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2017 (4) TMI 818 - AT - Income TaxValidity of assessment proceedings - non-Service of notice u/s 143(2) - Held that - AO has not issued any notice u/s 143(2) of the I.T. Act to the assessee. During the entire assessment proceedings, the assessment order in dispute is invalid, void abnitio and against the provisions of the law and the impugned order is not sustainable in the eyes of law and hence, we cancel the same by accepting the Cross Objection filed by the Assessee.
Issues Involved:
1. Deletion of addition made on account of salary and liaisoning expenses. 2. Deletion of addition made on account of web designing expenses. 3. Deletion of addition made on account of share application money. 4. Deletion of addition made on account of current liabilities. 5. Validity of the assessment order due to alleged non-service of mandatory notice under section 143(2) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Salary and Liaisoning Expenses: The Revenue challenged the deletion of ?33,41,230/- added on account of salary and liaisoning expenses by the CIT(A). The tribunal did not provide a detailed analysis of this issue as the primary focus was on the legal validity of the assessment proceedings. 2. Deletion of Addition on Account of Web Designing Expenses: The Revenue disputed the deletion of ?4,40,000/- added on account of web designing expenses by the CIT(A). Similar to the first issue, the tribunal did not delve into the specifics of this deletion due to the overarching legal issue regarding the validity of the assessment order. 3. Deletion of Addition on Account of Share Application Money: The Revenue contested the deletion of ?58,10,000/- added on account of share application money by the CIT(A). The tribunal's decision on the legal issue of notice under section 143(2) rendered a detailed examination of this issue unnecessary. 4. Deletion of Addition on Account of Current Liabilities: The Revenue opposed the deletion of ?5,87,607/- added on account of current liabilities by the CIT(A). The tribunal's focus on the procedural legality of the assessment proceedings meant that this issue was not specifically analyzed. 5. Validity of the Assessment Order Due to Non-Service of Mandatory Notice under Section 143(2): The Assessee's Cross Objection argued that the assessment order was invalid due to the non-service of the mandatory notice under section 143(2) of the Income Tax Act, 1961. The tribunal examined this issue in detail. - The Assessee's counsel argued that the assessment order was passed without serving the mandatory notice under section 143(2), making it invalid. They cited the Supreme Court's decision in ACIT & Anr. Vs. Hotel Blue Moon, which held that the issuance and service of notice under section 143(2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid. - The Revenue's counsel relied on the CIT(A)'s order, arguing that it was well-reasoned and based on the records and provisions of law. - The tribunal reviewed the records, including the order sheet entries and documentary evidence provided by the Assessee. It found discrepancies in the issuance of the notice under section 143(2). The order sheet recorded that only a notice under section 142(1) was issued on 15.9.2008, contrary to the AO and CIT(A)'s orders, which mentioned a notice under section 143(2). - The tribunal noted that the notice under section 143(2) was never sent to the addresses mentioned in the return of income or the assessment order, establishing non-service of the mandatory notice within the prescribed time. - Citing various judicial precedents, including decisions from the Supreme Court, High Courts, and ITAT Special Benches, the tribunal concluded that the non-issuance of notice under section 143(2) rendered the assessment order invalid. Conclusion: The tribunal allowed the Assessee's Cross Objection, declaring the assessment order dated 11.12.2009 invalid due to the non-service of the mandatory notice under section 143(2). Consequently, the Revenue's appeal became infructuous and was dismissed. The tribunal's decision was pronounced in the Open Court on 13/04/2017.
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