2020 (10) TMI 714 - AT - Income Tax

Validity of reopening of assessment - absence of the issuance of the notice u/s 143(2) - HELD THAT - As relying on SUKHINI P. MODI 2014 (11) TMI 50 - GUJARAT HIGH COURT to quash the entire proceeding under Section 147 of the Act in the absence of issuance of statutory notice under Section 143(2) of the Act upon the appellant. Also see M/S. HOTEL BLUE MOON 2010 (2) TMI 1 - SUPREME COURT - The assessee s appeal is, thus, allowed.

Summary

Issues:
Validity of order under Section 143(3) r.w.s. 147 without notice under Section 143(2).

Analysis:
The appeal challenged the order passed under Section 143(3) r.w.s. 147 of the Income Tax Act for Assessment Year 2010-11, questioning the absence of a notice under Section 143(2). The appellant contended that no such notice was issued by the authorities below, supported by records from the RTI Act, 2005, where the notice was not reflected. The appellant argued that failure to follow the prescribed procedure for issuing the notice under Section 143(2) rendered the jurisdiction of reopening under Section 147 unsustainable, seeking to set aside the entire order.

During the hearing, the appellant's senior counsel emphasized the non-issuance of the Section 143(2) notice, while the Departmental Representative (DR) highlighted the possibility of misplaced records during transit. The DR also referred to a communication stating that no Section 143(2) notice was issued to the appellant by the Assessing Officer (AO). However, the appellant's submission, supported by records and the AO's letter dated 31.07.2020, indicated a lack of issuance of the Section 143(2) notice, leading to a dispute over the validity of the reopening under Section 147.

The Tribunal thoroughly examined the records supplied under the RTI Act, 2005, confirming the absence of the Section 143(2) notice. Citing a judgment by the Hon'ble Jurisdictional High Court, the Tribunal emphasized the mandatory requirement of issuing the Section 143(2) notice for sustaining the jurisdiction of reopening under Section 147. Relying on the apex court's decision in Asstt. CIT v. Hotel Blue Moon, the Tribunal concluded that the failure to follow the prescribed procedure for issuing the Section 143(2) notice rendered the reopening unsustainable. Consequently, the Tribunal quashed the entire proceeding under Section 147 due to the absence of the statutory notice under Section 143(2), allowing the appellant's appeal.

In conclusion, the Tribunal allowed the assessee's appeal, emphasizing the significance of complying with the mandatory requirement of issuing a notice under Section 143(2) for sustaining the jurisdiction of reopening under Section 147. The judgment was pronounced on 15/10/2020.