Reassessment u/s 147 valid if assesse had deemed notice of reassessment proceedings

Brief Facts of the Case and Question of Law

Brief Facts

For AY 2008-09, the assessee had reported an income of Rs.444/-. This was processed under Section 143 (1). Upon an enquiry and investigation report, the AO issued notice under Section 148, doubting a transaction based upon the transfer of shares and purchase by two subsequent transferees i.e. Raghubir Singh and SimranjeetKaur. The assessment was completed with the addition of that amount to the assessee’s final income. The matter was carried in appeal unsuccessfully to the CIT (A), and later, to the ITAT as well. The assessee was unable to persuade both the authorities to accept its submissions that the reassessment proceedings were without jurisdiction as notice under section 143(2) was not duly served as required under provision of Income tax Act.

Question of Law

1. Whether reassessment proceedings can be termed void abintio or invalid if notice under section 143(2) was not duly served but assesse duly appears in any proceedings or cooperated in any enquiry related to assessment or reassessment.

 Contention of the Assessee

Learned counsel urges that re-assessment proceedings were unjustified and emphasized that the approval for reassessment, in the circumstances of the case, was accorded mechanically. He highlighted that the “reasons to believe”, forming the basis for reopening of assessment, did not disclose any particulars as to how the information triggering notice was received and who furnished that information.

It was next urged that the AO did not even issue notice under Section 143 (2), but rather completed the assessment. Highlighting that absence of notice vitiates the entire proceedings, learned counsel states that both the CIT (A) and the ITAT erred in not returning the findings on this aspect

Contention of the Revenue

The Department submitted that that the assessee is precluded from arguing on the validity or nullity of the order, in view of the bar enacted under Section 292 (BB) which reads as under: –

“Notice deemed to be valid in certain circumstances. 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.]”

Hence the express terms of Section 292BB, which overrides all arguments, so long as the assessee appears in any proceedings or cooperated in any enquiry related to assessment or reassessment. In the present case, there is no doubt at all that the assessee cooperated and appeared both in the assessment as well as reassessment proceedings. Therefore, it had deemed notice of the re-assessment proceedings. Its contentions were taken into account. In such circumstances, issuance of notice is a mere empty formality. Thus, the non-issuance of notice, shall not vitiate the assessment proceedings after due service of notice under Section 147

Held by the High Court

For the above reasons, this Court finds no ground for interference and holds that there is no substantial question of law.

The appeal is accordingly dismissed.