2010 (4) TMI 43 - HC - Income Tax

Validity of assessment proceedings u/s 143(2) - notice under Section 143(2) of the Income Tax Act, 1961 was issued on 23.03.2000, whereas the return of income was filed on 27.03.2000 and was served on the same date on the assessee held that - Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have returned a concurrent and clear finding of fact that the notice under Section 143 (2) was issued on 23.03.2000 and since the return was filed on 27.03.2000, the notice was not a valid one and, therefore, the assessment completed on the basis of the notice was also invalid and was consequently set aside. - It is for the first time before us that the learned counsel for the appellant contends that the notice, in fact, was issued on 27.03.2000 and not on 23.03.2000, the date which is recorded on the notice itself. - Assuming the aforesaid to be true, the notice was served on the Authorized Representative simultaneously on his filing the return which clearly indicates that the notice was ready even prior to the filing of the return.

Summary

Issues:
1. Validity of assessment proceedings based on the notice under Section 143(2) of the Income Tax Act, 1961.

Analysis:
The High Court of Delhi heard an appeal (ITA 441/2010) where the Revenue challenged the order of the Income Tax Appellate Tribunal regarding the Assessment Year 1997-98. The main issue raised was the validity of the assessment proceedings based on the notice under Section 143(2) of the Income Tax Act. The Revenue contended that the notice was issued on 23.03.2000, while the return of income was filed on 27.03.2000. Both the Commissioner of Income Tax (Appeals) and the Tribunal had found that the notice was invalid as it was issued before the return was filed.

The High Court examined the assessment order and the lower authorities' decisions. It noted that the notice under Section 143(2) was served on the assessee after the return was filed, which was a violation of the Act. The Court observed that the notice should only be served after the Assessing Officer examines the return, as per the provisions of Section 143(2). Even though the Revenue argued that the notice was issued on 27.03.2000, the Tribunal's finding of it being issued on 23.03.2000 remained unchallenged.

The Court dismissed the appeal, stating that no substantial question of law arose for consideration. It upheld the lower authorities' decision that the notice under Section 143(2) was invalid, leading to the assessment being set aside. The Court emphasized that the notice must be served after the Assessing Officer examines the return, and any deviation from this procedure would render the assessment invalid.