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2024 (4) TMI 1072 - AT - Income TaxValidity of the assessment order passed u/s 143(3) - No return of income filled by assessee - Assumption of jurisdiction to make an assessment - whether a curable defect u/s 292BB - HELD THAT - As provisions of section 143 read as a whole, makes it clear that assumption of jurisdiction to make an assessment u/s 143(3) is based on notice issued u/s 143(2), which gets triggered only upon filing of return of income either u/s 139(1) or in response to notice issued u/s 142(1) of the Act. In the facts of the present appeal, undisputedly, on the date of issuance of notice u/s 143(2) there was no return of income filed by the assessee either u/s 139, or in response to notice issued u/s 142(1). There was no occasion for the AO to issue notice u/s 143(2) in absence of a return of income. More so, when assessee s case was selected under manual scrutiny, which presupposes that the AO must have examined all the facts and materials available on record. The very initiation of assessment proceedings u/s 143(3) of the Act, suffers from serious jurisdictional error and infirmity. Before us, DR has made an attempt to make out a case in favour of the Department by submitting that notice u/s 143(2) of the Act was issued based on Form 29B, Form 3CA and form 3CEB. We are not impressed with such submission. The provision contained u/s 143(2) makes it clear that only upon filing of return of income proceedings could have been initiated. Certainly Form 29B, Form 3CA and Form 3CEB cannot be considered as return of income in terms of section 139 of the Act. Though, in the assessment order, the AO has referred to only a single notice dated 23.09.2015 issued under section 143(2) however, in letter dated 27.12.2021, AO has referred to two more notices u/s 143(2) issued on 26.05.2016 and 25.07.2016. Even assuming that such notices were actually issued, however, they were issued prior to the filing of return of income on 26.12.2016. As fairly well settled that an assessment order u/s 143(3) can only be passed based on a valid notice issued under section 143(2) - In this context, we may refer to a decision in case of PCIT Vs. Marck Biosciences Ltd. 2019 (4) TMI 215 - GUJARAT HIGH COURT . As notice issued u/s 143(2) was prior to filing of return of income by the assessee, at which point of time, the provisions of section 143(2) could not have got triggered. Therefore, the very assumption of jurisdiction by the Assessing Officer was invalid. That being the case, section 292BB of the Act cannot come to the rescue of the Department. Notice issued under section 143(2) of the Act is invalid - Decided in favour of assessee.
Issues Involved:
The validity of the assessment order u/s 143(3) of the Income-tax Act, 1961 based on the notice issued u/s 143(2) of the Act prior to the filing of the return of income. Issue 1: Validity of Assessment Order The Appellate Tribunal ITAT DELHI considered cross appeals arising from the order dated 09.11.2017 passed by the Commissioner of Income Tax (Appeals)-28, New Delhi, for the assessment year 2014-15. The assessee challenged the validity of the assessment order dated 30.12.2016 passed u/s 143(3) of the Act. The Assessing Officer made additions for unexplained expenditure and purchases. The first appellate authority granted partial relief to the assessee but did not address the challenge to the validity of the assessment order. The assessee contended that the notice issued u/s 143(2) was invalid as it was issued before the filing of the return of income, rendering the assessment order invalid. The Department argued that the assessee's participation in the assessment proceedings cured any infirmity in the notice. The Tribunal analyzed the provisions of section 143 of the Act, emphasizing that the jurisdiction to make an assessment u/s 143(3) is based on the notice u/s 143(2), triggered upon the filing of the return of income. As the notice was issued before the return, the initiation of assessment proceedings was deemed to suffer from a serious jurisdictional error. The Tribunal held that the notice was invalid, rendering the assessment order invalid, and subsequently quashed the assessment order. Outcome: The Appellate Tribunal partially allowed the assessee's appeal and dismissed the Revenue's appeal, setting aside the order of the first appellate authority due to the invalidity of the assessment order based on the notice issued prior to the filing of the return of income.
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