2023 (8) TMI 275 - AT - Income Tax

Validity of reopening of assessment - as argued AO did not have territorial jurisdiction to frame the assessment and further that the notice issued u/s 143(2) of the Act was time-barred - curable defect u/s 292BB or not? - HELD THAT - The notice in this case has been shown to be signed on 30.09.2015, however, the same was emailed to the assessee on 03.11.2015. The notice was set in motion only on 03.11.2015, in our humble view, signing of the notice would not constitute as issuance of notice. The date of issuance of notice would be when it is set in motion for delivery to the assessee. So far as the contention of issue of notice u/s 143(2) of the Act within the prescribed period in relation to the reassessment proceedings u/s 147/148 was not mandatory, we find that the issue has been settled by the various High Courts holding that even in the case of reassessment proceedings u/s 147/148 the issuance of notice within the specified period u/s 143(2) is mandatory and that the AO cannot assume jurisdiction u/s 143(3) of the Act without issuance of notice u/s 143(2) of the Act and this defect cannot be cured by taking recourse to the deeming fiction provided u/s 292BB of the Act. Since the Assessing Officer did not issue notice u/s 143(2) of the Act within the specified time period, therefore, the Assessing Officer could not have assumed jurisdiction to frame the assessment u/s 143(3) of the Act and, therefore, the impugned assessment order is bad in law - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the issue of treating unsecured loans as unexplained income, validity of notice u/s 143(2) of the Income Tax Act, and jurisdiction of the Assessing Officer in framing the assessment.

Validity of Notice u/s 143(2) of the Income Tax Act:
The appeal was against the order treating unsecured loans as unexplained income. The assessee contested the addition on grounds including lack of territorial jurisdiction of the Assessing Officer and the notice u/s 143(2) being time-barred. The counsel for the assessee argued that the notice sent via email on 03.11.2015, even though signed on 30.09.2015, should be considered as the date of issuance. Citing a relevant case, the counsel emphasized that signing alone does not constitute issuance. The contention was supported by decisions from various High Courts, establishing the mandatory nature of issuing notice u/s 143(2) within the specified period for reassessment proceedings u/s 147/148. As the Assessing Officer failed to issue the notice within the prescribed time, it was concluded that the assessment order was invalid and non-est.

Conclusion:
The Appellate Tribunal, after considering the arguments and legal precedents, allowed the appeal of the assessee based on the grounds related to the validity of the notice u/s 143(2) of the Income Tax Act. As a result, the other grounds raised by the assessee were deemed academic. The judgment highlighted the importance of adhering to statutory formalities and timelines in assessment proceedings to ensure the validity and legality of the decisions made.