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Facts
The assessee filed an appeal against the CIT(A)'s order for AY 2017-2018. The appeal was filed with a 34-day delay, which the Tribunal condoned. An additional legal ground was raised, contending that the notice issued under Section 143(2) of the I.T. Act was invalid as it failed to specify the type of scrutiny (e.g., limited, complete, or manual) as mandated by a CBDT Instruction, rendering the subsequent assessment baseless.
Held
The Tribunal admitted the additional legal ground, concluding that the notice issued u/s. 143(2) on 24.09.2018 violated CBDT Instruction f.No.225/157/2017/ITA-II dated 23.06.2017 because it did not specify the type of scrutiny. Consequently, the Tribunal held that the Section 143(2) notice was invalid, and the assessment framed u/s. 143(3) based on it was also invalid and quashed.
Key Issues
Whether a notice issued under Section 143(2) of the Income Tax Act is valid if it does not specify the type of scrutiny as per CBDT instructions, and if not, whether the assessment framed under Section 143(3) based on such an invalid notice is sustainable.
Sections Cited
143(2), 143(3)
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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR
O R D E R This is an appeal filed by the assessee against the order dated 09.03.2024, passed by the ld. CIT(A), National Faceless Appeal Centre, (NFAC), Delhi for the Assessment Year 2017-2018.
2. As per the appeal record, it is observed that the appeal is filed belatedly by 34 days. In this regard, the assessee has filed condonation application stating therein sufficient reasons for condonation of delay. Considering the reasons stated in the application of the assessee, the delay of 34 days in filing the present appeal is condoned and the appeals is admitted for hearing.
At the time of hearing, ld. counsel of the assessee has raised the additional ground which is extracted as under :- 1. For that on the facts of the case, the Assessing Officer issuing the notice u/s. 143(2) of the I.T. Act, 1961 on 24.09.2018 did not have jurisdiction over the case of the assessee, as there was no mention of the type of scrutiny under which the case of the assessee has been selected, hence the notice is bad-in-law and the assessment order passed on the basis of such notice is baseless and should be quashed.
For that on the facts of the case, the A.O. was wrong in issuing notice u/s. 143(2) on 24.09.2018 without complying to the CBDT Instruction f. No. 225/157/2017/ITA-II dated 23.06.2017and so the notice issued u/s. 143(2) is not valid as per Provision of Act.
3. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal.
Ld. Counsel of the assessee submitted that the above additional ground is legal issue which goes to the root of the issue and, therefore, the assessee is free to raise the issue in any appellate proceedings. Ld. AR relied on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT, reported in [1998] 229 ITR 383(SC) in defense of his arguments. Ld. Sr. DR, on the other hand, opposed the additional ground at this stage. After considering the rival contentions and looking to the facts and circumstances of the case, we find that the issue raised by the assessee is purely a legal issue which goes to the root of the matter and we further note that no further facts are required to be brought on records or require any verification at any level whatsoever. Consequently, we admit the additional ground filed by the assessee before us and we proceed to decide the appeal of the assessee on the above legal ground.
We note that the additional ground raised
by the assessee is with regard to issuance of notice u/s.143(2) of the Act on 24.09.2018 in violation to CBDT Instruction f.No.225/157/2017/ITA-II dated 23.06.2017. The ld. AR also placed before us the above instruction issued by the Government of India, Ministry of Finance, Department of Revenue, wherein it has been provided that w.e.f. 23.06.2017, the notice u/s.143(2) of the Act to be issued in any of the three following forms :- ❖ Limited Scrutiny (Computer Aided Scrutiny Selection ❖ Complete Scrutiny (Computer Aided Scrutiny Selection) ❖ Compulsory Manual Scrutiny
6. The ld. AR submitted that the notice is not bearing to any of the above forms prescribed by the CBDT in the above instruction, therefore, notice issued u/s.143(2) of the Act is bad in law for which the assessment is not sustainable. Ld. AR in defense of his arguments, relied on following series of decisions, wherein similar issue has been decided in favour of the assessee :- ❖
1. Lavanya Estates Pvt. Ltd. vs. ITO ITA No.: 342/PAT/2023 PATNA ITAT ❖ ❖
2. Shri Rudraprasad Mondal vs. DCIT ITA No.: 702/K/2024 [08.10.2024] Kolkata ITAT ❖ ❖
3. Dev Milk Foods Pvt. Ltd. vs. Addl. CIT Spl. R-3,New Delhi Delhi ITAT [ITA No.: 6767/Del/2019] dt. 12.06.2023 ❖ ❖
4. Sukhdham Infrastructure LLP vs. ITO [ITA No.: 2611/Kol/2019] dt. 23.02.2023 Kolkata ITAT ❖
7. Since the facts and issue involved in the present case are identical to the decisions as relied on by the ld. AR above, we are inclined to hold that notice issued u/s.143(2) of the Act is invalid and, therefore, the assessment framed u/s.143(3) of the Act is also invalid and accordingly quashed. Consequently the additional ground raised by the assessee is allowed.
8. Since we have decided the appeal of the assessee on legal issue, the grounds raised on merit by the assessee are not deliberated upon at this stage. Thus, appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 24/04/2025.