MD Sons Vs ITO (ITAT Bangalore)
Defect in Section 143(2) Notice Format Is Curable Under Section 292B; Assessment Not Invalid Merely for Non-Compliance with CBDT-Prescribed Format
The Special Bench of the ITAT, Bengaluru, resolved the conflicting decisions of various Tribunal Benches on whether a notice issued under section 143(2) after 23.06.2017, but not in the format prescribed by the CBDT, would invalidate the consequent assessment. The Tribunal held that such a defect is merely procedural and is protected by section 292B, provided the notice is issued within time, served on the assessee, and substantially fulfills the statutory purpose of informing the assessee that the return has been selected for scrutiny.
The Special Bench observed that section 143(2) itself does not prescribe any statutory format nor does it require the notice to specify whether the scrutiny is Limited Scrutiny, Complete Scrutiny or Manual Scrutiny. These classifications arise only from CBDT administrative instructions intended to regulate departmental functioning. While such instructions are binding on the tax authorities, their breach does not automatically render the notice or assessment void unless the defect affects a statutory jurisdictional requirement or causes demonstrable prejudice to the assessee.
The Tribunal distinguished cases such as Hotel Blue Moon, Laxman Das Khandelwal, Maruti Suzuki, and the penalty notice decisions in Manjunatha Cotton and Mohd. Farhan A. Shaikh, holding that those decisions dealt with absence of statutory notice or other foundational jurisdictional defects, whereas the present controversy concerned only the format of an otherwise valid notice. It held that section 292B was enacted precisely to save proceedings from technical defects which do not affect their substance or the intent of the Act.
