Re-assessment proceedings concluded us/ 147 are invalid if notice u/s 143(2) is not issued

Admittedly no notice u/s 143(2) was issued to the assessee and only notice u/s 142(1) was issued and on this aspect the ITAT in the case of Silver Line (supra) in para 7.1 of its order has observed as under:

“7.1. Now, the moot question for consideration is: Whether the non-issuance of a notice u/s 143(2) of the Act as alleged by the assessee-firm had vitiated the conclusion of the assessments u/s 147 read with s. 143(3) of the Act? On receipt of information from the DIT (Inv), Jaipur that there were alleged bogus purchases resorted to by the assessee firm, the AO had re­opened the assessments of the assessee for the assessment years under dispute by issuance of notices u/s 148 of the Act. Subsequently, notice u/s 142(1) of the Act along with questionnaire was issued to the assessee. In the reassessment proceedings, after having considered the asssessee’s submissions, the AO had concluded the re-assessments making certain additions. While doing so, however, no notices u/s 143(2) of the Act were issued to the assessee, even though notice u/s 142(1) of the Act was ordered to be issued on 14.11.2011. This was apparent from the perusal of the Order Sheet for the AY 2005-06 [Source: P 88 of PB-I ARl. This fact has been admitted by the Revenue through a RTI query by the assessee firm [Refer: P 165 of PB AR (A.Y.2006-07)]. The above sequence of events categorically proves that notice u/s 143(2) of the Act was neither issued nor served on the assesee.”

Further we find that in the case of Naseman Farms Pvt. Ltd. (supra), the ITAT in para 15 of its order has observed as under:

15. In the light of the above, we are of the view that the AO has not issued notice u/s. 143(2) of the Act which is mandatory. We are also of the view that in completing the assessment u/s. 148 of the Act, compliance of the procedure laid down u/s. 142 and 143(2) is mandatory. As per record, we find that there was no notice issued u/s. 143(2) of the Act which is very much essential for reassessment and it is a failure on the part of the AO for not complying with the procedure laid down in section 143(2) of the Act. If the notice is not issued to the assessee before completion of the assessment, then the reassessment is not sustainable in the eyes of law and deserves to be cancelled. In view of above facts and circumstances of the present case, the issue in dispute raised in additional ground relating to non issue of the mandatory notice u/s. 143(2) of the Act is decided in favour of the assessee and we hold that the impugned assessment order dated 31.12.2009 passed u/s. 147/143(3) of the Act by the AO as invalid. Our view is supported by the various judgments of the Hon’ble Supreme Court, and Hon’ble Jurisdictional High Court. The relevant portion of the head- notes of various judgments of the Hon’ble Courts are reproduced as under:-

“ACIT & Anr. VS. Hotel Blue Moon: [(2010) 321 ITR 362 (SC)]

HELD: “It is mandatory for the AO to issue notice u/s 143 (2). The issuance and service of notice u/s 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid Reassessment—- Notice—- -Assessee intimating original return be treated as fresh return— Reassessment proceedings completed despite assessee filing affidavit denying serviced of notice under section 143(2)—- Assessing Officer not representing before Commissioner (Appeals) that notice had been issued—- Reassessment order invalid due to want of notice under section 143(2)– – Income-tax Act, 196I,ss.143, 147, 148{I), prov.—- ITOv. R.K. GUPTA [308 1TR49 (Delhi) Tribu., “

CIT vs. Vishu & Co. Ltd. In ITA No. 470 of 2008 (2010) 230 CTR (Del) 62

Assessment – validity – Non Service of notice under section 143(2) within time – Notice served on the last date after office hours by affixture as no authorized person was present at assessee’s premises – is not a valid service of notice – Assessment framed in pursuance of such notice is not valid – It is immaterial that the assessee appeared in the proceedings.”

CIT Vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H)

5. We find that concurrent finding has been recorded by the CIT{A) as well the tribunal on the question of date of service of notice. Notice was not served within the stipulated time. Mere giving of dispatch number will not render the said finding to be oetvetse. In absence of notice being setveo. the AO had no jurisdiction to make assessment. Absence of notice cannot be held to be curable under s 292BB of the Act.

CIT Vs.Mr. Salman Khan, ITA No.508 of 2010

In the present case, reassessment order passed under section 143(3) r/w 147 of the Income Tax Act, 1961 is held to be bad in law in view of the fact that the assessing officer has not issued notice under section 143(2) after issuing notice under section 148 of the Income Tax Act, 1961. This Court in the case of The Commissioner of Income Tax Vis. Mr. Salman Khan [Income Tax Appeal NO.23 62 of 2009) decided on 1st December, 2009 has considered similar question and has held that in the absence of notice under section 143(2) (prior to the insertion of section 29288), the reassessment order cannot be sustained. In the present case, the reassessment year involved relates to the period prior to the insertion of Section 29288. In this view of the matter, the appeal is dismissed with no order as to costs.

DCIT Vs. M/s Silver Line, ITA No. 1809, 1504, 1505 & 1506/De1/2013

vii. The Hon’ble ITAT of Agra 8ench, in the case of ITO v. Aligarh Auto Centre reported in 152 ITJ (Agra) 767, on an identical issue that of the present issue, has recorded its findings as under:

“5. We have considered the rival submissions and the material on record. It is not in dispute that the assessee filed original return of income and at .the reassessment proceedings, the assessee contended before the AO that the original return filed earlier may be treated to nove been filed in response to the notice u/s.   147, which is also supported by order sheet entry dated 09.08.2006 (PB-20). It is also not in dispute that AO never issued any notice u/s. 143(2) of the IT Act. The Revenue merely contended that the CIT (A) should have appreciated the provisions of section 292BB of the IT Act. Section 292 BB of the IT Act provides as under:

“292BB. Where an assessee has appeared in any proceeding or co- operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-

(a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner:

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”

The above provision has been inserted by the Finance Act, 2008 w.e.f. 01.04.2008. ITAT, Delhi Special Bench in the case of Kuber Tobacco Product Pvt. Ltd. vs. DCIT, 171TD 273 held that section 292BB has been inserted by Finance Act, 2008, has no retrospective effect and is to be construed prospectively. The assessment order under appeal is 2001-02. Therefore, the provision of section 292BB of the IT Act would not apply in the case of the assessee. Further, no notice u/s 143(2) has been issued or served upon the assessee. Therefore, the decision of Hon’ble Punjab & Haryana High Court in the case of Cebon India Ltd. (supra) squarely applies against the revenue. It was held in this case that absence of notice is not curable defect u/s. 292BB of the IT Act. Considering the above discussion and the case laws cited above, the sole objection of the Revenue is not maintainable. Therefore, the Id. CIT (A) was justified in setting aside the entire assessment order. We, therefore, do not find any infirmity in the order of the Id. CIT (A) for interference. “

(v) The Hon’ble Mumbai Bench of the ITAT has, in the case of Sanjeev R Arora v. ACIT [IT (SS)A No.103/MumI2004 dated 25.7.2012], recorded its findings as under.

“Even, the irregularity in proper service of notice which can be treated as curable under section 292B of the Income-tax Act is only in the cases where the notice under section 143(2) was issued properly and within the period of limitation and the assessee did not raise any objection regarding the service of the notice during the assessment proceedings and also participated in the assessment proceedings then at a later stage the assessee is precluded from raising such objection. Therefore, the provisions of section 2928 are not applicable in the case where the assessing officer has not at all issued notice under section 143 (2) within the period as prescribed.”

7.9. Taking into account the facts and circumstances of the issue as deliberated upon in the fore-going paragraphs and also in views of the judicial pronouncements (supra), we are of the view that the re-assessment’s made for the assessment years under consideration have become invalid for not having served the mandatory notice u/s 43(2) of the Act on the assessee. It is ordered accordingly.

7. 10 We have since decided that the re-assessment proceedings concluded u/s 147 r/w 143(3) of the Act were invalid for the AYs under dispute, the issues raised by the revenue in its appeals and also the Cross objections of the assessee firm based on the invalid assessment orders have not been addressed to.”

Respectfully following the decisions cited in the case of Naseman Farms Pvt. Ltd. (supra), the ground raised in the cross objection is allowed and the impugned assessment order is cancelled. In the result, the assessment order is held to be void ab initio.