2020 (2) TMI 1691 - AT - Income Tax

Validity of Reopening of assessment - mandatory requirement of giving a notice u/s 143(2) - Curable defect u/s 292BB or not - HELD THAT - Impugned reassessment order passed by the AO u/s. 147/143(3) of the Act is invalid and void-ab-inito for want of valid notice u/s. 143(2) as per law as evident from fact that when return in response to notice u/s. 148 of the Act was admittedly filed on 05.10.2015, the notice u/s. 143(2) of the Act was issued on very same date i.e. on 05.10.2015 which shows non application of mind on the part of the AO in issuing notice u/s. 143(2) of the Act and thereafter assuming jurisdiction to frame assessment on this basis, the notice is not tenable in law and therefore impugned proceedings need to be quashed. See Silver Line 2015 (11) TMI 809 - DELHI HIGH COURT as held Section 292BB of the Act is a rule of evidence and it has nothing to with the mandatory requirement of giving a notice and especially a notice u/s 143(2) of the Act which is a notice giving jurisdiction to the AO to frame an assessment. Decided in favour of assessee.

Summary

Issues:
Validity of reassessment order due to lack of valid notice u/s. 143(2) of the Income Tax Act, 1961.

Detailed Analysis:
The appeal was filed against the order passed by the Ld. CIT(A)-34, New Delhi for the assessment year 2008-09. The assessee, a private limited company engaged in trading non-ferrous metals, declared a loss in the return filed. The Assessing Officer (AO) issued a notice u/s. 148 based on information indicating accommodation entries of Rs. 15,00,000 from entities managed by two individuals. The AO completed the assessment u/s. 147/143(3) by adding Rs. 15,00,000 to the returned loss. The Ld. CIT(A) dismissed the appeal, leading the assessee to appeal before the Tribunal, challenging the validity of the reassessment order due to the absence of a valid notice u/s. 143(2) of the Act.

During the hearing, the Ld. Counsel for the assessee contended that the reassessment order was invalid and void-ab-initio due to the lack of a valid notice u/s. 143(2). The counsel argued that the notice u/s. 143(2) was issued on the same day the return was filed, indicating a lack of application of mind by the AO. The assessee filed an additional ground of appeal, citing legal grounds for the invalidity of the reassessment order. The Tribunal admitted the additional ground for adjudication, following legal precedents.

The Tribunal examined the order sheet and concluded that the reassessment order was indeed invalid due to the absence of a valid notice u/s. 143(2). The Tribunal referenced a decision by the Hon'ble Delhi High Court to support its view. The Court's decision highlighted the importance of a valid notice u/s. 143(2) for the AO to frame an assessment. Consequently, the Tribunal quashed the reassessment order, rendering other grounds of appeal academic and not requiring adjudication.

In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing the invalidity of the reassessment order due to the lack of a valid notice u/s. 143(2) of the Income Tax Act, 1961. The order was pronounced on 13-02-2020.