issuance of notices.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue, affirming the CIT(Appeals)'s decision that the reassessment was invalid due to the non-issuance of mandatory statutory notices under sections 143(2) and 142(1). The Tribunal reiterated the importance of adhering to procedural requirements, as established by higher judicial authorities, to ensure the validity of reassessment proceedings. The decision underscores the critical nature of following statutory mandates in tax assessments and reassessments.