Shaily Juneja Vs ACIT (Delhi High Court)
Conclusion: Where AO failed to issue a notice under Section 143(2) and proceed directly by rejecting the return filed by assessee, the reassessment action would thus be liable to be quashed.
Held: The principal ground of challenge to reassessment action was based upon a conceded failure on the part of the respondents to comply with the requirements of Section 143(2). Assessee contended that a failure to issue a notice referable to that provision would be fatal and render the entire proceedings invalid. Respondents referencing the case of Ashok Chaddha vs. Income-tax Officer argued that the challenge to the reassessment action should not succeed in light of the Ashok Chaddha decision, which dealt with whether a notice under Section 143 was required during an assessment under Section 153A. It was held that if AO did not accept the return filed by assessee on its face and he was required to issue a notice under Section 143(2) and provide an opportunity to assessee to produce the necessary material in support of his return. A notice under Section 143(2) was required to be issued only in cases where the AO considered it necessary or expedient to do so and in cases where assessee had not filed its response to the notice under Section 142(1) it was not necessary for AO to issue such notice under Section 143(2). This contention was bereft of any merits and completely ignored the scheme of the machinery provisions for assessment under the Act. It was now well settled by a number of decisions (See: Pr. CIT v. Silver Line and Anr.: 283 CTR 148 (Del), ACIT v. Hotel Blue Moon: 321 ITR 362 (SC) and CIT v. Pawan Gupta: 318 ITR 322 (Del)) that whenever the return filed by an Assessee was not accepted at its face, it was mandatory for the AO has to issue a notice under Section 143(2) for proceeding further. It was thus not open for AO to not issue a notice under Section 143(2) and proceed directly under Section 144 by rejecting the return filed by assessee. The failure to comply with Section 143(2) was conceded and the reassessment action would thus be liable to be quashed on this short ground alone.
