2019 (5) TMI 1557 - HC - Income Tax

Non issuance of Notice u/s 143(2) within the time- validity of assessment - curable defect u/s 292BB - HELD THAT - As could be seen from the material on record, the assessee neither appeared nor co-operated for inquiry during assessment. It is an exparte assessment concluded by the respondent Authority, rejecting the time sought for by the petitioner to file objections to the Notices issued u/s 143(2) and u/s 142(1). It is clear that service of notice has to be made on the assessee within a period of six months from the end of financial year in which return is furnished, not from the date or issuance of notice. The relevant factor is the date of service of Notice and the same if to be considered in accordance with the e-Portal maintained by the Department, an exception has to be taken with the order impugned herein. In such circumstances, Section 292BB would not attract and the arguments of the learned counsel for the revenue deserves to be negated. It is well settled legal principle that omission on the part of the Assessing Authority to issue proper notice under Section 143(2) of the Act cannot be a procedural irregularity and the same is not curable, which is referred in Hotel Blue Moon s case 2010 (2) TMI 1 - SUPREME COURT . The flaw found in the notice issued u/s 143(2) goes to the root of the matter and the same cannot be cured or dispensed with, to consider the case on merits. The Assessment Order is passed based on the invalid Notice, which does not survive. Notice is the foundation. Assessment Order built upon such defective notice would certainly fall to the ground. Writ petition is allowed.

Summary

Issues:
Challenge to Assessment Order based on Notice under Section 143(2) of the Income Tax Act, 1961.

Analysis:
1. The petitioner challenged the Assessment Order for the Assessment Year 2016-17, contending that the Notice under Section 143(2) of the Act dated 24.08.2017, served on 19.12.2017, was invalid due to non-compliance with the proviso to Section 143(2) of the Act.

2. The Revenue argued that the notice was dispatched to the petitioner's address on 24.08.2017, and the e-Portal of the Income Tax Department showed the date of service as 19.12.2017. Reference was made to Section 292BB of the Act, stating that the petitioner's participation in the assessment proceedings validated the notice.

3. The Court examined the proviso to Section 143(2) of the Act, emphasizing that the notice should be served within six months from the end of the financial year in which the return is furnished. It noted discrepancies between the e-Portal date and the actual service date of the notice, highlighting the importance of the date of service.

4. Section 292BB of the Act was analyzed, clarifying that the petitioner's appearance or cooperation in the inquiry is necessary to deem the notice served in time. As the petitioner did not participate in the assessment, Section 292BB could not be invoked, and the arguments favoring the Revenue were dismissed.

5. Referring to legal precedent, the Court reiterated that a defective notice under Section 143(2) cannot be cured and goes to the root of the matter. It emphasized that the Assessment Order based on an invalid notice is unsustainable, as the notice forms the foundation of the assessment process.

6. Consequently, the Court allowed the writ petition, quashing the Assessment Order dated 19.12.2018. The judgment highlighted the critical importance of proper notice issuance under Section 143(2) for a valid assessment process and upheld the principle that procedural irregularities in notice issuance are not curable, impacting the validity of subsequent assessment orders.