2020 (3) TMI 1165 - AT - Income Tax

Reopening of assessment u/s 148 - no notice under section 143(2) of the Act was issued before the completion of assessment - HELD THAT - DR has stated that no return was filed by the assessee in response to notice u/s 148 and notice u/s. 143(2) is only mandatory, where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142 or in response to notice u/s. 148 whereas in this case no return was filed by the assessee and therefore, the contention of the Ld. DR requires verification at the level of the AO and thereafter, the AO may frame the assessment Denovo , as per law, after giving adequate opportunity of being heard to the assessee for which both the parties were agreed. The the assessee is at liberty to file any evidence in support of his claim before the AO. - Appeals filed by the Revenue stand allowed for statistical purposes.

Summary

Issues Involved:

1. Annulling the assessment order due to non-issuance of notice under section 143(2) before completion of assessment.
2. Ignoring the fact that no return was filed by the assessee in response to notice under section 148.
3. Time limit for issuance of notice under section 143(2).
4. Comparison with a similar case where the appeal was allowed.
5. Directing the Assessing Officer to reframe the assessment order under section 150.
6. Application of section 150(2) in barring the revival of assessment.

Issue-Wise Detailed Analysis:

1. Annulling the assessment order due to non-issuance of notice under section 143(2):
The Revenue contended that the Ld. CIT(A) erred in annulling the assessment order on the grounds that no notice under section 143(2) was issued before completing the assessment. The Tribunal noted that the Ld. DR reiterated this contention and emphasized that the CIT(A)'s decision was contrary to the facts and law.

2. Ignoring the fact that no return was filed by the assessee in response to notice under section 148:
The Revenue argued that the CIT(A) overlooked the fact that no return was filed by the assessee in response to the notice under section 148. They emphasized that a notice under section 143(2) is mandatory only when a return has been furnished under section 139, in response to a notice under sub-section (1) of section 142, or in response to notice under section 148. Since no return was filed in this case, the CIT(A)'s finding was challenged.

3. Time limit for issuance of notice under section 143(2):
The Revenue highlighted that as per section 143(2)(ii), there is a time limit for issuing a notice under section 143(2), which should be served before the expiry of six months from the end of the financial year in which the return is furnished. In this case, since no return was filed, the CIT(A)'s decision to annul the assessment order was questioned.

4. Comparison with a similar case where the appeal was allowed:
The Revenue referenced a similar case where the Hon'ble ITAT, Delhi Bench 'SMC', New Delhi, allowed the appeal of the Revenue. They argued that the CIT(A) erred by not considering this precedent.

5. Directing the Assessing Officer to reframe the assessment order under section 150:
The CIT(A) directed the AO to reframe the assessment order under section 150 of the I.T. Act, 1961. The Revenue contended that this direction was erroneous due to the provisions of sub-section (2) of section 150, which bars the revival of assessment if it would have been time-barred when the original assessment order was passed.

6. Application of section 150(2) in barring the revival of assessment:
The Revenue argued that section 150(2) provides a rider to section 150(1), stating that the provisions of sub-section (1) shall not apply where reassessment proceedings would have been time-barred at the time the order, which was the subject-matter of appeal, was passed. They emphasized that an appellate or revision authority cannot confer jurisdiction upon the AO if it had ceased due to the bar of limitation.

Conclusion:
The Tribunal heard both parties and reviewed the orders of the revenue authorities. It was found that the Ld. DR's contention regarding the non-issuance of notice under section 143(2) and the non-filing of return by the assessee required verification. Therefore, the Tribunal directed that the issues be set aside to the AO for verification and to frame the assessment 'Denovo' as per law, after giving adequate opportunity of being heard to the assessee. The assessee was also given the liberty to file any evidence in support of their claim before the AO. Consequently, all three appeals filed by the Revenue were allowed for statistical purposes.