2017 (4) TMI 114 - HC - Income Tax

Validity of reopening of assessment - Held that - It is settled law that the reassessment notice is a jurisdictional notice and it is equally settled law that ground of lack of jurisdiction may be raised at a subsequent stage as well. In the instant case the reassessment order was admittedly an exparte order and, therefore, there was no occasion for the assessee to have conceded to the reassessment proceedings. Further, in the instant case, it is clearly being shown by the assessee that he had raised specific ground both before the CIT (Appeals) and also before the Tribunal, challenging the jurisdiction of the Assessing Officer. The issue of validity of reassessment proceedings is a jurisdictional issue. It goes to the root of the matter. The Tribunal ought to have examined the ground no.3 raised in the assessee s appeal on its merit without being prejudiced by the facts that the reassessment order has been passed on the exparte basis in which the proceedings the assessee has not objected to the initiation of the reassessment.Accordingly, question no.1 is answered in favour of assessee and against the department.

Summary

Issues:
1. Validity of reassessment proceedings due to non-disclosure of assessment year in the notice u/s 148.
2. Jurisdictional requirement of serving a valid notice u/s 148 for reassessment.
3. Impact of non-supplying reasons along with the notice u/s 148 on the validity of reassessment proceedings.
4. Validity of reassessment order under section 144/148 when notice u/s 143(2) was not served.
5. Correctness of invoking section 69A without supporting evidence.

Issue 1: Validity of Reassessment Proceedings
The appellant challenged the reassessment proceedings due to the absence of the assessment year in the notice u/s 148. The Tribunal upheld the validity, citing the notice under Section 142(1) that mentioned the assessment year. The appellant argued that lack of jurisdiction can be raised at any stage, even after an exparte order. The Court referred to precedents emphasizing the importance of jurisdictional issues, ruling in favor of the appellant.

Issue 2: Jurisdictional Requirement of Notice u/s 148
The Court highlighted that reassessment notice is jurisdictional and can be challenged at any stage. The appellant raised objections at different levels, questioning the Assessing Officer's jurisdiction. Precedents were cited to support the appellant's stance that jurisdictional issues can be raised in appeals or revisions, emphasizing the root importance of proper notice and jurisdiction in tax proceedings.

Issue 3: Impact of Non-Supplying Reasons with Notice u/s 148
The Court considered whether non-supplying reasons with the notice u/s 148 could validate reassessment proceedings. The appellant's argument centered on the necessity of disclosing the assessment year in the notice. Precedents were cited to support the appellant's contention that jurisdictional issues, including notice validity, are fundamental and can be raised at any stage.

Issue 4: Validity of Reassessment Order under Section 144/148
The validity of the reassessment order under section 144/148 was questioned due to non-service of notice u/s 143(2) on the appellant. The Court examined the procedural requirements and found that the absence of proper notice could impact the validity of reassessment proceedings, emphasizing the importance of following statutory provisions.

Issue 5: Correctness of invoking Section 69A without Supporting Evidence
The Court assessed whether invoking section 69A without supporting evidence was justified. The appellant argued against the affirmation of section 69A without material evidence. The Court considered the lack of proof regarding the appellant's alleged capital and emphasized the necessity of substantiating claims under tax laws.

In conclusion, the Court ruled in favor of the appellant, setting aside the Tribunal's order and remitting the matter for a fresh decision in accordance with law. The judgment underscored the critical nature of jurisdictional issues, emphasizing the need for proper notices and adherence to statutory provisions in reassessment proceedings.