2013 (11) TMI 1324 - AT - Income Tax

Reassessment u/s 147 - Issue of Notice u/s 143(2) - mandatory or not Held that - Before making assessment under section 147 of the Act the A.O. is to serve notice under section 148 of the Act requiring the assessee to furnish the return of income. On furnishing return of income in compliance to notice under section 148 of the Act then the provisions of this Act including issue of notice under section 143(2) of the Act shall apply accordingly - If we see the objects of issuing notice under section 143(2) after filing return of income, it is noticed that notice is required to be issued to examine and to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner. For this purpose opportunity is required to be given to the assessee to produce or to be produced any evidence on which the assessee may rely in support of the return. When the assessee has chosen not to file return, no notice under section 143(2) is required to be served - Since no valid return is filed under section 148, 139 or 142, therefore, period of issue of notice under section 143(2) as per proviso to section 143(2) cannot be counted which is to be reckoned from furnishing of return Decided in favor of Revenue.

Summary

Issues:
1. Validity of notice under section 143(2) of the Income Tax Act, 1961.
2. Requirement of issuing notice under section 143(2) in the case of a revised return.
3. Compliance with the provisions of sections 139, 142, 143, and 148 of the Act.

Issue 1: Validity of notice under section 143(2):
The appeal filed by the Revenue challenged the order passed by the CIT(A) for the Assessment Year 2003-04. The primary contention was regarding the quashing of the Assessing Officer's order due to the absence of a notice under section 143(2) of the Act issued to the assessee. The CIT(A) based the decision on a previous order by the ITAT Agra Bench in a similar case, emphasizing the mandatory nature of issuing the notice within the stipulated time frame. As the notice in this case was served after the prescribed period, the CIT(A) held that the Assessing Officer could not make additions to the income without the mandatory notice under section 143(2).

Issue 2: Requirement of issuing notice under section 143(2) for a revised return:
The case involved a revised return filed by the assessee after a survey, surrendering additional income. The Assessing Officer issued a notice under section 148 of the Act to regularize the revised return. The CIT(A) contended that the notice under section 143(2) was mandatory even if the return was not filed in response to the notice under section 148. However, the ITAT observed that the revised return was invalid as it was filed after the prescribed period under section 139(5). Since no valid return was filed under sections 139, 142, or 148, the ITAT concluded that the issue of notice under section 143(2) was not mandatory in this scenario.

Issue 3: Compliance with the provisions of sections 139, 142, 143, and 148:
The ITAT analyzed the provisions of sections 143(2) and 148 of the Act to determine the necessity of issuing a notice under section 143(2) in the absence of a valid return filed by the assessee. It highlighted that the purpose of issuing the notice was to examine the accuracy of the income reported and to provide an opportunity for the assessee to support their claims. In this case, where no valid return was filed in response to the notice under section 148, the ITAT concluded that the notice under section 143(2) was not obligatory. The ITAT set aside the CIT(A)'s decision and directed a reevaluation of the grounds on merit after providing a fair hearing to both parties.

In conclusion, the ITAT allowed the appeal of the Revenue, emphasizing that the notice under section 143(2) was not mandatory due to the absence of a valid return filed by the assessee. The matter was remanded back to the CIT(A) for a fresh adjudication on the grounds of the appeal in accordance with the law.