2022 (3) TMI 429 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - mandation of issue of notice u/s. 143(2) - Whether the 143(2) notice has not been issued before framing reassessment order? - HELD THAT - In this case, since the assessee pursuant to the notice u/s. 147/148 had requested the AO to treat the original return of income filed u/s. 139 of the Act as the return in response to the notice u/s. 147/148 vide letter dated 22.03.2018 means the AO had to issue 143(2) notice before 30.09.2018. Admittedly, the 143(2) notice has not been issued before framing reassessment order dated 26.12.2018 and, therefore, the action of the AO to frame the assessment u/s. 144 of the Act is without jurisdiction and for that we rely on the decision in the case of Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT wherein it has been held that issuance of notice u/s 143(2) is mandatory for scrutiny assessment even in cases of assessments after search u/s 132 of the Act Block Assessment . Since issuance of notice u/s 143(2) is mandatory before scrutiny assessment, even section 292BB of the Act cannot come to the rescue of the AO. And the Hon'ble Madras High Court in the case of CIT vs. C. Palaniapan 2006 (2) TMI 103 - MADRAS HIGH COURT held that issuance of notice u/s 143(2) is mandatory in reassessment cases also. Further, we do not find any merit in the argument of the Ld DR that return of income should have been filed and not the letter requesting the AO to treat the original return as the return of income pursuant to the 147/148 notice. For that we rely on the judgment of the Hon'ble Calcutta High Court in the case of Iqbal Singh Atwal 1982 (12) TMI 12 - CALCUTTA HIGH COURT and Pr. CIT Vs. Shri Jai Shiv Shankar Traders Pvt. Ltd. 2015 (10) TMI 1765 - DELHI HIGH COURT Since no notice u/s. 143(2) of the Act had been issued by the AO before framing reassessment order dated 26.12.2018 it is bad in law because the A.O. had no jurisdiction to frame the reassessment order dated 26.12.2018 without issuing the mandatory notice and therefore, all subsequent action is null in the eyes of the law and therefore we find merit in the appeal of the assessee and the order of the AO dated 26.12.2018 passed u/s. 144/147 of the Act is quashed. Appeal of assessee is allowed.

Summary

Issues:
1. Validity of reassessment order passed without issuing notice u/s. 143(2) of the Income-tax Act, 1961.

Analysis:
The appeal was filed against the order of the Ld. CIT(A) regarding the reassessment for AY 2011-12. The original assessment was conducted under section 143(3) of the Act in 2014, and later, a notice u/s. 148 was issued in 2018 to reopen the assessment. The assessee requested the AO to treat the original return filed u/s. 139 as the return for the notice u/s. 148, but the AO proceeded with reassessment u/s. 144/147 without issuing notice u/s. 143(2). The Ld. AR contended that the reassessment order was bad in law due to the absence of the mandatory notice u/s. 143(2), citing a Tribunal decision. The Ld. DR argued that the AO correctly framed the assessment as the assessee did not file the return as directed.

The Tribunal noted the crucial dates and contentions. The Ld. AR emphasized that the absence of notice u/s. 143(2) rendered the reassessment order invalid. On the contrary, the Ld. Addl. CIT, DR argued that the notice should have been served within six months of the original return filing. The Tribunal referred to legal provisions and precedents, including the Supreme Court and High Court decisions, to support the necessity of notice u/s. 143(2) for reassessment cases. It was highlighted that the AO's action lacked jurisdiction without issuing the mandatory notice, rendering the reassessment order void.

The Tribunal found merit in the appeal, quashing the AO's order dated 26.12.2018 passed u/s. 144/147 due to the absence of the mandatory notice u/s. 143(2). Other grounds were considered academic and not adjudicated. Consequently, the appeal of the assessee was allowed, and the order was pronounced on 4th March, 2022.