2003 (4) TMI 257 - AT - Income Tax

Summary

Issues involved: Appeal against the order of the CIT(A) regarding fresh assessment and its validity.

Issue 1: Validity of assessment based on notice under section 143(2)
The assessee filed a return of income in response to a notice u/s 148 of the Income-tax Act. The contention was that the notice u/s 143(2) was served beyond the statutory period of twelve months from the end of the month in which the return was furnished. The mandatory requirement of serving a notice within the specified time period is crucial for the validity of the assessment under section 143(3) or 144. The assessment framed without a valid notice is considered invalid as per the decision of the Ahmedabad Bench of the Tribunal in Rakesh S. Mardia v. Dy. CIT [2002] 74 TTJ 836.

Issue 2: Interpretation of statutory provisions
The procedure for assessment under the Income-tax Act, particularly under sections 139 to 158, outlines the steps from filing returns voluntarily to the issuance of notices under various sections. Section 143(2) mandates the Assessing Officer to serve a notice within twelve months from the end of the month in which the return is furnished. Failure to comply with this requirement renders any subsequent assessment invalid. The Act distinguishes between different modes of assessments, including assessments based on returns filed and ex parte assessments under sections 143(2) and 144 respectively.

Issue 3: Compliance with statutory timelines
Section 153(2) sets the time limit for framing assessments, especially in cases of reopened assessments. The outer time limit for framing assessments is crucial, and the Assessing Officer must strictly adhere to the procedural requirements under section 143(2) to ensure the validity of the assessment. The decision emphasizes the importance of following statutory timelines and procedures to maintain the integrity of the assessment process.

Conclusion:
The assessment in question was deemed invalid due to the notice under section 143(2) being served beyond the prescribed time limit, as per the provisions of the Income-tax Act and relevant judicial precedents. The Tribunal quashed the assessment based on this procedural irregularity, highlighting the significance of adherence to statutory timelines in the assessment process.