THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 vs. TARACHAND BACHOMAL RAMCHANDANI

Facts

The Assistant Commissioner of Income Tax, Central Circle 1 (the Revenue) has filed these appeals challenging the judgments and orders of the Income Tax Appellate Tribunal (the Tribunal). The Tribunal had partly allowed appeals preferred by the assessee, Tarachand Bachomal Ramchandani. The High Court admitted these matters and framed a substantial question of law concerning the validity of assessments made without service of notice under Section 143(2) of the Income Tax Act, 1961. The appeals involve multiple assessment years, and the procedural history indicates that the Tribunal's decision was under challenge.

Held

The High Court held that the issue was squarely governed by the decision of the Apex Court in Assistant Commissioner of Income-tax vs. Hotel Blue Moon, reported in [2010] 321 ITR 362 (SC). In that case, the Supreme Court held that for the determination of undisclosed income for a block period under Section 158BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable, and no assessment can be made without issuing a notice under Section 143(2). The Court further held that if the Assessing Officer repudiates the return filed by the assessee in response to a notice under Section 158BC(a), he must necessarily issue a notice under Section 143(2) within the prescribed time. The High Court found no dispute between the parties that this decision applied to the present case. Therefore, the question of law was answered in the affirmative in favour of the assessees and against the department. The appeals were dismissed accordingly.

Key Issues

1. Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal is right in coming to the conclusion that an assessment made without service of notice under Section 143(2) of the Income Tax Act is illegal, invalid, and without jurisdiction, and on that ground, the assessment is canceled/annulled? Assessee's Contention: The assessee's position, as reflected in the Tribunal's decision being challenged by the Revenue, is that an assessment made without issuing a notice under Section 143(2) is invalid. The assessee relies on the principle that such a notice is mandatory for a valid assessment. Revenue's Contention: The Revenue, by filing the appeal, contends that the Tribunal erred in holding the assessment invalid due to the absence of a Section 143(2) notice. The Revenue likely argues for the validity of the assessment despite this procedural lapse, or that the circumstances did not necessitate such a notice.