2021 (5) TMI 7 - AT - Income Tax

Reopening of assessment u/s 147 - whether the notice issued under section 143(2) of the Act to the assessee barring time limitation is contrary to the provisions of the Act? - HELD THAT - In the case of CIT Vs. Laxmandas Khandelwal 2019 (8) TMI 660 - SUPREME COURT wherein it was held that according to section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even there be infraction as detailed in the said section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the section does not save complete absence of notice. For section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that section seeks to cure. The section is not intended to cure complete absence of notice itself. Since the facts on record are clear that no notice under section 143(2) of the Act was however issued by Department, the finding rendered by the High Court and the Tribunal and the conclusion arrived at were correct. As held by Kerala High Court in the case of Padinjarkara Agencies Pvt. Ltd., Vs. CIT 2017 (8) TMI 724 - KERALA HIGH COURT after considering the judgment of Hotel Bluemoon cited 2010 (2) TMI 1 - SUPREME COURT held that where adverse orders are passed against assessee only after affording assessee proper opportunity, then Assessment Order passed can be considered as valid. Being so, in our opinion, it is appropriate to remit the issue to the file of CIT(A) to examine whether there is proper service of notice under section 143(2) of the Act before 31.12.2012 in these cases to the assessee after seeing the case records and decide accordingly in the light of judgment of Hotel Bluemoon cited supra.

Summary

Issues:
Cross Appeals related to the validity of notice under section 143(2) of the Income Tax Act for Assessment Year 2007-08.

Detailed Analysis:
1. The Tribunal was tasked with adjudicating four Cross Appeals filed by the assessee arising from the Department's appeals for Assessment Year 2007-08. The High Court remitted the issue of notice under section 143(2) of the Act to the Tribunal for further examination. The AR presented a chart of important dates to assess the validity of the notice.

2. The main contention was the time limitation for issuing the notice under section 143(2) of the Act. The AR argued that the notice issued on 28.02.2013 was time-barred as the return filed in response to the notice under section 148 was dated 23.12.2011. The DR, on the other hand, relied on section 292BB of the Act to bar the assessee from raising objections due to cooperation during assessment.

3. The Tribunal analyzed the timeline and legal provisions, noting that the notice under section 143(2) should have been issued by 31.12.2012 as per the twelve-month limit. The notice produced was dated 28.02.2013, and the DR failed to provide evidence of an earlier notice. Referring to legal precedents, the Tribunal highlighted the importance of a valid notice for assessment.

4. Citing judgments such as ACIT Vs. Hotel Bluemoon and Laxmandas Khandelwal, the AR emphasized the fatal nature of delays in issuing notice under section 143(2). The Tribunal agreed that a valid notice is crucial for assessment validity. Referring to the Kerala High Court's decision in Padinjarkara Agencies Pvt. Ltd., the Tribunal decided to remit the issue to the CIT(A) for further examination based on the principles outlined in Hotel Bluemoon.

5. Consequently, the Tribunal allowed all Cross Objections of the assessee for statistical purposes, emphasizing the need for a proper examination of the notice's service under section 143(2) before 31.12.2012. The judgment was pronounced on 01-04-2021, highlighting the importance of adherence to legal procedures in tax assessments.