2016 (11) TMI 1677 - AT - Income Tax

Validity of reopening of assessment u/s 147 - jurisdiction of AO to issue notice u/s.148 when time for issuance of notice u/s.143(2) of the Act has not expired before the issuance of notice - HELD THAT - According to proviso to section 143(2) at the relevant time, no notice u/s.143(2)(ii) shall be served on the assessee after the expiry of 12 months from the end of the month in which the return is furnished. In the present case, the return of income was furnished by the assessee on 14.2.2008 and, therefore, notice u/s.143(2) (ii) of the Act could have been issued to the assessee on or before 28.2.2009. It is also not in dispute that notice u/s.148 of the Act was issued to the assessee on 6.10.2008, which was much prior to the expiry of time for issuing notice u/s.143(2) of the Act. Therefore, the notice issued u/s.148 of the Act is bad in law - Hence, the reassessment order passed in pursuance to this notice is also bad in law. Cancel the reassessment order dated 31.12.2009 passed u/s.143(3)/147 of the Act and allow the grounds of appeal of the assessee.

Summary

Issues: Jurisdiction of Assessing Officer to issue notice u/s.148 when time for notice u/s.143(2) has not expired.

In this case, the appellant challenged the jurisdiction of the Assessing Officer to issue a notice u/s.148 of the Act when the time for issuance of notice u/s.143(2) had not expired. The appellant contended that the notice u/s.148 was issued before the expiry of the time period for issuing notice u/s.143(2), making it bad in law. The appellant cited decisions of the Hon’ble Madras High Court to support the argument that reassessment proceedings cannot be initiated under section 147 when the time for notice u/s.143(2) has not expired. On the other hand, the Revenue argued that the notice u/s.148 was valid. The Tribunal examined the facts and found that the return of income was filed on 14.2.2008, and the notice u/s.148 was issued on 6.10.2008, before the expiry of the time period for issuing notice u/s.143(2). Relying on the decisions of the Hon’ble Madras High Court, the Tribunal held that the notice u/s.148 was bad in law, and consequently, the assessment framed based on such notice was also bad in law. Therefore, the reassessment order passed u/s.143(3)/147 was canceled, and the grounds of appeal of the assessee were allowed.

Moreover, as the reassessment order was canceled, the other grounds of appeal of the assessee on the merits of addition were deemed infructuous and hence dismissed. Therefore, the appeal filed by the assessee was allowed, and the order was pronounced in the open court on 8/11/2016 in the presence of parties.