2024 (5) TMI 1234 - AT - Income Tax

Validity of reassessment order u/s 147 in absence of statutory notice u/s 143(2) - HELD THAT - As statutory notice u/s 143(2) has never been issued by the AO which is mandatory for assumption of jurisdiction, and the non-issue of statutory notice u/s 143(2) is an incurable defect which cannot be cured because the basic foundation of the assessment proceedings is bad in law. On this aspect of the mater, we respectfully rely on the judgment of Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT and also Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT Also see Cebon India Ltd. 2009 (7) TMI 26 - PUNJAB AND HARYANA HIGH COURT and also Punnu Synthetics Private Limited 2023 (6) TMI 1378 - ITAT AMRITSAR As such we hold the assessment order invalid in absence of statutory notice u/s 143(2) of the Act 1961. Decided in favour of assessee.

Issues Involved:
1. Delay in filing the appeal.
2. Addition of Rs. 12,10,000/- on account of unexplained investment under section 69.
3. Validity of the assessment order under section 147 due to non-issuance of notice under section 143(2).

Detailed Analysis:

1. Delay in Filing the Appeal:
The appellant contended that the delay of 121 days in filing the appeal before the CIT(A) was due to confusion between two counsels, Mr. Joginder Singh and Mr. Karan Sethi. An affidavit from CA Karanbir Singh Sethi was submitted to explain the delay, stating that it was unintentional and caused by a misunderstanding regarding who was responsible for filing the appeal. The CIT(A) dismissed the appeal in limine without condoning the delay, stating that the reason given for the delay was not admissible as sufficient cause.

2. Addition of Rs. 12,10,000/- on Account of Unexplained Investment under Section 69:
The appellant argued that the CIT(A) erred in confirming the addition without examining the merits of the case and without following the principles of law. The appellant contended that the reopening of the assessment was based on borrowed satisfaction and incorrect facts. The appellant had sold a flat jointly with other co-owners and had already considered the long-term capital gains in the return of income. The CIT(A) confirmed the addition without appreciating these facts.

3. Validity of the Assessment Order under Section 147 due to Non-Issuance of Notice under Section 143(2):
The appellant raised an additional ground, arguing that the assessment framed under section 147 was bad in law as the jurisdictional notice under section 143(2) was not issued by the AO. The Tribunal admitted this ground, being a legal ground that goes to the root of the case. The appellant contended that the issuance of notice under section 143(2) is mandatory, and the non-issuance of such notice renders the assessment invalid. The appellant relied on several case laws, including the judgments of the Hon'ble Supreme Court in the cases of ACIT vs. Hotel Blue Moon and CIT vs. Laxman Das Khandelwal, which held that the non-issuance of notice under section 143(2) is an incurable defect.

Tribunal's Decision:
The Tribunal noted that the CIT(A) had called for a remand report from the AO regarding the issue of notice under section 143(2) but did not adjudicate on this issue in the appellate order. The Tribunal held that the non-issuance of statutory notice under section 143(2) is an incurable defect that renders the assessment proceedings invalid. The Tribunal relied on the judgments of the Hon'ble Supreme Court and the Hon'ble Jurisdictional High Court, which held that the issuance of notice under section 143(2) is mandatory for the assumption of jurisdiction.

Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the assessment order was invalid due to the non-issuance of notice under section 143(2). The Tribunal did not deal with the merits of the additions and other issues involved in the appeal, as the appeal was decided on the grounds of jurisdiction. The appeal of the assessee was allowed, and the assessment order was quashed.

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