2016 (6) TMI 885 - AT - Income Tax

Validity of assessment - non issue of notice -Held that - If notice u/s 143(2) is not served on the assessee within the period prescribed in proviso to section 143(2), no valid assessment can be framed. Adverting to the facts of the instant case, it is found as an admitted position that the notice was affixed at the wrong address, which was never served on the assessee, as a consequence of which assessment was completed u/s 144 of the Act. Since the jurisdictional condition for making assessment, namely, the issue of notice u/s 143(2) was not satisfied,no valid assessment cannot follow. See Commissioner of Income Tax-II Versus M/s. Salarpur Cold Storage (Pvt.) Ltd. 2014 (8) TMI 732 - ALLAHABAD HIGH COURT - Decided in favour of assessee

Summary

Issues:
Non-service of notice u/s 143(2) by the AO leading to assessment u/s 144, Challenge to validity of issuance of notice u/s 143(2).

Analysis:

Issue 1: Non-service of notice u/s 143(2) by the AO leading to assessment u/s 144
The appeal raised concerns about the non-service of notice u/s 143(2) on the assessee, leading to the completion of assessment u/s 144. The assessee argued that the notice was served at a wrong address, WZ-32, Chukhandi Post Office, Tilak Nagar, New Delhi, whereas the correct address was Plot No.30, Dwarka Apartments, Shalimar Garden, Sahibabad. The contention was that since no notice u/s 143(2) was served, the assessment should be annulled. The Department, on the other hand, argued that the correct address was not properly conveyed to the Revenue and cited section 292BB to support the sending of notice to a wrong address. The Tribunal noted that the challenge to the issuance of notice u/s 143(2) was a pure question of law and admitted the grounds for adjudication. It was observed that the notice was indeed served at the wrong address, and as per legal precedents, failure to issue notice u/s 143(2) within the stipulated period renders the assessment invalid. Relying on relevant case law, the Tribunal held that since the jurisdictional condition for assessment was not met due to non-service of notice at the correct address, the assessment u/s 144 was declared invalid.

Issue 2: Challenge to validity of issuance of notice u/s 143(2)
The second ground of appeal challenged the validity of the issuance of notice u/s 143(2) by the AO. The Tribunal acknowledged that this issue was not specifically raised before the CIT(A) but could be considered as a legal ground. Citing a Supreme Court judgment, the Tribunal allowed the issue to be taken up for the first time before the Tribunal since no fresh investigation of facts was required. The Tribunal examined the facts, including the address on the return filed with the Department, and concluded that the notice was indeed served at the wrong address. Relying on legal precedents, the Tribunal held that the failure to issue notice u/s 143(2) within the prescribed period rendered the assessment invalid. Consequently, the Tribunal set aside the impugned order and declared the assessment to be invalid.

Conclusion:
The Tribunal allowed the appeal based on the non-service of notice u/s 143(2) at the correct address, leading to the invalidity of the assessment completed u/s 144. The Tribunal emphasized the importance of proper service of notices and upheld the legal principle that failure to issue notice u/s 143(2) within the stipulated period renders the assessment invalid. As a result, the Tribunal annulled the assessment and did not delve into the merits of the addition made during the assessment process.