2019 (5) TMI 1199 - AT - Income Tax

Validity of Reopening of assessment - no notice under section 143(2) have been issued and served upon the assessee - HELD THAT - Since no notice under section 143(2) have been issued and served upon the assessee, therefore, the mandatory requirement of Law have not been complied with in the matter. It is well settled Law that re-assessment order cannot be passed without service of notice under section 143(2) of the I.T. Act, 1961 See Hon ble Delhi High Court in the case of Pr. CIT vs. Sri Jai Shiv Shankar Traders Pvt. Ltd. 2015 (10) TMI 1765 - DELHI HIGH COURT , Pr. CIT vs. Silverline 2015 (11) TMI 809 - DELHI HIGH COURT and CIT vs. Lunar Diamonds Ltd. 2005 (3) TMI 33 - DELHI HIGH COURT . Considering the above discussion, we are of the view that reassessment order is nullity and bad in law. - Decided in favour of assessee.

Summary

Issues:
Appeal against CIT(A) Orders for A.Y. 2002-2003 on quantum addition and penalty under section 271(1)(c) of the I.T. Act, 1961.

Analysis:

1. Quantum Addition Issue:
The case involved an appeal against the CIT(A) Orders for the A.Y. 2002-2003 regarding quantum addition under sections 80IB and 80HHC of the I.T. Act, 1961. The original return declared income of ?1.70 crores, later revised to ?1.58 crores. The AO made an addition of ?22,75,585 on account of excessive deductions claimed. The CIT(A) partly allowed the appeal. The Assessee raised an additional ground challenging the reassessment order's legality due to the absence of a notice under section 143(2) of the Act. The ITAT admitted this additional ground, citing legal implications and the root of the matter.

2. Legal Validity of Reassessment Order:
The Assessee contended that the reassessment order was illegal as no notice under section 143(2) was issued within the limitation period. The ITAT agreed, emphasizing the mandatory nature of the notice requirement. Citing a similar case, the ITAT held that failure to issue the notice within the time limit rendered the reassessment order null and void. They referred to various judicial decisions, including the Hon'ble Delhi High Court's rulings, to support their decision to set aside the reassessment order and delete all additions.

3. Penalty under Section 271(1)(c):
The AO imposed a penalty under section 271(1)(c) based on the quantum reassessment order. However, since the reassessment order was deemed null and void, the ITAT canceled the penalty as well. The ITAT emphasized that no penalty was leviable due to the invalidity of the quantum reassessment order.

In conclusion, both appeals by the Assessee were allowed, with the reassessment order being deemed null and void due to the absence of a notice under section 143(2). The ITAT set aside all additions and canceled the penalty under section 271(1)(c) accordingly.