2020 (12) TMI 604 - AT - Income Tax

Reopening of assessment - requirement of issue of notice u/s 143 - assessee individual has not filed any return of income u/s 139(1) - HELD THAT - When Section 148 notice was issued to the assessee, the assessee was given time for 30 days to file the return of income. The assessee neither filed original return u/s 139(1) of the Act nor filed any return in response to the notice u/s 148 of the Act within the time given by the Assessing Officer. The assessee filed the return of income only on 23rd September, 2017. Therefore, these returns cannot be considered as a return in response to the notice u/s 148 - return filed by the assessee is as such non-est. There is no requirement of issuance of notice u/s 143(2) of the Act, when there is no valid return available before the Assessing Officer. However, the judicial precedent clearly says that while framing the assessment order u/s 143(3) read with Section 147 AO must issue a notice u/s 143 (2) of the Act as per the Proviso to Sub-Section 143(2) of the Act provides specifically that where a return has been filed by the assessee, either u/s 139 or u/s 143(1) or u/s 148 of the Act. In this case, there is no such return filed by the assessee. In view of this, we categorically held that there is no infirmity in the order of the Coordinate Bench in holding that there is no requirement of issue of notice u/s 143 of the Act in the present case. Whether in case the return filed by the assessee as late as in the month of September, 2017 can be treated as valid return or not? - The answer is clearly No as even after 30 days any return of income filed by the assessee would not have been taken cognizance by the Assessing Officer. There is no requirement of the law that if the return is filed any time before Assessing Officer u/s 148 read with 143 (3) of the Act, the Assessing Officer should have been issued notice u/s 143(2). The question will arise then that if the assessee was issued a notice u/s 148 of the Act and he does not file any return of income till the date of framing of the assessment order or also filed a return before passing of the assessment order u/s 143(2) of the Act, then what is the stand Revenue should take? In such case, it is not at all possible that the assessee can contest that notice u/s 143(2) should have been issued, in all such cases where reassessment is required to be made.

Issues:
1. Validity of assessment order due to non-issuance of notice u/s 143(2).
2. Requirement of notice u/s 143(2) in case of reopened assessment proceedings.
3. Consideration of judicial precedents in determining the necessity of notice u/s 143(2).
4. Validity of return filed by the assessee after the issuance of notice u/s 148.

Analysis:

Issue 1: Validity of assessment order due to non-issuance of notice u/s 143(2)
The applicant contended that the assessment order was erroneous as no notice u/s 143(2) was issued, which is a statutory requirement. The applicant argued that the notice u/s 142(1) was issued instead of u/s 143(2), and the absence of the latter notice rendered the assessment illegal. The applicant relied on the judgment of the Hon'ble Delhi High Court to support their claim. However, the Coordinate Bench dismissed the ground of appeal, stating that the notice was duly served based on the records. The applicant sought rectification, emphasizing the necessity of considering their arguments and material on record. The Ld. AR supported the application, highlighting the absence of a notice u/s 143(2) in the reopening of assessment proceedings.

Issue 2: Requirement of notice u/s 143(2) in case of reopened assessment proceedings
The Ld. AR argued that the Assessing Officer should have issued a notice u/s 143(2) when reopening the assessment, as mandated by law. The Ld. AR referred to judicial decisions to support the necessity of such a notice. On the contrary, the Ld. DR contended that there was no apparent mistake in the Coordinate Bench's order and that the assessment was valid despite the absence of a notice u/s 143(2). The Ld. DR emphasized that the addition on merit was open for contest by the assessee, minimizing any prejudice caused.

Issue 3: Consideration of judicial precedents in determining the necessity of notice u/s 143(2)
The Tribunal analyzed various judicial precedents cited by the parties to determine the requirement of a notice u/s 143(2) in reopened assessment cases. The Tribunal differentiated the facts of the present case from those in the cited judgments, emphasizing the absence of a valid return filed by the assessee in response to the notice u/s 148. The Tribunal clarified that the lack of a valid return before the Assessing Officer negated the necessity of a notice u/s 143(2) in the current scenario.

Issue 4: Validity of return filed by the assessee after the issuance of notice u/s 148
The Tribunal examined the validity of the return filed by the assessee after the issuance of notice u/s 148. It was established that the return filed by the assessee was beyond the stipulated time frame, rendering it non-est. The Tribunal emphasized that the absence of a valid return filed in response to the notice u/s 148 eliminated the need for a notice u/s 143(2). The Tribunal concluded that the assessee's delayed compliance did not warrant the issuance of a notice u/s 143(2) and upheld the Coordinate Bench's decision.

In conclusion, the Tribunal dismissed the Miscellaneous Application, ruling that the absence of a valid return filed within the prescribed time frame negated the requirement for a notice u/s 143(2) in the present case. The decision was based on a thorough analysis of the legal provisions and judicial precedents cited by the parties.

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