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Facts
The assessee filed an appeal with a delay of 129 days due to illness, which the tribunal condoned. The assessee raised an additional legal ground challenging the validity of the notice issued under Section 143(2) of the Income Tax Act, contending that it was in an invalid format as it did not specify the type of scrutiny as required by CBDT instructions.
Held
The tribunal held that the notice issued under Section 143(2) was invalid as it failed to specify whether the scrutiny was limited, complete, or compulsory manual, violating CBDT Instruction F. No. 225/157/2017/ITA-II. Consequently, the assessment order framed under Section 143(3) was also rendered void ab initio and quashed, following precedents from co-ordinate benches and higher courts.
Key Issues
Whether a notice issued under Section 143(2) of the Income Tax Act without specifying the type of scrutiny is invalid, rendering the subsequent assessment order under Section 143(3) void ab initio.
Sections Cited
143(2), 143(3), 119
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 15.05.2023 for the AY 2017-18.
At the outset, we observe from the noting made by the registry that there is a delay of 129 days in filing the appeal for which the assessee has filed the condonation petition. It was submitted that the assessee became ill in the last week of June , 2023 and was bed ridden for a long period. The condition further deteriorated when She was diagnosed with Hepatitis and viral fever. The assessee ultimately recovered only in the third week of October and there after steps were
At the time of hearing, we note that the assessee has raised an additional ground challenging the issuance of notice u/s 143(2) of the Act. The ground raised by the assessee is as under:-
FOR THAT in the facts and circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. acted unlawfully in not appreciating that none of the conditions precedent existed for and/or were fulfilled by the Ld. Income Tax Officer, Ward 24(1), Hooghly for his specious action of framing the assessment order u/s. 143(3) of the Income Tax Act, 1961 on 26-12-2019 in the instant case de hors any valid notice u/s. 143(2) of the Income Tax Act, 1961 issued in contravention of the C.B.D.T. Instruction F. No. 225/157/2017/ITA-II Dated 23-06-2017 and the impugned inaction on that account renders the assessment order framed ab initio void, ultra vires and null in law.
The ld. Counsel for the assessee submitted that the said ground is purely a legal issue and the assessee is within his legal right to raise the same before any of the appellate authority at any stage whatsoever. The ld. Counsel for the assessee submitted that the notice u/s 143(2) of the Act has been issued in an invalid format in violation to the CBDT instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017 and accordingly, the assessment order passed consequently is void ab initio, ultra virus and nullity in the eyes of law. The ld. Counsel for the assessee submitted that since the issue raised is legal issue which goes to the root of the matter and since no further verification of facts is required to be done from any quarter whatsoever, the legal ground raised by the assessee may kindly be admitted for adjudication. In defense of his arguments the ld. AR relied on the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of
The ld. DR on the other hand submitted that the issue was not raised before any of the authorities below and therefore, may kindly be restored to the file of any of the authorities below for adjudication.
After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of appeal challenging the validity of the notice issued u/s 143(2) of the Act being in an invalid format and in our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT (supra) ii) National Thermal Power Co. Ltd v. CIT (supra) and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. (supra). Therefore, we are inclined to admit the same for adjudication.
The ld. AR vehemently submitted that the notice u/s 143(2) of the Act, a copy of which is available at page no.61 of the Paper Book, does not specify whether it is a limited scrutiny or a complete scrutiny or a compulsory manner scrutiny. The ld. AR submitted that the CBDT has issued specific instruction vide instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017, that the notice u/s 143(2) can be issued in one of the three format which specifically mentioned and prescribed but the present notice issued is not in accordance with
The ld. DR on the other hand submitted that this is a computer- generated notice and the non-mentioning of the fact of either limited or complete scrutiny or compulsory manual scrutiny would not render the issuance of notice u/s 143(2) of the Act as invalid. Therefore, additional ground raised by the assessee may kindly be dismissed.
After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the notice issued u/s 143(2) of the Act dated 10.08.2018, specifies only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceeding would also be invalid. The case of the assessee find support from the decision of the co-ordinate Bench in the case of Tapas Kumar Das Vs. ITO (supra), wherein a similar issue has been decided in favour of the assessee. The operative part of the same is extracted below:-
“After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act, a copy of which is available at page no. 25 of the Paper Book. We note that the said notice has not been
Since, we have allowed the appeal of the assessee on legal issue, the other grounds raised on merit are not being adjudicated at this stage and are being left open to be decided at the later stage if need arises for the same.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.03.2025.