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2021 (7) TMI 150 - AT - Income TaxReopening of assessment u/s 147 - non issue of notice under section 143(2) - Whether the assessment made under section 143(3) read with section 147 of the Act without issuing the notice under section 143(2) is valid? - applicability of provision of section 292BB - HELD THAT - AO was under the obligation to issue a notice under section 143(2) of the Act for making the assessment or reassessment as the case may be under section 147 of the Act. But the AO has not done so. Accordingly, the order framed under section 143(3) read with section 147 of the Act becomes invalid. The provisions of section 292BB of the Act deals with the situation where notice is not served or not served on time or served in a improper manner viz a viz the assessee does not raise objection before the completion of the assessment. As such, the provision of section 292BB of the Act does not deal about the issuance of notice. In the present case, the issue is whether the assessment framed under section 147/143(3) of the Act is valid without the issuance of the mandatory notice under section 143(2) of the Act. Accordingly we hold that, the provision of section 292BB of the Act does not extend any benefit to the Revenue. We conclude that it was mandatory to issue the statutory notice under section 143(2) of the Act within the prescribed time and such defect cannot be cured under the provisions of section 292BB - Decided against revenue.
Issues Involved:
1. Validity of assessment under section 143(3) read with section 147 without issuance of notice under section 143(2). 2. Applicability of section 292BB in the context of non-issuance of notice under section 143(2). Detailed Analysis: 1. Validity of Assessment under Section 143(3) read with Section 147 without Issuance of Notice under Section 143(2): The primary issue raised by the Revenue was that the assessment framed under section 143(3) read with section 147 of the Income Tax Act, 1961, was deemed unsustainable due to the non-issuance of a statutory notice under section 143(2). The assessee argued before the CIT(A) that the absence of this notice rendered the assessment invalid. The CIT(A) agreed with the assessee, noting that the Assessing Officer (AO) admitted in a remand report that the notice under section 143(2) was not issued. The CIT(A) concluded that the assessment was invalid without the statutory notice. The Tribunal, upon reviewing the materials and rival contentions, noted that the return filed in response to a notice under section 148 is treated as filed under section 139, necessitating the issuance of a notice under section 143(2) for a valid assessment. The Tribunal referred to various judicial precedents, including the Hon’ble Apex Court's decision in R. Dalmia Vs. CIT (236 ITR 480), which emphasized the mandatory nature of following procedural provisions under section 139 when making assessments under section 147. The Tribunal further cited the Special Bench of Delhi in Raj Kumar Chawla v/s ITO (145 Taxman 12) and the Hon’ble Kerala High Court in Lally Jacob v/s ITO (197 ITR 439), both supporting the necessity of issuing a notice under section 143(2) for assessments under section 147. The Hon’ble Gujarat High Court in ITO vs. Smt. Sukhini P. Modi (367 ITR 682) also upheld that the absence of a notice under section 143(2) invalidates the assessment. 2. Applicability of Section 292BB in the Context of Non-Issuance of Notice under Section 143(2): The Revenue argued that the assessee did not object to the non-issuance of the notice under section 143(2) during the assessment proceedings, invoking section 292BB, which precludes the assessee from raising such objections later. However, the Tribunal clarified that section 292BB deals with the service of notice and not the issuance of notice. The Tribunal emphasized that section 292BB does not cure the defect of non-issuance of a mandatory notice under section 143(2). The Tribunal referred to the Hon’ble Gujarat High Court's decision in PCIT v/s Marck Biosciences Ltd. (106 Taxmann.com 399), which held that section 292BB applies only where a notice has been issued but not served properly or in time, not where no notice has been issued. The Hon’ble Gujarat High Court in CIT Vs. Panorama Builders Pvt. Ltd. (45 taxmann.com 159) also supported this interpretation, stating that section 292BB does not apply to the issuance of notice and does not cure the defect of non-issuance of a mandatory notice under section 143(2). In conclusion, the Tribunal held that the AO's failure to issue a notice under section 143(2) rendered the assessment under section 143(3) read with section 147 invalid. The defect could not be cured under section 292BB, and thus, the assessment was not sustainable. Consequently, the appeal filed by the Revenue was dismissed. Order: The appeal filed by the Revenue is dismissed.
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