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Facts
The assessee, a company engaged in trading diamonds, filed its return for AY 2011-12. The assessment was initially made under Section 143(3) and later reopened under Section 147 based on information about bogus bills. The Assessing Officer (AO) made additions, which were confirmed by the CIT(A). The assessee appealed to the ITAT.
Held
The ITAT held that the reassessment order was bad in law because the mandatory notice under Section 143(2) of the Income-tax Act was not issued. The tribunal noted that this issue was jurisdictional and went to the root of the assessment proceedings.
Key Issues
Whether the reassessment proceedings are vitiated due to the non-issuance of a notice under Section 143(2) of the Income-tax Act.
Sections Cited
143(2), 147, 148, 142(1), 143(3), 151(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
This appeal is filed by the assessee against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] for A.Y. 2011-12 dated 28th November, 2023, wherein the appeal filed by the assessee against the assessment order dated 20th December, 2016 passed under Section 143 read with section 147 of the Income-tax Act, 1961 (the Act) by the Asst. Commissioner of Income Tax, Circle 5(1)(2), Mumbai was dismissed. Therefore, assessee is aggrieved with the same and is in appeal before us.
“1. The learned Assessing Officer was not justified din reopening of the case under Section 147 by issuing notice under Section 148 of the Income-tax Act, 1961 and also the learned CIT (Appeals) has erred in confirming the same.
The learned Assessing Officer has erred in making addition of ₹3,09,11,602/- (11.83% of ₹26,12,98,413/-) and also the learned CIT (Appeals) has erred in confirming the same.”
Now, assessee has raised three additional grounds of appeal as under;-
“4. The learned income-tax officer has erred in making reassessment without issuing statutory notice u/s 143(2) of the Act, resulting in reassessment is bad in law. The Ld. CIT (A) has further erred in confirming the same.
The Ld. AO has erred in reopening of the case u/s 147 of the Act by issuing notice u/s 148 of the Act after obtaining prior permission of Ld. CIT-5, Mumbai, whereas the permission as per section 151(2) of the Act (As substituted from 01.06.2015) is of Joint/Additional CIT. The Ld. CIT (A) has further erred in confirming the same.
6. The Ld. AO. Has erred and Ld. CIT(A) has erred in confirming the same that the Ld. AO has erred in It is stated in the application itself that the additional ground is in 04. question of law, can be raised any time during the appeal and therefore, the same should be admitted. It was further stated that this ground was also raised before the learned CIT (A) in the written submission filed. He referred to page no.99 of his paper book stating that non-issue of notice under Section 143(2) of the Act is fatal to the assessment and therefore, the assessment order does not survive.
The learned Departmental Representative vehemently objected to the 05. same and submitted that this issue was not raised before the lower authorities and therefore, now the same should not be admitted.
The learned Authorised Representative submitted that this is a jurisdictional ground which can be raised at any time during the course of opening of the appeal and he further submitted that issue of notice under Section 143(2) of the Act goes to the foundation of the assessment proceedings.
As the above ground of appeal is jurisdictional in nature, goes to the 07. root of the matter, therefore, same is admitted.
The brief facts of the case show that assessee is a company engaged 08. in trading of diamonds. The return of income was filed on 25th September, 2011, declaring total income of ₹57,14,029/-. The assessment under Section 143(3) of the Act has already been made on 29th March, 2015, at the same amount. Subsequently, the assessment reopened in view of the fact that information was
Assessee preferred the appeal before the learned CIT (A), wherein the reopening was challenged and also the addition on merit was also challenged. The learned CIT (A) decided against the assessee on both the counts and confirmed the action of the learned Assessing Officer.
Before us, the assessee has submitted that in the reassessment proceedings, the learned Assessing Officer make an assessment only if notice under Section 143(2) of the Act is issued. He submits that in the present case, no notice under Section 143(2) of the Act has been issued. He therefore submitted that the decision of the Hon'ble Supreme Court clearly held that if the notice is not served within the prescribed period the impugned assessment is bad in law. He relied
The learned Departmental Representative submits that if there is no mentioned in the assessment order about the notice under Section 143(2) of the Act, the same does not mean that no such notices has been issued.
We have carefully considered the rival contentions and find that additional ground no.1, the assessee has challenged that the learned Assessing Officer while framing the assessment order under Section 143(3) read with section 147 of the Act has not issued a statutory notice under Section 143(2) of the Act. The re-assessment order is bad in law.
We have perused the assessment order and we do not find any mention of the issue of notice under Section 143(2) of the Act. It is also proved that if the fact of issue of notice under Section under Section 143(2) of the Act is not mentioned in the assessment order it cannot be said that no notices has been issued under Section 143(2) of the Act. Therefore, as this was also the argument of the learned Departmental Representative, we granted time for 7 day to submit whether any such notice is issued or not. However till todate no such communication is received. Thus, we do not have any option but to hold that notices u/s 143 (2) of the Act is not issued. Still, later on if it is found that such notices were issued in time, necessary application of recall of this order , may be made in time.
In view of the above facts, the assessment order passed without issue of notice under Section 143(2) of the Act cannot be sustained. Accordingly, the additional ground raised by the assessee is allowed. All other grounds remain unadjudicated.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 30.05. 2024.