2017 (2) TMI 853 - AT - Income Tax

Validity of assessment proceedings - no notice issued - Held that - Jurisdictional AO has not issued any notice u/s 143(2) of the I.T. Act to the assessee, hence, the assessment order in dispute is invalid, void abnitio and against the provisions of the law and is not sustainable in the eyes of law. Therefore, the assessment order as well as the appellate order stand cancelled and appeal of the assessee stands allowed.

Summary

Issues Involved:
"Whether non-issuance of the notice u/s 143(2) within the prescribed time, made the whole block assessment order null and void and bad in law, despite the assessee not having raised any objection before the passing of the assessment order and despite the provisions of section 292BB of the Act?"

Detailed Analysis:

Issue 1: Disallowance of Alleged Unexplained Income
The appellant contested the disallowance of ?11,47,123 as opposed to the addition of ?16,58,000 under section 69A of the Income Tax Act. It was argued that the cash deposit was explained to the Ld. CIT(A) and the rejection of the explanation was arbitrary. The appellant claimed that the adverse findings were based on assumptions and ignored evidence supporting the non-requirement of disallowance.

Issue 2: Fair Opportunity of Being Heard
The appellant challenged the part disallowance sustained by the Ld. CIT(A) without providing a fair opportunity to be heard, alleging a violation of natural justice principles. The appellant sought the admission of an additional ground regarding the jurisdiction of the assessing officer in the absence of a notice under section 143(2) of the Act.

Issue 3: Admission of Additional Ground
The Tribunal admitted the additional legal ground raised by the appellant, citing the decision of the Hon'ble Supreme Court in NTPC Limited. The ground questioned the jurisdiction of the assessment order due to the absence of a notice under section 143(2), emphasizing the illegality and unsustainability of the proceedings.

Judicial Precedents and Decisions
The Tribunal referred to various judgments supporting the mandatory nature of issuing notices under section 143(2) for assessment validity. Cases like ACIT vs. Hotel Blue Moon and CIT vs. M/s Panorama Builders Pvt. Ltd. highlighted the significance of complying with procedural requirements for assessment proceedings.

Conclusion
Based on the absence of a notice under section 143(2) and following legal precedents, the Tribunal concluded that the assessment order was invalid, void ab initio, and against the provisions of the law. Consequently, the assessment order and the appellate order were canceled, and the appeal of the assessee was allowed.

This detailed analysis showcases the legal intricacies and the application of precedents in the judgment, emphasizing the significance of procedural compliance and natural justice principles in income tax assessments.