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2018 (6) TMI 1472 - HC - Income TaxReopening of assessment - no notice under Section 143(2) was issued - curable defect u/s 292BB - Held that - This is not a case where the assessing officer says that a notice had been issued and there is a contradiction thereof by the assessee. It is evident that the assessee carried the objection before the Commissioner (Appeals) and the Commissioner brushed aside the objection on the ground that it was a technicality without addressing the issue or applying his mind to such aspect of the matter. As evident from the order impugned passed by the Appellate Tribunal that no notice under Section 143(2) had in fact been issued in this case. In such a situation where a notice that is mandatorily required to be issued is found not to have been issued Section 292BB of the Act has no manner of operation. Substantial questions of law are answered accordingly as follows (1) If the time for issuance of the notice under Section 143(2) of the Act has expired or the time for completing the reassessment proceedings under Section 153(2) of the Act has run out the failure to issue such notice under Section 143(2) of the Act would result in the entire proceedings including any order of assessment to be quashed. (2) Section 292BB of the Act does not dispense with the issuance of any notice that is mandated to be issued under the Act but merely cures the defect of service of such notice if an objection in such regard is not taken before the completion of the assessment or reassessment. In addition it is held that in the light of the Supreme Court dictum in Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA the view expressed in Humboldt Wedag India Pvt. Ltd 2014 (5) TMI 279 - CALCUTTA HIGH COURT is per incuriam and as such not good law.
Issues:
1. Whether the failure to issue a notice under Section 143(2) of the Act in course of reassessment proceedings would vitiate the reassessment proceedings altogether? 2. What is the effect in view of Section 292BB of the Act when a notice under Section 143(2) of the Act is not issued at all? Analysis: Issue 1: The judgment pertains to reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961 due to a notice under Section 148. The Appellate Tribunal quashed the reassessment proceedings as no notice under Section 143(2) was issued. The Supreme Court's ruling in Hotel Blue Moon establishes that a notice under Section 143(2) is mandatory if the return is not accepted and an assessment order is made contrary to it. The Court emphasized that such notice is indispensable, not a procedural irregularity. The Tribunal's judgment in a related case, Humboldt Wedag India Pvt. Ltd., was found to be incorrect for not considering the Supreme Court's stance. The Madras High Court's judgment in Areva T & D India Ltd. was deemed outdated post the Hotel Blue Moon ruling. The Court concluded that the absence of a Section 143(2) notice vitiates the reassessment proceedings. Issue 2: Regarding the effect of Section 292BB when no Section 143(2) notice is issued, the Court highlighted that the provision deems a notice served if the assessee participated in the proceedings. However, this provision does not eliminate the mandatory requirement of issuing notices under the Act. It was emphasized that Section 292BB cures defects in notice service but does not negate the necessity of issuing mandatory notices. The Court ruled that the Hotel Blue Moon judgment's principles are paramount, rendering conflicting views in other cases obsolete. The Court held that Section 292BB does not exempt the issuance of mandated notices and clarified that the absence of a Section 143(2) notice leads to the quashing of proceedings. In conclusion, the Court upheld the necessity of issuing a notice under Section 143(2) during reassessment proceedings and clarified the limited scope of Section 292BB in rectifying notice service defects. The judgment provided a detailed analysis of legal precedents, emphasizing the mandatory nature of certain notices under the Income Tax Act and the implications of non-compliance with such requirements.
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