2025 (4) TMI 673 - AT - Income Tax

Assessment order u/s 143(3) - whether valid notice u/s. 143(2) of the Act has been served upon the assessee or not? - HELD THAT - e are of the considered view that issuing of valid notice u/s. 143(2) of the Act is mandatory and without complying to the said provision and not issuing a valid notice u/s. 143(2) of the Act ld. AO cannot assume jurisdiction for proceeding ahead with carrying out of the assessment proceedings. Therefore since in the instant case notice u/s. 143(2) of the Act was issued at a wrong/non-existing address and this mistake having been accepted by the Revenue authorities at the later part of the assessment proceedings during which the assessee has strongly raised objection about non-receipt of valid notice u/s. 143(2) of the Act on the address of communication mentioned in the PAN database we are of the considered view that no valid notice was issued and served upon the assessee u/s. 143(2) within the statutory time limit provided under the Act. We further hold that in absence of issuance of valid notice u/s. 143(2) ld. AO failed to assume jurisdiction for carrying out the assessment proceedings. We therefore quash the assessment order dated 31.03.2016 framed by the ld. AO in the case of assessee for A.Y. 2013-14 being bad illegal and void ab-initio - Decided in favour of assessee.

1983 (12) TMI 35 - HC

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the assessment order under section 143(3) is void due to the non-service of notice under section 143(2) within the statutory time limit.
Whether the address used for serving the notice was incorrect, thereby invalidating the notice.
Whether the assessment proceedings were conducted without proper jurisdiction due to the alleged non-service of the notice.
Whether the additions made under section 68 and the denial of the claim under section 54F were valid.
Whether the interest levied under sections 234A, 234B, and 234C was justified.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Assessment Order under Section 143(3) due to Non-Service of Notice under Section 143(2)

Relevant Legal Framework and Precedents: The legal requirement under section 143(2) mandates that a notice must be served on the assessee within six months from the end of the financial year in which the return is filed. The Supreme Court in ACIT Vs. Hotel Blue Moon held that failure to issue notice under section 143(2) is not a mere procedural irregularity but a jurisdictional defect.
Court's Interpretation and Reasoning: The Tribunal emphasized that the issuance and service of notice under section 143(2) are crucial for jurisdictional validity. The Tribunal relied on the precedent set by the Supreme Court, emphasizing the mandatory nature of the notice.
Key Evidence and Findings: The Tribunal found that the notice dated 03.09.2014 was sent to an incorrect address, "268A, Shivaji Nagar," which was not the address for communication as per the PAN database or the return of income. The correct address was "301, Kamala Residency, CTS No.1050, Pune 411016."
Application of Law to Facts: The Tribunal determined that the notice was not served at the correct address, and there was no evidence of service from the postal authorities. The Tribunal concluded that the assessment proceedings were invalid due to the non-service of a valid notice.
Treatment of Competing Arguments: The Revenue's argument that the notice was deemed served as it was not returned was rejected. The Tribunal noted the absence of evidence of service and the incorrect address used.
Conclusions: The Tribunal held that the assessment order was void ab initio due to the non-service of a valid notice under section 143(2).

2. Address Used for Serving the Notice

Relevant Legal Framework: Section 282 of the Income Tax Act outlines the requirements for serving notices, emphasizing the need for correct addresses.
Court's Interpretation and Reasoning: The Tribunal noted that the address used was incorrect and not the one opted for communication by the assessee in the PAN database.
Key Evidence and Findings: The Tribunal found that the address "268A, Shivaji Nagar" did not exist, and the correct address was "301, Kamala Residency, CTS No.1050, Pune 411016."
Application of Law to Facts: The Tribunal applied section 282 and determined that the notice was not served correctly, invalidating the assessment proceedings.
Conclusions: The Tribunal concluded that the incorrect address used for serving the notice invalidated the assessment proceedings.

3. Jurisdictional Validity of Assessment Proceedings

Relevant Legal Framework: Jurisdiction under section 143(3) is contingent upon the proper service of notice under section 143(2).
Court's Interpretation and Reasoning: The Tribunal reiterated that jurisdiction was not properly assumed due to the non-service of notice.
Conclusions: The Tribunal held that the assessment proceedings were conducted without proper jurisdiction.

4. Additions under Section 68 and Denial of Claim under Section 54F

Key Evidence and Findings: The Tribunal did not delve into the merits of these additions and claims due to the quashing of the assessment proceedings on jurisdictional grounds.
Conclusions: The issues were rendered academic and not adjudicated upon.

5. Interest under Sections 234A, 234B, and 234C

Conclusions: The Tribunal did not address the interest liability due to the quashing of the assessment proceedings.

SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal reinforced the principle that the service of notice under section 143(2) is a jurisdictional requirement, and failure to serve such notice invalidates the assessment proceedings.
Final Determinations on Each Issue: The Tribunal quashed the assessment order due to the non-service of a valid notice under section 143(2), rendering other issues academic.
Verbatim Quote: "In absence of issuance of valid notice u/s. 143(2) ld. AO failed to assume jurisdiction for carrying out the assessment proceedings."

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