Case Law Details
Issue- Learned CIT (A) has erred both on facts and in law in confirming the order assed by the AO despite the fact that the same has been passed without issue of statutory notice under section 143(2) of the Act.
Contention of the Assessee
Assessee stated that the assessment order has been passed without issuing the notice u/s. 143(2) of the I.T. Act. He stated that this Bench can peruse the assessment order and the record which clearly shows that the AO has not even issued the notice u/s. 143(2) of the I.T. Act before completion of the assessment in dispute. He submitted that the assessee has filed his written submissions on this issue before the Ld. First Appellate Authority but has also rejected the request of the assessee in routine manner by stating that non-issue of notice u/s. 143(2) does not render the reassessment. Finding of the Ld. CIT(A) is contrary to the law and the facts and circumstances of the present case as well as the decision of the Hon’ble Supreme Court of India in the case of ACIT & Anr. Vs. Hotel Blue Moon [2010] 321 ITR 362 (SC) wherein the Hon’ble Supreme Court has held that the issue of notice u/s. 143(2) of the I.T. Act is mandatory and not procedural.
If the notice is not served within the prescribed period, the assessment order is invalid. He further submitted that the Ld. CIT(A) has ignored the order of the Hon’ble Supreme Court of India (Supra) and passed the impugned order which is contrary to law and facts on file and deserve to be cancelled.
Ld. Counsel of the assessee further stated that there are plethora of judgments passed by the Hon’ble Supreme Court of India; Hon’ble Jurisdictional High Courts and the various Hon’ble High Courts wherein the Hon’ble Courts held that non-service of the notice u/s. 143(2) of the I.T. Act, the reassessment made in such cases is invalid. He requested that on this ground the assessment in dispute as well as the impugned order passed by the Ld. CIT(A) may be declared invalid, void abnitio. In support of his contention Ld counsel of the assessee cited following relevant judgments:-
- ACIT & anr. Vs. Hotel Blue Moon (2010) 321 ITR 362 (SC)
- DIT vs. Society for Worldwide InterBank Financial Telecommunications in ITA No. 441 of 2010 (Delhi High Court) (2010) 323 ITR 249
- CIT vs. Pawan Gupta & Ors. [2009] 318 ITR 322 (Delhi High Court).
- M/s Sapthagiri Finance and Investments vs. ITO : TC(A) No. 159 of 2006 dated 17.7.2012 (Madras High Court) [2013] 90 DTR 289.
- Alpine Electronics Asia Pte Ltd. vs. DGIT & Ors. [2012] 341 ITR 247 (Del.)
- Raj Kumar Chawla and Ors. vs. ITO (2005) 94 ITD 1 (Del), ITAT, Special Bench, New Delhi
- DCIT vs. Indian Syntans Investments (P) Ltd. [2007] 107 ITD 457.
- CIT vs. M/s Panorama Builders Pvt. Ltd. in Tax Appeal NO. 435 of 2011 of Hon’ble Gujarat High Court.
- CIT vs. Rajeev Sharma 336 ITR 678 of High Court of Allahabad.
Contention of the Revenue
Ld. DR relied upon the order passed by the Ld. CIT(A) and stated that the Ld. First Appellate Authority has passed a well reasoned order on the basis of the records and as per the provisions of law, therefore, the impugned order may be upheld by dismissing the Appeal filed by the Assessee.
Held by ITAT
AO has not issued notice u/s. 143(2) of the I.T. 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 I.T. 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 I.T. 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 deserve to be cancelled. In view of above facts circumstances of the present case, the issue in dispute relating to non service of the mandatory notice u/s. 143(2) of the Act is decided in favor of the assessee by declaring the assessment order dated 31.12.2010 passed u/s. 143(3) / 147 of the I.T. Act as invalid , void abnitio and against the provisions of the law.
