2018 (3) TMI 1166 - HC - Income Tax

Reopening of assessment - failure to serve the Notice u/s 143(2) within prescribed time - Held that - It is a settled position in law that a service of notice under Section 143(2) of the Act is a sine qua non for completion of assessment under Section 143(3) of the Act. In this case, admittedly, the notice is served beyond the period as prescribed in Section 143(3) of the Act. The grievance of the Revenue that as the respondent had participated in the assessment proceedings and raised the objection of non-service of notice under Section 143(2) of the Act only at the end of the assessment proceedings, it must be deemed that the objection is waived but the proceedings in the absence of service of notice, within the prescribed time will not be saved by Section 292BB of the Act as the proviso thereto very clearly states that if an objection is raised before the completion of assessment proceedings, then, a notice would not be deemed to have been validly served upon the respondent within time provided under the Act. - Decided against revenue

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding Assessment Year 2009-10 based on non-service of notice under Section 143(2) of the Income Tax Act.

Analysis:
The appeal challenges the order passed by the Income Tax Appellate Tribunal (the Tribunal) for Assessment Year 2009-10, questioning the validity of the assessment order under Section 143(3) of the Income Tax Act due to failure in serving the notice under Section 143(2) within the prescribed time. The Tribunal allowed the respondent assessee's appeal by setting aside the Assessment Order dated 26th December, 2011, citing non-service of the notice within the statutory time limit as mandated by the Act. The Revenue contended that the respondent's participation in the assessment proceedings and raising the objection of non-service of notice at a late stage should not render the assessment void, terming it as a procedural irregularity. However, the court emphasized that service of notice under Section 143(2) is a mandatory requirement for completing assessments under Section 143(3), as established by the Supreme Court in previous judgments.

The court referred to the decision in Asstt. Commissioner of Income Tax Vs. Hotel Blue Moon, emphasizing the mandatory nature of serving notice under Section 143(2) within the prescribed time for assessment under Section 143(3). Despite the respondent's participation in the assessment proceedings and delayed objection regarding non-service of notice, the court highlighted that the objection cannot be deemed waived, as per the provisions of Section 292BB of the Act. Citing the precedent in Commissioner of Income Tax Vs. Abacus Distribution Systems (India) (P)Ltd., the court reiterated that serving notice beyond the stipulated period renders the assessment order void. Consequently, the court upheld the Tribunal's decision, stating that no substantial question of law arises from the matter, and hence, the appeal was dismissed without costs.

In conclusion, the judgment underscores the significance of timely service of notice under Section 143(2) of the Income Tax Act for the validity of assessments under Section 143(3). The court reiterated that failure to adhere to the statutory timelines for notice delivery could render the assessment order void, emphasizing the mandatory nature of the notice requirement as established by previous judicial precedents.