2024 (2) TMI 745 - AT - Income Tax

Revision u/s 263 against non-Est order - as per assessee assessment which was taken-up for revisionary proceedings was completed u/s 143(3) r.w.s. 147 but without issuance of statutory notice u/s 143(2), therefore, the assessment was bad in law, invalid and void ab initio - as per DR Return filed by the assessee was delayed which is against the provisions of the law, thus, has been categorized as a non-Est return which does not required issuance of any notice u/s 143(2), therefore, the order passed u/s 147 r.w.s. 143(3) was a valid order and the order passed by the Ld. PCIT u/s 263 was eligible to be upheld Validity of a return filed belatedly in response to notice u/s 148 - HELD THAT - When a return is filed by the assessee beyond the stipulated time period, the same would not render as invalid or non-Est in the eyes of law merely because it was filed with delay. Analogy in this respect has been duly discussed and decided in the case of Smt. Amani Ismile Rangari 2017 (10) TMI 1079 - ITAT MUMBAI which in our opinion was the right approach to be adopted, accordingly, in the present case the return filed by the assessee though belatedly, which has been recognised by issuing a valid acknowledgement, subsequently the same was E-verified by the assessee and has been duly accepted by the e-portal of the department. AO has acted upon such return therefore the same cannot be treated as a non-Est return. Mandation of issuance of notice u/s 143(2) in completing the assessment u/s 147 r.w.s. 143(3) - As in the case of Shri Dev Narayan Sahu 2022 (5) TMI 110 - ITAT RAIPUR wherein it has been decided that, issuance of notice u/s 143(2) is a sine-qua-non for framing of an assessment u/s 143(3), this view is well supported by the judgment of M/s Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT , wherein as held that issuing of notice u/s 143(2) of the Act is mandatory and not a procedural mistake, if the notice is not served within the prescribed period then assessment order would be invalid. In view of such observations, we are of the considered opinion that the order passed u/s 147 r.w.s. 143(3) in the present case was invalid on account of non-issuance of notice u/s 143(2) by the Ld. AO which is an accepted fact discernible from the order of Ld. PCIT, wherein it has been impliedly observed that no notice u/s 143(2) was issued, stating that the issuance of notice u/s 143(2) is not required. Validity of an assessment order during the Appellate Proceedings - This issue duly answered in the case of M/s Maruti Clean Coal Power Ltd 2022 (10) TMI 1215 - ITAT RAIPUR Accordingly, we hold that as per law the assessee is permitted to challenge the validity of order passed u/s 263 on the ground that the impugned assessment order selected for revisionary proceedings, was a non-Est order. Order framed u/s 147 r.w.s. 143(3), which was passed dehors issuance of a notice u/s 143(2) is liable to be treated as non-Est, and therefore, the revisionary proceedings initiated u/s 263 are without appropriate jurisdiction with the Ld. PCIT, since, the same cannot be invoked on the foundation of an invalid/ void ab initio assessment order.

Summary

Issues Involved:
1. Jurisdiction under Section 263.
2. Validity of the assessment order passed under Section 147 read with Section 143(3) without issuance of notice under Section 143(2).
3. Assumption of jurisdiction by the Principal Commissioner of Income Tax (PCIT) based on audit objection.
4. Requirement of notice under Section 143(2) for a return filed in response to notice under Section 148.
5. Validity of the return filed beyond the stipulated time period under Section 148.

Summary:

Issue 1: Jurisdiction under Section 263
The assessee challenged the jurisdiction assumed by the Principal Commissioner of Income Tax (PCIT) under Section 263, arguing that the assessment order passed under Section 147 read with Section 143(3) was without jurisdiction, illegal, and void ab initio due to the non-issuance of notice under Section 143(2). The tribunal found that the PCIT could not assume jurisdiction under Section 263 for non-Est proceedings vitiated by the non-issuance of a mandatory notice under Section 143(2).

Issue 2: Validity of the Assessment Order
The tribunal held that the assessment order passed under Section 147 read with Section 143(3) without issuing a notice under Section 143(2) is invalid and non-Est. This view is supported by the judgment of the Hon'ble Supreme Court in the case of ACIT vs. Hotel Blue Moon, which mandates the issuance of notice under Section 143(2) for a valid assessment order under Section 143(3).

Issue 3: Assumption of Jurisdiction by PCIT
The PCIT's action under Section 263 was based on an audit objection. The tribunal noted that the PCIT cannot assume jurisdiction over an assessment order that is non-Est in the eyes of law. This position is supported by various judicial pronouncements, including the case of Maruti Clean Coal and Power Ltd. vs. PCIT-I, Raipur.

Issue 4: Requirement of Notice under Section 143(2)
The tribunal emphasized that the issuance of notice under Section 143(2) is a sine qua non for completing an assessment under Section 143(3). The absence of such a notice renders the assessment order invalid. This principle was reiterated in the case of Shri Dev Narayan Sahu vs. ITO by the ITAT, Raipur Bench.

Issue 5: Validity of the Return Filed Beyond the Stipulated Time
The tribunal held that a return filed beyond the stipulated time period under Section 148 does not render it invalid or non-Est. The return filed by the assessee was accepted by the Assessing Officer, and the assessment was completed based on this return. Therefore, the return cannot be treated as non-Est merely because it was filed with a delay.

Conclusion:
The tribunal concluded that the assessment order passed under Section 147 read with Section 143(3) without issuing a notice under Section 143(2) is non-Est and invalid. Consequently, the PCIT's order under Section 263, based on such a non-Est assessment order, is also invalid and without jurisdiction. The appeal of the assessee was allowed, and the order under Section 263 was set aside.