2021 (10) TMI 1109 - AT - Income Tax

Validity of reopening of assessment - absence of a valid Section 143(2) notice issued by the Assessing Officer - HELD THAT - AO has himself filed a remand report dt.13-07-2021 inter alia making it clear that he had issued 148 notice on 21-03-2014 followed by the assessee s latter submissions dt.07-01-2015 seeking to treat the original return filed on 31-07-2008 as the one in response to re-opening only. Learned assessing authority further states that it had issued only Section 142(1) notice(s) dt.21-01-2014 and 30-12-2014 thus, a Section 143(2) notice in the entire re-assessment process. We thus quote hon ble apex court s landmark decision in ACIT Vs. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT holding that Section 143(2) notice has to be mandatorily issued before framing an assessment. An assessee s letter seeking to treat the original return as that filed in furtherance to Section 148 notice requires issuance of a valid Section 143(2) notice. Thus the impugned re-assessment frame herein on 31-03-2015 is non est in law. The same stands quashed therefore. All other pleadings on merits are rendered infructuous. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment framed without a valid Section 143(2) notice.
2. Entertaining new ground going to the root of the matter.
3. Legal implications of treating the original return as filed in response to re-opening.

Analysis:
1. The appeal for AY 2008-09 was based on the assessment framed without a valid Section 143(2) notice. The assessee contended that the assessment was invalid in the absence of the notice. The Assessing Officer had issued a 148 notice followed by the assessee's submissions seeking to treat the original return as a response to re-opening. However, it was noted that no Section 143(2) notice was issued during the reassessment process. Citing the ACIT Vs. Hotel Blue Moon case, it was established that a Section 143(2) notice is mandatory before framing an assessment. Various case laws were referred to support this position. Consequently, the tribunal held that the assessment was non est in law and quashed it.

2. The tribunal considered the plea to raise a new legal ground regarding the validity of the assessment. Referring to the National Thermal Power Co. Ltd. Vs. CIT and All Cargo Global Logistics Ltd. Vs. DCIT cases, it was determined that a new ground could be entertained if it goes to the root of the matter and all relevant documents are on record. The tribunal admitted the assessee's petition raising additional substantive grounds, allowing for a comprehensive review of the tax liability.

3. The issue of treating the original return as filed in response to re-opening was crucial in this case. The Assessing Officer's actions and the subsequent submissions by the assessee were examined. It was highlighted that seeking to treat the original return as a response to the 148 notice necessitates the issuance of a valid Section 143(2) notice. Relying on legal precedents and the facts presented, the tribunal concluded that the re-assessment framed without a valid Section 143(2) notice was legally untenable. As a result, the assessment was deemed invalid, rendering all other arguments on merits irrelevant.

In conclusion, the tribunal allowed the assessee's appeal based on the absence of a valid Section 143(2) notice during the reassessment process, thereby quashing the assessment for AY 2008-09. The judgment emphasized the importance of procedural compliance and legal requirements in conducting assessments under the Income Tax Act, 1961.