2017 (3) TMI 676 - AT - Income Tax

Vladity of reopening of assessment - no notice under section 143(2) issued - Held that - We find considerable cogency in the assessee s counsel submissions that the assessment order passed by the Assessing Officer is without jurisdiction and void-ab-initio and is liable to be quashed, as no notice under section 143(2) of the Act was issued and served on assessee. Therefore, the assessment proceedings initiated are illegal, unsustainable and untenable under the law. Hence, the assessment so framed by the AO is totally illegal and needs to be quashed. - Decided in favour of assessee

Summary

Issues involved:
- Whether non-issuance of the notice u/s 143(2) within the prescribed time made the whole block assessment order null and void and bad in law, despite the assessee not having raised any objection before the passing of the assessment order and despite the provisions of section 292BB of the Act?

Detailed Analysis:
1. The Assessee filed appeals against separate impugned orders relevant to assessment years 1999-2000 & 2000-01. The grounds raised in both appeals were similar, except for the figures involved. The Assessee declared a total loss for the AY 1999-2000 and claimed an exemption under section 10(1) of the Income Tax Act, 1961. The case was subsequently reopened, and the income was determined at a different amount by the Assessing Officer.

2. The Assessee challenged the assessment order on various grounds, including the arbitrary nature of the order, lack of issuance of notice under section 143(2) of the Act, and errors in upholding the validity of the reassessment order. The Assessee contended that the assessment order was without jurisdiction and void-ab-initio due to the absence of a notice under section 143(2) served on them.

3. The Counsel for the Assessee argued that the assessment order was illegal and unsustainable under the law due to the absence of a notice under section 143(2). The Tribunal found merit in the Assessee's submissions, citing relevant case laws and judgments that emphasized the mandatory nature of issuing a notice under section 143(2) for a valid assessment. The Tribunal held that the assessment order, being void-ab-initio, needed to be quashed.

4. The Tribunal referred to various judicial decisions, including those by the Hon'ble Supreme Court of India, High Courts, and ITAT decisions, to support the view that the absence of a notice under section 143(2) rendered the assessment order invalid. The Tribunal concluded that the jurisdictional Assessing Officer had not issued the required notice, making the assessment order invalid, void abnitio, and against the provisions of the law. Consequently, the Tribunal allowed the Assessee's appeals for both assessment years.

5. In line with the decision on the AY 1999-2000, the Tribunal allowed the appeal for the AY 2000-01 as well, maintaining a consistent view on the issue of non-issuance of notice under section 143(2). The Tribunal pronounced the order in favor of the Assessee, canceling both the assessment order and the appellate order due to the lack of a valid notice under section 143(2).

6. The Tribunal's decision highlighted the importance of procedural compliance, specifically emphasizing the mandatory nature of issuing a notice under section 143(2) for a valid assessment. The judgment reaffirmed that failure to adhere to this requirement rendered the assessment order invalid and unsustainable in the eyes of the law, leading to the cancellation of the orders and allowing the Assessee's appeals.