2019 (5) TMI 1166 - AT - Income Tax

Reopening of assessment u/s 147 - no notice u/s 143(2) have been issued within the time - assessment as time barred - HELD THAT - As relying on SHRI JAI SHIV SHANKAR TRADERS PVT. LTD. 2015 (10) TMI 1765 - DELHI HIGH COURT and MADHYA BHARAT ENERGY CORPN. LTD. 2011 (7) TMI 66 - DELHI HIGH COURT since notice under section 143(2) have been issued beyond the period of limitation, therefore, entire reassessment order is nullity and void abinitio. We, accordingly, set aside the orders of the authorities below and quash the reassessment order. - decided in favour of assessee

Summary

Issues:
1. Reopening of assessment under section 148 of the Income Tax Act, 1961.
2. Addition of fictitious losses to the total income of the assessee.
3. Challenge to the initiation of reassessment proceedings and the timing of notice under section 143(2).
4. Legal validity of the assessment order due to delay in issuing notice under section 143(2).

Analysis:

1. The case involved the reopening of the assessment under section 148 of the Income Tax Act, 1961, for the assessment year 2010-2011. The assessee had initially filed a return of income declaring an amount, which was later challenged through the reopening process initiated by the assessing officer.

2. The assessing officer made an addition to the total income of the assessee based on information received regarding fictitious losses allegedly transferred by certain brokers, in which the assessee was involved. The assessee contested this addition before the Ld. CIT(A) but was unsuccessful in challenging it.

3. The assessee raised objections regarding the initiation of the reassessment proceedings and the timing of the notice under section 143(2) of the Income Tax Act. The argument was centered around the contention that the assessment order was time-barred due to the delay in issuing the notice under section 143(2).

4. The legal validity of the assessment order was questioned based on the delay in issuing the notice under section 143(2). The assessee argued that the delay rendered the reassessment proceedings null and void, citing various judicial precedents to support this claim. The Delhi High Court's decisions were particularly emphasized in this regard.

5. After considering the arguments presented by both sides, the tribunal concluded that the notice under section 143(2) was issued beyond the period of limitation, rendering the reassessment order null and void ab initio. As a result, the tribunal set aside the orders of the lower authorities and quashed the reassessment order, leading to the deletion of all additions made. The tribunal relied on the decisions of the Delhi High Court and other relevant judicial precedents to support its decision.

6. Ultimately, the tribunal allowed the appeal of the assessee, emphasizing the importance of adhering to the statutory timelines and procedures outlined in the Income Tax Act. The reassessment order was deemed invalid due to the delay in issuing the notice under section 143(2), highlighting the significance of procedural compliance in such matters.