2021 (10) TMI 262 - AT - Income Tax

Validity of reassessment proceedings for non-issuance of statutory notice u/s 143(2) - HELD THAT - Additional ground issue raised by the assessee is that reassessment proceedings are liable to be quashed, on the specific ground of non-issuance of statutory notice u/s 143(2) of the Act. It is an admitted fact before us that for the instant year under appeal for the purpose of reassessment Ld. AO only issued notice u/s 148 of the Act but failed to issue statutory notice u/s 143(2) of the Act. Whether the issue of notice u/s 143(2) of the Act is mandatory for carrying out reassessment proceedings, we find that Hon'ble Apex Court in a recent judgment in the case of CIT vs. Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT adjudicating similar issue laying down the ratio that the issuance of notice u/s 143(2) of the Act being a prerequisite and in the absence of such notices the entire proceeding would be invalid. Since notice u/s 143(2) of the Act was not issued to the assessee, before commencing reassessment proceedings the error being fatal and uncorrectable renders the reassessment proceedings void ab initio and thus liable to be quashed. Hence the assessment so framed without issuance of notice u/s 143(2) of the Act is hereby quashed being contrary to law - Decided in favour of assessee.

Summary

Issues Involved:
1. Admission of additional legal ground.
2. Validity of reassessment proceedings due to non-issuance of statutory notice under Section 143(2) of the Income Tax Act, 1961.

Detailed Analysis:

1. Admission of Additional Legal Ground:
The assessee raised an additional ground challenging the reassessment on the basis of non-issuance of a statutory notice under Section 143(2) of the Income Tax Act. The Tribunal considered precedents from the Hon'ble Apex Court and jurisdictional High Court, affirming that legal grounds can be admitted if they go to the root of the matter and all relevant materials are on record. The Tribunal cited judgments from the National Thermal Power Co. Ltd. vs. CIT, CIT vs. Eicher Motors Ltd., and DCIT vs. Turquoise Investment & Finance Ltd., establishing that the Tribunal can admit and consider new legal grounds.

2. Validity of Reassessment Proceedings Due to Non-Issuance of Statutory Notice under Section 143(2):
The Tribunal examined whether the issuance of notice under Section 143(2) is mandatory for reassessment proceedings. The Tribunal found that the Assessing Officer (AO) did not issue the required notice under Section 143(2), a fact uncontroverted by the Revenue. The Tribunal referenced multiple judicial precedents, including the Hon'ble Apex Court's judgment in CIT vs. Laxman Das Khandelwal, which mandates the issuance of such notice. The Tribunal emphasized that Section 292BB, which deems notice valid if the assessee participates in proceedings, does not apply to the complete absence of notice. The Tribunal concluded that the failure to issue the notice under Section 143(2) rendered the reassessment proceedings void ab initio. Consequently, the reassessment was quashed.

Conclusion:
The Tribunal allowed the assessee's appeal, quashing the reassessment proceedings due to the non-issuance of the mandatory notice under Section 143(2). The remaining grounds of appeal were dismissed as infructuous since the reassessment proceedings were invalidated. The order was pronounced on 09.08.2021.