2021 (11) TMI 1182 - AT - Income Tax

Validity of assessment - No notice u/s 143(2) as issued and served to the appellant - HELD THAT - As return of income was filed by the assessee on 31.01.2014 declaring loss. The assessment u/s 143(3) of the Act was passed on 30.03.2015. AO in the remand report itself before the ld. CIT (Appeals) has stated that there is no official record available with him to show issuance of notice. CIT (Appeals) based on this relying on the decisions of several High Courts as per para No. 4 quashed the order of the AO. We concur with the order of the ld. CIT (Appeals) that where there is no issuance of notice under Section 143(2) of the Act the order passed by the ld. AO deserves to be quashed. Issuance of notice u/s 143 (2) of the act is foundation stone for the assessment order. Even before us, no proof of issuance of any notice under Section 143(2) of the Act was shown. Thus we confirm the order of the ld. CIT (Appeals) in quashing the assessment order. Decided in favour of assessee.

Summary

Issues:
Appeal against order deleting addition of unexplained credit, validity of assessment order under Section 143(3) of the Income-tax Act, 1961, quashing of assessment order due to lack of notice under Section 143(2) of the Act.

Analysis:
1. The appeal was filed against the order passed by the ld. CIT (Appeals) for assessment year 2013-14. The assessee, a real estate development company, declared a loss in its income tax return. During a search at a related party's premises, incriminating documents were found, leading to a notice under Section 153C of the Act being issued to the assessee. The Assessing Officer made an addition of Rs. 7,38,80,000 under Section 68 of the Act as unexplained credit, as the assessee failed to prove the identity, creditworthiness, and genuineness of certain transactions. The total income was determined at Rs. 7,38,77,320 in the assessment order passed under Section 143(3) of the Act.

2. The assessee contended that no notice under Section 143(2) of the Act was issued and served within the stipulated time frame. The ld. CIT (Appeals) found that the notice was not valid as per RTI inquiry, and since no valid notice was issued, the assessment order was quashed. The Revenue appealed, arguing that the assessee had appeared before the Assessing Officer, invoking Section 292BB of the Act. However, as the assessee did not appear during the appeal, the issue was decided on merits.

3. The Tribunal concurred with the ld. CIT (Appeals) that the absence of a notice under Section 143(2) of the Act rendered the assessment order invalid. The ld. Assessing Officer admitted to the lack of official records to prove notice issuance. Citing various High Court decisions, the Tribunal upheld the quashing of the assessment order. It emphasized that the issuance of notice under Section 143(2) is fundamental to the assessment process and without proof of such notice, the assessment order cannot stand. Consequently, the Tribunal confirmed the order quashing the assessment order without delving into the merits of the addition.

4. Therefore, the Tribunal dismissed the appeal of the Assessing Officer, emphasizing the importance of complying with procedural requirements such as issuing a notice under Section 143(2) of the Act. The order was pronounced on 11/11/2021.