2022 (8) TMI 849 - AT - Income Tax

Validity of the assessment order passed u/s 153A read with section 143(3) - as argued notice under Section 143(3) of the Act was not issued and served within the statutory time limit - HELD THAT - Assessee had filed its return of income under Section 139(1) on 13.09.2013. Thus, as per proviso to Section 143(2) as it existed prior to its amendment by Finance Act, 2016 w.e.f. 01.06.2016, no notice under Section 143(2) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished under Section 139(1) or section 142(1) - In the facts of the present appeal, assessee had filed its return of income on 30.09.2013, therefore, in terms with the proviso to section 143(2) of the Act, notice under Section 143(2) of the Act, should have been served on the assessee on or before 30th September 2014 As per facts available on record, notice under Section 143(2) of the Act was issued by the assessing officer on 13th October 2014. Thus, the notice issued under Section 143(2) of the Act in the instant case is beyond the period of limitation prescribed in the statute, hence, is an invalid notice. Based on such an invalid notice, assessing officer could not have assumed jurisdiction for completing the assessment under Section 143(3) of the Act. Therefore, in absence of a valid notice issued under Section 143(2) of the Act, the assessment order passed in consequence thereof is unsustainable. Similar view has been expressed by the co-ordinate Bench in case of Harman Singh Dhingra 2021 (11) TMI 854 - ITAT DELHI We hold that the assessment order passed under Section 153C read with section 143(3) of the Act based on an invalid notice issued under Section 143(2) of the Act is equally invalid. Accordingly, we quash the assessment order. As a natural corollary, the impugned order of learned Commissioner (Appeals) is set aside. The additional ground is allowed.

Summary

Issues Involved:
Challenging the validity of the assessment order passed under Section 153A read with section 143(3) of the Income-Tax Act, 1961 due to the notice under Section 143(3) not being issued within the statutory time limit.

Analysis:
Issue 1: Validity of Assessment Order
The appeal was against an order dated 26.12.2016 of the Commissioner of Income-Tax (Appeals) for the assessment year 2013-14. The assessee challenged the validity of the assessment order based on the notice under Section 143(3) not being issued within the statutory time limit. The assessment was initiated under Section 153A read with section 143(3) following a search and seizure operation. The assessing officer completed the assessment, making additions to unaccounted interest income and disallowance under Section 14A read with Rule 8D. The Commissioner (Appeals) granted partial relief by deleting one of the additions.

Issue 2: Legal and Jurisdictional Challenge
The assessee contended that the notice under Section 143(2) was not served within the prescribed time limit, rendering the assessment order unsustainable. The assessing officer issued the notice on 13.10.2014, beyond the deadline of 30.09.2014. The assessee relied on the proviso to section 143(2) which mandates serving the notice within six months from the end of the financial year in which the return was filed. The Tribunal had previously quashed a similar assessment order in a related case, highlighting the importance of complying with the statutory timelines.

Issue 3: Admissibility of Additional Ground
At the appellate stage, the assessee raised an additional ground challenging the validity of the assessment order. The Tribunal admitted this ground as it raised a legal and jurisdictional issue crucial to the case. Despite the Departmental Representative failing to provide a factual report on the notice issuance, the affidavit submitted by one of the directors confirmed that the notice was served after the statutory deadline.

Conclusion:
The Tribunal found the notice under Section 143(2) to be invalid due to being issued beyond the prescribed time limit. Consequently, the assessment order under Section 153C read with section 143(3) was deemed invalid, leading to the quashing of the assessment order and setting aside of the Commissioner (Appeals) decision. The appeal was allowed based on the invalidity of the notice, rendering the assessment unsustainable. The other grounds raised on merits were considered academic and left open for future adjudication if necessary.