2022 (3) TMI 1247 - HC - Income Tax

Validity of assessment - notice under Section 143(2) of the Act was not issued within the period of limitation - failure or delay in issuing the statutory notice required to be issued under Section 143(2) - HELD THAT - As on the basis of admitted fact that notice under Section 143(2) of the Act was not issued within the period of six months prescribed for the purpose, jurisdiction assumed by the Assessing Officer under Section 143(3) of the Act was assumed erroneously. Further, it is settled law that the issue of jurisdiction goes to the roots of the cause and such an issue can be raised at any belated stage of the proceeding including appeal - See KANWAR SINGH SAINI 2011 (9) TMI 960 - SUPREME COURT and MAVANY BROTHERS 2015 (10) TMI 1093 - BOMBAY HIGH COURT - no substantial question of law.

Summary

Issues:
Challenge to the order passed by ITAT for Assessment Year 2011-12; Interpretation of Section 292BB of the Income Tax Act, 1961; Jurisdiction of Assessing Officer; Validity of notice under Section 143(2) of the Act.

Interpretation of Section 292BB of the Income Tax Act, 1961:
The appellant challenged the ITAT order, arguing that the respondent-assessee cooperated during assessment proceedings without objecting to the non-service of notice under Section 143(2) of the Act. The appellant contended that as per Section 124(3) of the Act, challenges to the jurisdiction of the Assessing Officer must be raised within one month of notice issuance or completion of assessment. Referring to the Supreme Court judgment in Commissioner of Income-Tax vs. Laxman Das Khandelwal, the appellant highlighted that Section 292BB deems notice served if the assessee participated, but it does not cure the complete absence of notice. The High Court concurred with the Tribunal that Section 292BB does not condone the failure to issue the statutory notice under Section 143(2) but only addresses the failure of service. Previous court decisions were cited to support this interpretation.

Jurisdiction of Assessing Officer:
The High Court emphasized that Section 292BB does not grant the power to overlook the failure or delay in issuing the statutory notice under Section 143(2) of the Act. It was clarified that the section deals with service failure, not notice issuance failure. Citing the Supreme Court and a Division Bench judgment, the High Court reiterated that Section 292BB only cures infirmities in the service of notice, not the absence of notice itself. The failure to issue a notice under Section 143(2) before finalizing reassessment was deemed fatal to the reassessment order. The High Court concluded that the jurisdiction assumed by the Assessing Officer under Section 143(3) was erroneous due to the admitted fact that the notice under Section 143(2) was not issued within the prescribed period.

Validity of notice under Section 143(2) of the Act:
The High Court highlighted that the failure to issue a notice under Section 143(2) within the prescribed period rendered the assumption of jurisdiction by the Assessing Officer erroneous. It was established that the issue of jurisdiction is fundamental and can be raised at any stage of the proceeding, including appeal. Citing relevant case law, the High Court affirmed that the failure to issue a notice under Section 143(2) before finalizing reassessment was fatal to the order. Consequently, the High Court dismissed the appeal, stating that no substantial question of law arose for consideration.

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