Many times in Reassessment proceedings very little importance & attention is paid to the timing of issue of notice under section 143(2).
Section 143 of Income Tax Act is about Assessment, subsection 2 of section 143 talks about issue of notice in cases where return of income has been filed within the time limits specified u/s 139. However, the use of words by legislature in section 143(2) is more important to note. The legislature has used the word ‘shall’ while talking about issue of notice under that section, which clearly indicates a mandatory action on the part of the Assessing Officer to issue a notice under that section.
Various judgments of the Apex Court & High Courts have commented on the said section 143(2) that issue of notice under this subsection is mandatory to assume jurisdiction over assessee for the purpose of assessment
Normal Process flow in case of Reassessment –
1. Certain instances are provided in section 147, if the same are noticed in any case, then the AO is authorized to issue a notice for reassessment
2. AO then goes on to record the reasons & proceeds to issue a notice u/s 148 after obtaining necessary approvals from Joint/Principal Commissioner (depending upon the period for which he intends to go back) & then goes on to issue the said notice
3. The notice invariably makes an allegation upon the person on whom the notice is being served that some of his income for a certain Assessment Year has escaped assessment & therefore he intends to reassess the same
4. As the process requires, he asks the assessee to file a return in response to such a notice
5. The assessee upon receiving such a notice, has two choices, firstly he will have to go through the return already filed by him & check whether there is any mistake / omission because of which he has under reported his income, in that case he may choose to file a revised return in response to such a notice OR he may respond to the AO by submitting that his original return already filed & on record with the AO may be treated as the return in response to such notice u/s 148
6. The AO then goes on to issue a notice u/s 143(2) & follows up with the procedure to assesses the income
However in practice, many times it is noticed that different practices by AO’s with respect to issue of notice u/s 143(2). This very question came up before Hon’ble Pune Tribunal in case of ITO Exemption Ward (1) vs S M Batha Education Trust – 105 taxmann.com 118
Facts of the case –
1. Assessee Trust was engaged in Education Activities & claimed to have filed the ROI for AY 201213
2. however there was no evidence in support of the same.
3. AO issued notice u/s 148 on 29.09.2014.
4. But Assessee did not filed ROI in response to the same in the 30 days time that is usually allowed by AO.
5. AO issued two separate notices u/s 143(2) on 29.04.2015 & 01.07.2015.
6.However assessee filed the ROI only on 21.10.2015.
7. No notice u/s 143(2) was issued thereafter at any point & assessment was completed
This matter was carried over before Pune Tribunal which decided in favour of Assesse. The case laws cited by the AR during the proceedings are –
1. Sudhir Menon Vs ACIT [IT Appeal No. 1744 (Mum.) of 2016, dated 3-10-2018] (para 4)
2. Asstt. CIT v. Geno Pharmaceuticals Ltd. [2013] 32 taxmann.com 162/214 Taxman 83 (Bom.) (para 4),
3. CIT Ms. Malvika Arun Somaiya [2010] 2 taxmann.com 144 (Bom.) (para 4) and
4. DIT Society For Worldwide Inter Bank Financial, Telecommunications [2010] 323 ITR 249 (Delhi) (para 4).
Concluding Remarks –
There is one more section which is often resorted to by the Department in such cases while pleading at higher forums, the section is section 292BB, however the said section takes care of the situations post issue of notice & does not deal with the situations where no notice is issued.
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