2019 (3) TMI 1923 - AT - Income Tax

Legality of the reassessment proceedings - notice u/s 143(2) of the Act was not issued - whether the impugned order can be held to be invalid merely for non issuance of notice u/s 143(2)? - HELD THAT - As relying on Dimension Promoters Pvt. Ltd 2018 (1) TMI 393 - ITAT DELHI the impugned reassessment order is liable to be quashed being invalid bad in law and void abinitio as the revenue authorities post issuance of notice u/s 148 of the Act failed to issue statutory notice u/s 143(2) of the Act which is mandatory before commencing the assessment proceedings. - Decided in favour of assessee.

Summary

Issues:
1. Validity of reassessment proceedings due to non-issuance of notice u/s 143(2) of the Income Tax Act.
2. Legality of reopening the case u/s 147/148.
3. Addition made on account of undisclosed income.
4. Quantum addition made on account of undisclosed income.
5. General grounds of appeal.

Issue 1: Validity of reassessment proceedings
The appeal challenged the legality of reassessment proceedings due to the absence of a notice u/s 143(2) of the Income Tax Act. The assessee contended that as per a previous decision, failure to issue such a notice rendered the assessment invalid. The Revenue did not dispute the failure to issue the notice. The Tribunal observed that the notice was indeed not issued before commencing the assessment proceedings, leading to the conclusion that the reassessment order was invalid. Citing a similar case, the Tribunal quashed the reassessment proceedings, following the precedent set by the Delhi High Court and a Coordinate Bench.

Issue 2: Legality of reopening the case
The appeal also challenged the reopening of the case u/s 147/148 as being arbitrary and illegal. The Tribunal, after finding the reassessment proceedings invalid due to the lack of a notice u/s 143(2), deemed the reopening of the case to be improper and quashed the reassessment order on this ground as well.

Issue 3: Addition made on account of undisclosed income
The addition of ?15,00,000 made by the Assessing Officer on account of undisclosed income was contested as wrong and illegal. However, this issue became infructuous as the reassessment proceedings were quashed, rendering the quantum addition irrelevant.

Issue 4: Quantum addition made on account of undisclosed income
The specific quantum addition made on account of undisclosed income was addressed in the appeal but was considered irrelevant due to the quashing of the reassessment proceedings.

Issue 5: General grounds of appeal
The fifth ground of appeal, which was general in nature and not specified, was deemed to require no further adjudication by the Tribunal.

In conclusion, the Tribunal allowed the appeal of the assessee, quashing the reassessment proceedings and rendering the quantum addition issues moot. The decision was based on the failure to issue a statutory notice u/s 143(2) of the Income Tax Act, which was deemed mandatory before commencing assessment proceedings.