2023 (1) TMI 354 - AT - Income Tax

Non-service of notice u/s 143(2) - HELD THAT - Keeping in view the undisputed fact that the envelope containing the notice u/s 143(2) was not served on the assessee as admitted by the AO and also by the CIT(A) - we hold that the service of notice u/s 143(2) within the prescribed time limit is a sine qua non for completion of assessment u/s 143(3). Appeal of the assessee is allowed.

Summary

Issues:
1. Jurisdiction of ACIT to assess the assessee based on transfer memo
2. Validity of assessment order based on notice u/s 143(2) not served
3. Applicability of Section 292BB in case of non-service of notice
4. Legal consequences of non-service of notice u/s 143(2)

Analysis:

Issue 1: Jurisdiction of ACIT
The appeal challenged the assessment proceedings conducted by the ACIT, Circle 55(1), New Delhi, questioning the jurisdiction based on a transfer memo. The contention was that the ACIT assumed jurisdiction illegally. The assessee argued that the assessment order should be quashed due to this jurisdictional issue.

Issue 2: Validity of Assessment Order
The primary argument revolved around the non-service of the notice u/s 143(2) on the assessee by the ITO, Ward-35(4). The notice dispatched on 06.08.2013 was returned undelivered, raising concerns about the validity of the assessment order based on this notice. The revenue authorities relied on Section 292BB, claiming that the notice was served at the assessee's last known address.

Issue 3: Applicability of Section 292BB
The assessee contested the applicability of Section 292BB, emphasizing the distinction between the issue and service of notice. They argued that since the notice was undelivered and found in the assessment folder, Section 292BB did not apply. The contention was that the notice should have been served to initiate valid assessment proceedings.

Issue 4: Legal Consequences of Non-Service of Notice
Citing legal precedents, including judgments from various High Courts and the Supreme Court, the Tribunal highlighted the significance of serving the notice u/s 143(2) within the prescribed time limit. The Tribunal held that the non-service of the notice rendered the assessment proceedings invalid. Relying on judicial decisions, the Tribunal concluded that the absence of a served notice deprived the Assessing Officer of jurisdiction to make the assessment.

In conclusion, the Tribunal allowed the appeal, emphasizing the essential requirement of serving the notice u/s 143(2) for the completion of valid assessment proceedings. The judgment underscored the legal significance of proper notice service in upholding the integrity of assessment procedures.