2019 (2) TMI 2058 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - Necessity to issue notice u/s 143(2) - HELD THAT - In the instant case, admittedly, no notice u/s 143(2) of the Act was issued and served on the assessee after the return in response to notice u/s 148 of the Act was filed by stating that the original return filed may be treated as return filed in response to notice u/s 148, therefore, the reassessment order passed by the AO is not sustainable in law. We, therefore, accept the additional ground raised by the assessee and quash the order passed u/s 143(3)/147 for non-issuance of notice u/s 143(2) of the Act which is mandatorily required. Appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Validity of reassessment proceedings.
2. Non-issuance of notice under Section 143(2) after filing of return in response to notice under Section 148.
3. Admissibility of additional grounds challenging reassessment.

Detailed Analysis:

1. Validity of Reassessment Proceedings:
The assessee challenged the reassessment proceedings on the grounds that the reassessment order framed under Sections 147/143(3) was invalid due to the non-issuance and non-service of notice under Section 143(2) after filing the return in response to notice under Section 148. The Tribunal noted that the reassessment order must comply with the mandatory requirement of issuing a notice under Section 143(2) to validate the reassessment.

2. Non-Issuance of Notice Under Section 143(2):
The Tribunal observed that no notice under Section 143(2) was issued to the assessee after the return was filed in response to the notice under Section 148. The Tribunal referred to several judicial precedents, including the decisions of the Hon'ble Delhi High Court in PCIT vs. Silverline and PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd., which held that the failure to issue a notice under Section 143(2) is fatal to the reassessment proceedings. The Tribunal emphasized that the issuance of notice under Section 143(2) is a jurisdictional requirement and cannot be dispensed with or cured by subsequent participation in the assessment proceedings.

3. Admissibility of Additional Grounds:
The Tribunal admitted the additional ground raised by the assessee, which challenged the reassessment order on the basis of non-issuance of notice under Section 143(2). The Tribunal relied on the decision of the Hon'ble Supreme Court in NTPC Ltd. vs. CIT, which allowed the raising of purely legal grounds at any stage of the proceedings. The Tribunal also noted that the issue of non-issuance of notice under Section 143(2) goes to the root of the matter and does not require fresh facts to be investigated.

The Tribunal concluded that the reassessment order passed by the Assessing Officer was not sustainable in law due to the failure to issue a notice under Section 143(2) after the assessee filed the return in response to the notice under Section 148. Consequently, the Tribunal quashed the reassessment order and allowed the appeal filed by the assessee.

Conclusion:
The appeal filed by the assessee was allowed on the grounds that the reassessment order was invalid due to the non-issuance of a mandatory notice under Section 143(2). The Tribunal admitted the additional ground raised by the assessee and quashed the reassessment order, rendering other grounds of appeal academic in nature. The decision was pronounced in the open court on 18.02.2019.