2021 (4) TMI 1006 - AT - Income Tax

Non issue of mandatory notice u/s 143(2) - HELD THAT - As relying on Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT and LAXMAN DAS KHANDELWAL 2019 (8) TMI 660 - SUPREME COURT the passing of assessment order u/s 143(3) of the Act, without issuing notice u/s 143(2) of the Act, by the ITO, ward-9(2), Kolkata, is bad in law and has to be quashed.

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer to issue notice under Section 143(2) of the Income Tax Act, 1961.
2. Validity of the assessment order passed without issuing a valid notice under Section 143(2).
3. Enhancement of income by the Commissioner of Income Tax (Appeals) under Section 251 of the Income Tax Act, 1961.
4. Principles of natural justice and adequate opportunity of hearing.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer to Issue Notice under Section 143(2):
The assessee challenged the jurisdiction of the Assessing Officer (AO) to issue notice under Section 143(2) of the Income Tax Act, 1961. The notice was initially issued by ITO, Ward-5(3), Kolkata, who did not have jurisdiction over the assessee. The assessment was later completed by ITO, Ward-9(2), Kolkata, without issuing a fresh notice under Section 143(2). The Tribunal admitted this additional ground of appeal, citing that jurisdictional issues go to the root of the matter and do not require investigation into facts. The Tribunal referenced the judgment in NTPC vs. CIT (229 ITR 383) to support admitting the legal grounds.

2. Validity of the Assessment Order Passed Without Issuing a Valid Notice under Section 143(2):
The Tribunal held that the assessment order is bad in law as the mandatory notice under Section 143(2) was not issued by the jurisdictional AO. The Tribunal cited several cases, including Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, Soma Roy vs. ACIT, and Krishnendu Chowdhury vs. ITO, where similar circumstances led to the conclusion that assessments without valid notices under Section 143(2) are void. The Hon'ble Supreme Court's decision in CIT vs. Laxman Das Khandelwal (108 taxmann.com 183) was also referenced, emphasizing that Section 292BB does not cure the complete absence of notice.

3. Enhancement of Income by the Commissioner of Income Tax (Appeals) under Section 251:
The assessee appealed against the enhancement of income by ?17,18,00,000/- under Section 68 of the Act by the CIT(A). The Tribunal did not delve into the merits of this issue as the assessment itself was quashed on jurisdictional grounds. The enhancement was deemed uncalled for, and the Tribunal noted that the CIT(A) did not examine the assessment records and documents relating to share application adequately.

4. Principles of Natural Justice and Adequate Opportunity of Hearing:
The assessee argued that the appellate order was passed without giving adequate opportunity of hearing, violating the principles of natural justice. Although this issue was raised, the Tribunal's decision to quash the assessment on jurisdictional grounds rendered further discussion on this point unnecessary.

Conclusion:
The Tribunal quashed the assessment orders for both Assessment Years 2011-12 and 2012-13, holding that the absence of a valid notice under Section 143(2) by the jurisdictional AO rendered the assessments void. Consequently, the appeals of the assessee were allowed, and the Tribunal did not address the other issues on merits, as it would be an academic exercise.