9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 524 - AT - Income TaxRevision u/s 263 by CIT - defect of non-issuance of notice u/s. 143(2) - validity of reopening of assessment u/s 147 - HELD THAT - We note that the Hon'ble Supreme Court in the case of CIT V Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT has held that before the scrutiny assessment is made u/s. 143(3) of the Act the issuance of notice u/s. 143(2) of the Act is mandatory which is applicable also in the case of reopening of assessment once the assessee has filed return pursuant to notice u/s. 148 of the Act. In this case, in the impugned order itself the Ld. Pr. CIT has clearly given a finding of fact that the AO has not issued notice u/s. 143(2) of the Act after the event of the assessee having filed the return of income pursuant to the notice u/s. 148 We find merit in the contention of the assessee that the AO while passing the order u/s. 147/143(3) of the Act on 25.07.2017 has not issued notice u/s. 143(2) of the Act. And, therefore, the mandatory requirement of law to usurp the jurisdiction to frame the assessment u/s. 143(3)/147 of the Act pursuant to reopening is absent and, therefore, the legal effect is that the order of the AO dated 25.07.2017 is null in the eyes of law. Rescue u/s 292BB - Section 292BB is only safeguarding the deficiency if any of the service/non-service of notice and it does not cure the omission of issuance of mandatory notice by the AO And since in this case, the AO has not issued the mandatory notice u/s. 143(2) of the Act as found by the Ld. Pr. CIT, the question of section 292BB coming to the rescue of the AO to pass the reassessment order does not arise. Respectfully taking note of the ratio of Laxman Das Kandelwal 2019 (8) TMI 660 - SUPREME COURT , we find no merit in the contention of the Ld. DR that section 292BB of the Act would cure the defect of non-issuance of notice u/s. 143(2) of the Act and since the AO in this case had not issued notice u/s. 143(2) of the Act before framing the re-assessment u/s. 143(3)/147 of the Act as discussed supra, the order passed by the AO dated 25.07.2017 u/s. 143(3)/147 of the Act is without jurisdiction and, therefore, is non-est in the eyes of law and therefore, the Ld. Pr. CIT could not have interfered by exercising his power u/s. 263 of the Act in respect of non-est order - Decided in favour of assessee.
Issues Involved:
1. Validity of the reassessment order passed by the Assessing Officer (AO) under sections 147/143(3) of the Income Tax Act, 1961 without issuing a notice under section 143(2). 2. Jurisdiction and power of the Principal Commissioner of Income Tax (Pr. CIT) to revise the reassessment order under section 263 of the Income Tax Act, 1961. 3. Applicability of section 292BB of the Income Tax Act, 1961 in curing the defect of non-issuance of notice under section 143(2). Detailed Analysis: 1. Validity of the reassessment order passed by the AO under sections 147/143(3) without issuing a notice under section 143(2): The appeal was filed against the order of the Pr. CIT-2, Kolkata, which was passed under section 263 of the Income Tax Act, 1961. The primary contention of the appellant (assessee) was that the reassessment order passed by the AO under sections 147/143(3) was null and void as no notice under section 143(2) was issued after the assessee filed the return in response to the notice under section 148. The appellant argued that the issuance of a notice under section 143(2) is a mandatory requirement before making a scrutiny assessment under section 143(3), as held by the Supreme Court in CIT V Hotel Blue Moon (2010) 321 ITR 362 (SC). Since the AO failed to issue this mandatory notice, the reassessment order dated 25.07.2017 was without jurisdiction and thus null in the eyes of law. 2. Jurisdiction and power of the Pr. CIT to revise the reassessment order under section 263: The appellant argued that since the reassessment order itself was null and void due to the non-issuance of the mandatory notice under section 143(2), the Pr. CIT could not have exercised his power under section 263 to interfere with a non-existent order. The Tribunal agreed with this contention, stating that the Pr. CIT's action to revise a non-est order is also null in the eyes of law. Consequently, the impugned order passed by the Pr. CIT was quashed. 3. Applicability of section 292BB in curing the defect of non-issuance of notice under section 143(2): The respondent (Revenue) contended that the assessee, having participated in the reassessment proceedings, could not now challenge the non-issuance of notice under section 143(2) due to the provisions of section 292BB. However, the Tribunal rejected this argument, clarifying that section 292BB only cures defects related to the service of notice and not the complete absence of a mandatory notice. The Tribunal relied on the Supreme Court's decision in CIT Vs. Laxman Das Khandelwal, which held that section 292BB does not apply where there is a complete absence of notice under section 143(2). Since no such notice was issued in this case, the reassessment order was deemed to be without jurisdiction and thus non-est in the eyes of law. Conclusion: The Tribunal found merit in the appellant's contentions and concluded that the reassessment order dated 25.07.2017 was null and void due to the non-issuance of the mandatory notice under section 143(2). Consequently, the Pr. CIT's order under section 263 was also quashed. The appeal of the assessee was allowed, and the order was pronounced in the open court on 11th May, 2021.
|
