2022 (7) TMI 1288 - AT - Income Tax

Validity of assessment u/s 153B - belated notice issued u/s 143(2) - HELD THAT - In view of the decision of Hon ble Supreme Court in Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT AO in the instant case has no jurisdiction to make assessment on the basis of belated notice issued under Section 143(2) of the Act. The defect, being substantive, is not curable under Section 292B of the Act. Section 292BB also does not apply as the notice issued under Section 143(2) itself has been issued after limitation period and merely served belatedly. The impugned assessment order culminated from a belated jurisdictional notice is thus nonest and deserves to be quashed. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment order based on a time-barred and nonest notice under Section 143(2) of the Income Tax Act, 1961.
2. Applicability of normal assessment procedure for the year of search under Section 153A versus Section 153B(1)(b).
3. Jurisdiction of the Assessing Officer to frame assessment for the Assessment Year 2011-12.

Issue 1: Validity of Assessment Order based on Time-Barred Notice under Section 143(2):
The appeal challenged the assessment order due to the issuance of a notice under Section 143(2) beyond the prescribed time limit. The appellant contended that the notice for the Assessment Year 2011-12, issued on 14.11.2012, exceeded the limitation period, which should have been by 30th September, 2012. The appellant argued that the jurisdiction of the Assessing Officer to frame the assessment for the said year was null and void due to the belated jurisdictional notice.

Issue 2: Applicability of Normal Assessment Procedure under Section 153A vs. Section 153B(1)(b):
The appellant asserted that the assessment order under Section 153B(1)(b) was incorrect as the year of search, F.Y. 2010-11, for A.Y. 2011-12 was not covered by the special provisions of Section 153A but by the normal assessment mechanism. Citing various judgments, including ACIT vs. Hotel Blue Moon and PCIT vs. Consortium Nussli Comfort Net, the appellant argued that the assessment based on the belated notice under Section 143(2) was beyond the Assessing Officer's jurisdiction.

Issue 3: Jurisdiction of the Assessing Officer for AY 2011-12:
The appellant contended that the assessment order was required to be quashed due to being time-barred and beyond the jurisdiction of the Assessing Officer. The appellant highlighted that the notice under Section 143(2) was served after the limitation period specified in the Act, making the assessment order nonest and subject to being set aside.

In light of the Supreme Court's decision in Hotel Blue Moon, it was concluded that the Assessing Officer lacked jurisdiction to assess based on the belated notice under Section 143(2). The defect was deemed substantive and not curable under Section 292B of the Act. As a result, the impugned assessment order was considered nonest and was consequently quashed. The appeal of the assessee was allowed, and the order was pronounced in the open court on 23/06/2022.