2021 (5) TMI 103 - AT - Income Tax

Validity of notice issued u/s 143(2) as barred by limitation - HELD THAT - A perusal of the notice shows that the Assessing Officer required the assessee to furnish his return of income. As mentioned elsewhere, the assessee had already filed return of income on 20.03.2017 which was processed u/s 143(1) of the Act on 20.05.2017. These glaring facts are very much available on the face of the assessment order which have been totally ignored by the Assessing Officer while issuing notice u/s 142(1) of the Act dated 22.09.2017. Subsequently, notice u/s 143(2) of the Act was issued on 16.10.2017. Once again, the Assessing Officer completely ignored the fact that notice u/s 143(2) of the Act was to be issued and served upon the assessee within six months from the end of the F.Y. in which the return of income was filed, i.e. 20.03.2017. This makes the notice issued u/s 143(2) of the Act barred by limitation. Once a valid return of income was available on record, which was already processed issuing notice u/s 142(1) of the Act asking the assessee to furnish fresh notice in itself is invalid making subsequently proceedings void ab initio. We are inclined to quash the assessment order dated 29.12.2017 framed u/s 143(3) of the Act for want of jurisdiction as notice issued u/s 143(2) of the Act is barred by limitation. Decided in favour of assessee.

Summary

Issues:
Jurisdiction of Assessing Officer under section 143(2) of the Income Tax Act, 1961 - Validity of notice issued u/s 143(2) - Barred by limitation.

Analysis:

1. The appeal challenged the correctness of the order of the Commissioner of Income Tax [Appeals]-29, New Delhi dated 10.09.2018 for Assessment Year 2016-17. The assessee raised an additional ground challenging the jurisdiction of the Assessing Officer under section 143(2) of the Act, citing that the notice issued was time-barred.

2. The issue of jurisdiction was not raised before lower authorities. However, the Tribunal admitted the plea as it goes to the root of the matter, following the Supreme Court's decision in the case of NTPC 229 ITR 383. The additional plea required no verification of facts as they were evident in the assessment order.

3. The challenge pertained to the validity of the notice issued under section 143(2) of the Act, contended by the assessee to be beyond the limitation period.

4. The original return of income was filed on 20.03.2017, processed under section 143(1) on 20.05.2017. Subsequently, a notice under section 142(1) was issued on 22.09.2017, centralizing the case from Faridabad to New Delhi post a search and seizure operation.

5. Despite the existing processed return, a fresh notice under section 142(1) was issued, followed by a notice under section 143(2) on 16.10.2017. The Tribunal noted that the notice under section 143(2) should have been issued within six months from the end of the financial year in which the return was filed, rendering the notice time-barred.

6. The Tribunal held that since a valid return was already on record and processed, the issuance of a fresh notice under section 142(1) was invalid, making subsequent proceedings void ab initio.

7. Considering the facts and provisions of the Act, the Tribunal quashed the assessment order under section 143(3) for want of jurisdiction due to the time-barred notice under section 143(2), without delving into the case's merits.

8. Consequently, the appeal by the assessee was allowed, and the assessment order dated 29.12.2017 under section 143(3) was quashed due to the jurisdictional issue.

This detailed analysis covers the jurisdictional challenge regarding the notice issued under section 143(2) of the Income Tax Act, 1961, and the subsequent decision by the Appellate Tribunal ITAT Delhi.