2022 (11) TMI 895 - HC - Income Tax

Validity of assessment proceedings - Omission on the part of AO to issue notice under Section 143(2) - curable defect u/s 292BB - HELD THAT - Tribunal was fully justified in allowing the assessee s appeal by taking note of the decision of this Court in the case of Principal Commissioner of Income Tax vs. Oberoi Hotels Pvt. Ltd. 2018 (6) TMI 1472 - CALCUTTA HIGH COURT . In the said decision it was held that the notice under Section 143(2) of the Act was required to be mandatorily issued and Section 292BB had no manner of operation. The earliest of the decision is that of the Hon ble Supreme Court in the case of Assistant Commissioner of Income Tax Anr. vs. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT wherein it was held that if an assessment is to be completed under Section 143(3) read with Section 158BC, notice under Section 143(2) should be issued within one year from the date of filing of the block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedure irregularity and is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. Very recently, the Hon ble Supreme Court in the case of Assistant Commissioner of Income Tax vs. S.K. Industries 2022 (7) TMI 1345 - SC ORDER dismissed the Special Leave Petition filed by the revenue against the order of the High Court holding that where the assessing officer of a particular Circle passed an assessment order under Section 143(3) without issuing notice under Section 143(2) and only in pursuance with the notice issued under Section 143(2), he had no jurisdiction over the assessee at the relevant time and such assessment order was liable to be set aside. Thus Tribunal was fully justified in allowing the assessee s appeal.

Summary

Issues:
1. Jurisdiction of assessing officer under Section 143(2) of the Income Tax Act, 1961.
2. Validity of notice under Section 143(2) and challenge to jurisdiction under Section 292BB.
3. Duty of assessee to update address in PAN database for jurisdictional purposes.

Jurisdiction of Assessing Officer:
The High Court considered the appeal filed by the revenue challenging the order of the Income Tax Appellate Tribunal (ITA) regarding the jurisdiction of the assessing officer under Section 143(2) of the Income Tax Act, 1961. The revenue contended that the assessing officer had full jurisdiction over the assessee for issuing notice under Section 143(2). However, the Court referred to previous decisions, including one by the Supreme Court, emphasizing the mandatory requirement of issuing notice under Section 143(2) within a specified timeframe. The Court held that failure to issue such notice cannot be considered a procedural irregularity and is not curable, thus affirming the importance of complying with this statutory provision.

Validity of Notice and Challenge to Jurisdiction:
Another issue raised was the validity of the notice under Section 143(2) and the challenge to jurisdiction under Section 292BB of the Act. The revenue argued that since the assessee did not object to the notice and participated in the assessment proceedings, the jurisdiction could not be challenged. However, the Court disagreed, stating that there cannot be any estoppel against the statute. The Court highlighted that the assessee had filed an application before the Tribunal to raise additional grounds, which was allowed after due consideration. The Court emphasized that the jurisdictional issue was crucial to the entire proceedings, and the Tribunal was justified in allowing the appeal of the assessee.

Duty of Assessee to Update Address:
The Court also addressed the argument regarding the duty of the assessee to update their address in the PAN database for jurisdictional purposes. The revenue contended that the assessee's failure to change the address in the database affected the jurisdiction of the assessing officer. However, the Court did not find merit in this argument and upheld the Tribunal's decision in favor of the assessee.

Conclusion:
In conclusion, the High Court dismissed the appeal filed by the revenue and answered the substantial questions of law against the revenue. The Court affirmed the Tribunal's decision to allow the assessee's appeal, emphasizing the importance of complying with statutory provisions related to jurisdiction and notice requirements. The connected application for stay was also dismissed accordingly.