2022 (8) TMI 1358 - AT - Income Tax

Validity of assessment - non issuing notice u/s 143(2) - non complying with the mandatory provisions of section 143(2) - Non examining the return of income filed by the assessee - HELD THAT - Issuing notice u/s 143(2) and without having original or copy of the return of income filed by the assessee for AY 2014-15 and vitiates the entire assessment proceedings. Accordingly, respectfully following the judgement of Hon ble Jurisdictional High Court of Delhi in the case of Director of Income Tax vs Society for Worldwide Interbank Financial Telecommunications ( 2010 (4) TMI 43 - DELHI HIGH COURT impugned assessment order has to be held invalid being passed without complying with the mandatory provisions of section 143(2) - Decided in favour of assessee.

Summary

Issues Involved:
1. Admission of Additional Grounds of Appeal
2. Validity of Notice under Section 143(2) of the Income Tax Act
3. Jurisdiction of the Assessing Officer (AO) to Frame Assessment

Detailed Analysis:

1. Admission of Additional Grounds of Appeal:
The assessee sought to add two additional grounds of appeal and file a revised Ground No.1. The assessee's representative argued that the failure to initially include these grounds was neither willful nor deliberate, and the grounds were purely legal, requiring no fresh investigation. The Tribunal, referencing the Supreme Court judgments in National Thermal Power Co. Ltd. vs CIT and Jute Corporate of India Ltd. vs CIT, allowed the admission of these additional grounds as they were legal in nature and could be adjudicated based on the existing record.

2. Validity of Notice under Section 143(2) of the Income Tax Act:
The assessee contended that the assessment was invalid because the AO issued a notice under Section 143(2) on the same day the return was filed, indicating a lack of application of mind. The Tribunal noted that the AO issued the first notice under Section 143(2) on 29.09.2015 without having the return of income and again on 26.10.2015 immediately after receiving the acknowledgment of e-filing. The Tribunal found that the AO issued the notice mechanically without examining the return, violating the mandatory provisions of Section 143(2).

The Tribunal referenced several judgments, including Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications, Micron Enterprises Pvt Ltd vs ITO, and Astech Industries Pvt Ltd vs DCIT, which supported the assessee's position that the notice under Section 143(2) must be issued after examining the return. The Tribunal concluded that the AO did not validly assume jurisdiction to frame the assessment under Section 143(3) due to the improper issuance of the notice under Section 143(2).

3. Jurisdiction of the Assessing Officer (AO) to Frame Assessment:
The Tribunal held that the AO's issuance of the notice under Section 143(2) without examining the return invalidated the entire assessment proceedings. The Tribunal quashed the assessment order and the first appellate order, as the AO did not comply with the mandatory provisions of Section 143(2), thus lacking the jurisdiction to frame the assessment.

Conclusion:
The Tribunal allowed the additional grounds of appeal, quashed the assessment order due to the invalid issuance of the notice under Section 143(2), and did not adjudicate the merits of the case as they became infructuous. The appeal of the assessee was allowed.

Order Pronounced:
The order was pronounced in the open Court on 03rd August, 2022.