2020 (6) TMI 527 - AT - Income Tax

Validity of the notice issued u/s 143(2) - validity of the notice issued u/s 143(2) mainly on the ground that the assessee remain silent on the notices issued under section 143(2) and 142(1) of the Act till 31/03/2012 and thereafter, only raised the issue of the validity of notice under section 143(2) - HELD THAT - Notice under section 143(2) dated 1/09/2011 issued by the DCIT, Circle -37(1) was not valid being issued by AO not having jurisdiction over the assessee. The notice under section 143(2) by the correct jurisdiction AO has been issued on 30/08/2012, whereas the limitation for issue of the notice under section 143(2) of the Act expired on 30/09/2011 and therefore, this notice being beyond the period of limitation, it is not a valid notice. In the instant case, as per the proviso to section 143(2) of the Act, no notice could have been served on the assessee after the expiry of the six month from the end of the financial year in which return is filed. Respectfully following the finding of SUN WORLD INFRASTRUCTURE PVT LTD VERSUS ITO, WARD-24(3), NEW DELHI 2015 (3) TMI 572 - DELHI HIGH COURT we hold that the notice dated 01/09/2011 issued by the CIT, Circle -37(1) was without jurisdiction and, thus, it was invalid and the notice dated 30/08/2012 issued by the ITO, Ward 38(2), New Delhi issued by the correct Jurisdiction Officer, was beyond the period of limitation and therefore, this was also invalid. Assessment order passed without acquiring the correct jurisdiction for a scrutiny by way of notice under section 143(2) is void ab initio and thus we quash the same. As we have already quashed, the assessment order we are not adjudicating on the issue raised on merit of the addition. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the assessment order due to non-issuance of notice under section 143(2) within the limitation period.
2. Validity of notice under section 143(2) issued by a non-jurisdictional Assessing Officer.
3. Sustaining additions on account of wages and salaries paid by the assessee.
4. Sustaining the addition of ?45,00,000 based on AIR information without following principles of natural justice.

Detailed Analysis:

1. Validity of the Assessment Order:
The first issue revolves around the validity of the assessment order due to the non-issuance of notice under section 143(2) within the prescribed limitation period. The Tribunal observed that the notice under section 143(2) dated 01/09/2011 was issued by the Deputy Commissioner of Income Tax, Circle 21(1), New Delhi, who did not have jurisdiction over the assessee. The correct jurisdiction was with Range-38, New Delhi. Despite the case being transferred to the correct jurisdiction, the notice issued on 30/08/2012 was beyond the limitation period, rendering the assessment order void ab initio.

2. Validity of Notice Under Section 143(2):
The second issue pertains to the validity of the notice under section 143(2) issued by a non-jurisdictional Assessing Officer. The Tribunal highlighted that the initial notice dated 01/09/2011 was issued by an officer who did not have jurisdiction over the assessee. The correct jurisdiction was with Range-38, New Delhi, as per the master notification dated 03/07/2001 and subsequent orders. The Tribunal held that the issuance of notice by the non-jurisdictional officer was invalid, and the subsequent notice issued by the correct jurisdictional officer on 30/08/2012 was beyond the limitation period, making it invalid as well.

3. Sustaining Additions on Account of Wages and Salaries:
The assessee challenged the addition of ?25,11,087 out of ?42,16,362 on account of wages and salaries paid to manpower deployed with its various customers. The Tribunal did not adjudicate on this issue as the assessment order was already quashed due to the invalidity of the notices under section 143(2).

4. Sustaining the Addition of ?45,00,000:
The assessee contested the addition of ?45,00,000 made by the Assessing Officer based on AIR information, claiming it was in violation of the principles of natural justice and section 142(3) of the Act. The Tribunal did not address this issue on merits due to the quashing of the assessment order.

Conclusion:
The Tribunal quashed the assessment order on the grounds that the initial notice under section 143(2) was issued by a non-jurisdictional officer and the subsequent notice by the correct jurisdictional officer was issued beyond the limitation period. Consequently, the assessment order was deemed void ab initio. The Tribunal did not adjudicate on the merits of the additions due to the quashing of the assessment order. The appeal of the assessee was allowed, and the assessment order was set aside.