2018 (10) TMI 1167 - AT - Income Tax

Reopening of assessment u/s 147 - no notice under section 143(2) of the Act was issued - pending return of income - Return was filed by the assessee in response to notice under section 148 - Held that - Notice under section 148 dated 1.04.2013 was issued and AO before filing of return by assessee in response to this notice, a notice under section 143(2) of the Act dated 03.05.2013 requiring the assessee to attend the office on 13.05.2013 was also issued. Up to this date i.e. 13.05.2013 no return of income was filed by the assessee in response to notice under section 148 of the Act. In the absence of pending return of income, the provisions of section 143(2) is clear that notice can be issued only when a valid return is pending for assessment. Accordingly, this notice has no meaning. The assessee filed return of income under section 148 of the Act vide letter dated 23.05.2013 stating that the original return of income can be treated as return filed in response to notice u/s 148. It means that the assessee has filed return of income only on 23.05.2013. No notice u/s 143(2) of the Act was issued by the Department on or after 23.05.2013. According to us the assessment framed without issuing a notice under section 143(2) when the return was filed by the assessee in response to notice under section 148 the assessment framed is bad in law. Accordingly, assessment is quashed. - Decided in favour of assessee.

Issues:
1. Validity of assessment order due to lack of notice under section 143(2) of the Income Tax Act.
2. Admissibility of additional ground raised by the assessee regarding jurisdictional issue.
3. Interpretation of legal provisions regarding issuance of notices under section 143(2) and 148 of the Act.

Issue 1: Validity of Assessment Order:
The appeal concerns the validity of the assessment order as the appellant contests the absence of a notice under section 143(2) of the Income Tax Act. The appellant argues that the assessment order is flawed as the notice under section 143(2) was issued before the filing of the return of income in response to the notice under section 148. The appellant relies on legal precedents to support the contention that such a procedural error renders the assessment invalid. The tribunal examines the sequence of events, highlighting that the return of income was filed only after the notice under section 148 and no subsequent notice under section 143(2) was issued. Citing judgments from the Bombay High Court and Delhi High Court, the tribunal concludes that the assessment without a notice under section 143(2) when the return was filed in response to a notice under section 148 is legally untenable. Consequently, the tribunal quashes the assessment, upholding the appellant's argument regarding the jurisdictional issue.

Issue 2: Admissibility of Additional Ground:
The appellant raised an additional ground challenging the validity of the assessment based on jurisdictional issues. The tribunal admits this additional ground, emphasizing its significance in addressing the core matter of assessment validity. The appellant's argument is supported by legal principles, and the tribunal finds no objection from the CIT Departmental Representative regarding the admission of the additional ground. Subsequently, the tribunal proceeds to adjudicate on this additional ground, recognizing its jurisdictional importance in determining the legality of the assessment order.

Issue 3: Interpretation of Legal Provisions:
The tribunal delves into the interpretation of legal provisions governing the issuance of notices under sections 143(2) and 148 of the Income Tax Act. By analyzing the timeline of events and the relevant statutory requirements, the tribunal underscores the necessity of a valid return pending assessment for the issuance of a notice under section 143(2). Referring to judgments from the Bombay High Court and Delhi High Court, the tribunal establishes that the absence of a notice under section 143(2) in cases where the return was filed in response to a notice under section 148 renders the assessment invalid. This detailed analysis of legal provisions and precedents forms the basis for the tribunal's decision to quash the assessment due to procedural irregularities.

In conclusion, the tribunal allows the appeal of the assessee, dismissing the appeal of the Revenue based on the jurisdictional issue and the consequent invalidity of the assessment order. The detailed analysis of legal provisions, precedents, and procedural timelines forms the foundation for the tribunal's decision to uphold the appellant's challenge to the assessment order.

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