2023 (8) TMI 1279 - AT - Income Tax

Validity of reopening of assessment - Non-service of notice u/s 143(2) - HELD THAT - Even if the assessee did not raise any objection to non-service of notice u/s 143(2) of the Act before the AO, the legal contention cannot be dismissed on the strength of provision of section 292BB of the Act as the same has no application to present AY 2007-10. As per decision of Alpine Electronics Asia Pte Ltd 2012 (1) TMI 100 - DELHI HIGH COURT non-service of notice u/s 143(2) of the Act makes assessment order invalid. Accordingly, ground No. 1 of assessee is allowed and consequently, impugned reassessment order u/s 147/143(3) of the Act is quashed being bad in law and invalid. Appeal of the assessee is allowed.

Summary

Issues involved:
The issue in this case revolves around the non-service of notice u/s 143(2) of the Income Tax Act, 1961 during the reassessment proceedings for AY 2007-08. The main contention is whether the assessment completed by the Assessing Officer u/s 147/143(3) of the Act is valid despite the non-service of the notice.

Summary of the Judgment:

Issue 1 - Non-Service of Notice u/s 143(2) of the Act:
The assessee contended that the jurisdiction to complete the reassessment proceedings was not assumed by the Assessing Officer as the notice u/s 143(2) of the Act was not served during the course of the reassessment proceedings. The assessee argued that the assessment order u/s 147/143(3) of the Act should be quashed due to this reason. The AR submitted that section 292BB of the Act is not applicable to the present Assessment Year 2007-08, citing the case of Kuber Tobacco Products Pvt. Ltd Vs. DCIT. On the other hand, the Sr. DR argued that since the assessee did not raise any objection regarding the non-service of notice u/s 143(2) of the Act during assessment proceedings, section 292BB is applicable in favor of the Revenue. However, the Special Bench of ITAT clarified that section 292BB is applicable from AY 2008-09 onwards and not to the present case of AY 2007-08. The ITAT noted that non-service of notice u/s 143(2) of the Act makes the assessment order invalid, as per the decision in the case of Alpine Electronics Asia Pte Ltd Vs. DCIT. Consequently, the reassessment order u/s 147/143(3) of the Act was quashed, and the appeal of the assessee was allowed.

Conclusion:
The ITAT Delhi allowed the appeal of the assessee, emphasizing that the non-service of notice u/s 143(2) of the Act during the reassessment proceedings for AY 2007-08 rendered the assessment order u/s 147/143(3) of the Act invalid, leading to its quashing. The judgment highlighted the inapplicability of section 292BB of the Act to the said Assessment Year and the significance of proper notice service in maintaining the validity of assessment orders.