Loading judgment…
Facts
The Revenue appealed against the CIT(A)'s order deleting an addition of Rs. 14,08,50,000/- made by the Assessing Officer under Section 68 of the Income-tax Act, 1961. The CIT(A) had deleted the addition on the ground that no notice under Section 143(2) was issued to the assessee prior to the completion of the assessment proceedings, and the Assessing Officer was unable to provide evidence of such issuance.
Held
The Tribunal affirmed the CIT(A)'s decision, holding that the issuance of a notice under Section 143(2) is a mandatory and jurisdictional requirement for completing an assessment under Section 143(3). Since the Revenue failed to prove the issuance and service of such a notice, the assessment proceedings were deemed void ab initio. The Tribunal, therefore, declined to interfere with the CIT(A)'s order annulling the assessment.
Key Issues
Whether an assessment completed under Section 143(3) of the Income Tax Act, 1961, is valid if no notice under Section 143(2) was issued to the assessee.
Sections Cited
68, 143(2), 143(3), 147, 148, 142, 144, 145, 158BC, 158BB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: Dr. B. R. R. Kumar, Sh. Anubhav Sharma
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue against the order of ld. CIT(A)-23, New Delhi dated 06.10.2023. 2. Following grounds have been raised by the Revenue:
"1. The Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 14,08,50,000/- made by the Assessing Officer u/s 68 of the Income-tax Act, 1961.
The Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 14,08,50,000/- merely because notice u/s 143(2) of the Income-tax Act, 1961 was not issued to the assessee. The Ld. CIT(A) has not considered the fact that issuing notice u/s 143(2) of the Income-tax Act, 1961 in this case is not required as the assessee has neither filed ITR nor filed any reply within 30 days provided to the assessee as per notice u/s 148 of the Income-tax Act, 1961.
The Ld. CIT(A) has erred on facts and in law by not considering the merits of the case on which addition was made by Assessing Officer.”
2 KNS Infracon Pvt. Ltd. 3. The only issue to be decided by this Tribunal is whether the assessment completed u/s 143(3) sans the issue of notice u/s 143(2) of the Income Tax Act, 1961 is valid or not.
We have examined the entire record before us. The ld. CIT(A)-23, Delhi, incumbent Sh. Sujeet Kumar held that the assessee claimed that no notice u/s 143(2) was issued to him before the completion of assessment proceedings. To enquire the allegation with regard to non-service of notice u/s 143(3) from the record, a report from the Assessing Officer was called by the ld. CIT(A). The ld. CIT(A) has issued letters dated 25.07.2022, 09.08.2022 and 30.09.2022 to the Assessing Officer. The AO vide letter dated 07.11.2022 replied that he was not able to trace the record and find out whether the notice u/s 143(2) was issued or not. The ld. CIT(A) again issued letter on 05.02.2023 to furnish the copy of the notice issued. Owing to these facts, the ld. CIT(A) held that the assessment proceedings completed u/s 143(3) without issue of notice u/s 143(2) are not valid.
Even before us, the department could not produce the copy of the notice issued u/s 143(2) nor could not substantiate in any corroborative way the factum of issue and service of notice u/s 143(2). We have gone through the Assessment Order wherein the issue of other notices was mentioned but the Assessment Order nowhere mentions about the issue of notice u/s 143(2). The Assessment Order, considered in the backdrop of the claim of the assessee with regard to the non-issue of the notice and the inability of the revenue to furnish any evidences contra, leads to a conclusion that no notice u/s 143(2) was 3 KNS Infracon Pvt. Ltd. issued to the assessee before completion of the assessment proceedings. On this issue, we are guided by the judgment of Hon'ble Delhi High Court in the case of Alpine Electronics Asia Pte. Ltd. Vs DGIT (2012) 341 ITR 247 wherein it was held as under:
Section 143(2) of the Income-tax Act, 1961, is applicable to proceedings under section 147/148 of the Act. The proviso to section 148 of the Act grants liberty to the Revenue to serve notice under section 143(2) of the Act before passing the assessment order for returns furnished on or before October 1, 2005. In respect of returns filed pursuant to notice under section 148 of the Act after October 1, 2005, it is mandatory to serve notice under section 143(2) of the Act, within the stipulated time limit.
The Hon'ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon (2010) 321 ITR 362 wherein it was held as under:
"If the Assessing Officer, for any reason, repudiates the return filed by an assessee in response to notice under section 158BC(a) of the Income-tax Act, 1961 relating to a block assessment, the Assessing Officer must necessarily issue notice under section 143(2) of the Act within the time prescribed in the proviso to section 143(2).
By making the issue of notice mandatory, section 158BC, dealing with block assessments, makes such notice the very foundation for jurisdiction. Such notice is required to be served on the person who is found to have undisclosed income. Section 158BC provides for enquiry and assessment. After the return is filed, clause (b) of section 158BC provides that the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 1588BB and "the provisions of section 142, sub-
Hence, we hold that in order to acquire the jurisdiction, it is imperative to issue notice u/s 143(2) failing which the assessment is to be treated as void ab initio. Since, in the instant case, no notice u/s 143(2) has been issued, we decline to interfere with the order of the ld. CIT(A) in annulling the assessment.
In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 21/06/2024.