DHANOTTAM VASANT LONKAR,PUNE vs. INCOME-TAX OFFICER, WARD 3(3), , PUNE

ITA 214/PUN/2022Status: DisposedITAT Pune08 April 2025AY 2013-1421 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issuance of a valid notice under Section 143(2) is mandatory and a prerequisite for the Assessing Officer (AO) to assume jurisdiction for assessment proceedings under Section 143(3). The Tribunal noted that the initial notice under Section 143(2) dated 03.09.2014 was issued to a wrong address, which was later admitted by the revenue authorities. Despite the revenue's reliance on the principle of deemed service for notices sent by registered post, the Tribunal found that the revenue failed to establish valid service. The Tribunal referred to the judgments of the Hon'ble Bombay High Court in CIT v. Abacus Distribution Systems (India) (P.) Ltd. and Asstt. CIT v. Geno Pharmaceuticals Ltd., and the Hon'ble Apex Court in ACIT Vs. M/s. Hotel Blue Moon, emphasizing that non-issuance of a valid notice under Section 143(2) within the statutory time limit is not a curable procedural defect but vitiates the entire assessment proceedings, rendering them void ab-initio. Consequently, the Tribunal quashed the assessment order dated 31.03.2016 passed by the AO for AY 2013-14, deleted the impugned additions, and set aside the finding of the CIT(A). The legal ground raised by the assessee challenging the validity of the assessment proceedings due to non-service of a valid notice under Section 143(2) within the statutory time limit was allowed. All remaining grounds were rendered academic.

What were the facts?

The assessee, Dhanottam Vasant Lonkar, filed an appeal against the order dated 24.03.2022 passed by the National Faceless Appeal Centre, Delhi, which arose from an assessment order dated 31.03.2016 passed under Section 143(3) of the Income Tax Act, 1961. The assessment year in question is 2013-14. The assessee's return of income for AY 2013-14 was filed on 27.09.2013, declaring an income of Rs. 1,76,25,230. The case was selected for scrutiny. A notice under Section 143(2) was purportedly issued on 03.09.2014. Subsequently, a notice under Section 142(1) issued on 17.08.2015 was returned unserved with remarks 'assessee is not in given address'. The Assessing Officer (AO) later found the assessee's new address from the PAN database and issued a notice under Section 142 on 15.02.2016. The assessee contended that no valid notice was received until an SMS on 27.02.2016 and a notice dated 15.02.2016 received by RPAD on 04.03.2016, which was the first communication regarding scrutiny assessment. The assessee argued that the notice under Section 143(2) was not served within the statutory time limit.

What were the issues?

1. Whether the assessment order passed under Section 143(3) is bad in law, void, and ab-initio invalid due to lack of valid service of notice under Section 143(2) on the assessee within the statutory time limit, as per Section 143(2)(ii) and Section 282 of the Income Tax Act, 1961? Assessee's Contentions: The assessee argued that the notice under Section 143(2) was not served within the statutory time limit of six months from the end of the financial year in which the return was furnished. The initial notice dated 03.09.2014 was sent to a wrong address and was not validly served. The subsequent notices were also not served properly or within the prescribed time. The assessee relied on the judgments of the Hon'ble Bombay High Court in CIT v. Abacus Distribution Systems (India) (P.) Ltd. and Asstt. CIT v. Geno Pharmaceuticals Ltd., and the Hon'ble Apex Court in ACIT Vs. M/s. Hotel Blue Moon, which held that failure to issue a valid notice under Section 143(2) is not a procedural irregularity but goes to the root of the jurisdiction and vitiates the assessment proceedings. Revenue's Contentions: The revenue contended that the notice under Section 143(2) was deemed served as it was sent through RPAD and not returned. The AO relied on the judgments in Ramesh Khosla vs. ITO and Sonal Industries (P) Ltd. vs Delhi of Income Tax. The revenue also argued that the notice was generated online with the address from the PAN database and proof of dispatch was enclosed. However, the revenue admitted at a later stage that the address on the notice dated 03.09.2014 was wrong.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 143(2),Section 142(1),Section 129,Section 282,Section 27,Section 292BB,Section 148,Section 68,Section 54F,Section 234A,Section 234B,Section 234C

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Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri S.N. Puranik
For Respondent: Shri Ramnath P. Murkunde
Hearing: 29.01.2025Pronounced: 08.04.2025

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

This appeal filed at the instance of assessee pertaining to the Assessment Year 2013-14 is directed against the order dated 24.03.2022 passed by National Faceless Appeal Centre, Delhi which in turn is arising out of the Assessment order dated 31.03.2016 passed u/s.143(3) of the Act.

2.

Assessee has raised following grounds of appeal : "Modified Grounds 1) Lower Authorities/Commissioner of Income Tax (Appeals) has grossly erred in not holding the Assessment Order u/s 143(3) as Bad in Law, void and ab-initio invalid. Appellant pray to hold so and cancel the Order. 2) Commissioner of Income Tax (Appeals) has

The order continues below.

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