Siva Industries & Holdings Limited Vs ACIT (Madras High Court)
Madras High Court has ruled that an assessment reopened under Section 147 of the Income Tax Act, 1961, and subsequently completed under Section 143(3) of the Act, is invalid if the mandatory notice under Section 143(2) is not issued. This decision came in the appeal filed by Siva Industries & Holdings Limited against an order of the Income Tax Appellate Tribunal (ITAT) “A” Bench, Chennai, dated April 30, 2012.
The core of the dispute revolved around whether the Assessing Officer was legally permitted to reopen the assessment by issuing a notice under Section 148, especially when the time limit for passing a regular assessment order under Section 143(3) had not expired. A significant contention raised by the assessee was the failure of the tax authorities to issue the mandatory notice required under Section 143(2) of the Act before finalizing the assessment under Section 143(3) read with Section 147.
The assessee had previously raised this procedural lapse even before the Dispute Resolution Panel (DRP). The High Court observed that it was an “indisputable position” that the Section 143(2) notice had not been issued.
The Court referred to established legal positions from its own coordinate benches. It cited Sapthagiri Finance & Investments v. Income-tax Officer, Ward I(4), Kanchipuram [2012] 25 taxmann.com 341 (Mad.) and Commissioner of Income-tax, Chennai v. Alstom T & D India Limited [2014] 45 taxmann.com 424 (Madras). These precedents clearly held that the completion of assessment proceedings under Section 143(3) read with Section 147 of the Act without the issuance of a Section 143(2) notice was “bad in law.” The High Court emphasized that a failure by the revenue to comply with the procedure laid down under Section 143(2) necessitates the failure of the assessment itself.
