DCIT Vs G Corp Pvt. Ltd. (ITAT Bangalore)
No Fresh 143(2) Needed After Section 263 – ITAT Reverses CIT(A) Revives Assessment
ITAT Bangalore held that issuance of fresh notice u/s 143(2) is not mandatory when an assessment is framed pursuant to a revisionary order under Section 263, reversing the CIT(A)’s order which had quashed the assessment on this ground.
In this case, the original assessment was completed after issuing valid notice under Section 143(2). Subsequently, the PCIT invoked Section 263 and directed the AO to recompute income (specifically, to tax annual value of property). The AO passed a fresh order u/s 143(3) r.w.s. 263 without issuing a fresh 143(2) notice.
The CIT(A) quashed the assessment relying on Hotel Blue Moon, holding that absence of 143(2) notice invalidates the order.
However, the Tribunal disagreed and held that:
- Proceedings under Section 263 are a continuation/modification of original assessment,
- No fresh return is filed by the assessee in such proceedings,
- The AO’s jurisdiction is restricted to issues directed by PCIT, and
- The Act does not mandate multiple 143(2) notices for the same assessment year.
The Tribunal further clarified that:
- Judgments like Hotel Blue Moon apply to block/search assessments where fresh returns are filed,
- They are not applicable to 263 set-aside proceedings.
Accordingly, the ITAT:
