The section 292BB talks about ‘Notice deemed to be valid in certain circumstances’ was introduced by Finance Act 2008 & is reproduced below –

[Notice deemed to be valid in certain circumstances.

292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was—

(a) not served upon him; or

(b) not served upon him in time; or

(c) served upon him in an improper manner:

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.

The section is very short & it puts bar on assessee as far as raising objection with respect to a) service of notice, b) time of service of notice & c) manner of service of notice, is concerned, if the assesse either appears in any proceeding or co-operates in any enquiry relating to assessment or reassessment.

The proviso to the section carves out an exception to the said section ONLY where the assessee raises an objection BEFORE completion of the proceedings.

Para 42.2  & 42.3 of Circular no 1/2009 dated 27.03.2009 issued as “Explanatory Notes to Finance Act 2008” outline the purpose behind introduction of this section 292BB –

Instances have come to the notice of the department, where notices under sub-section (2) of section 143, though issued by registered post within twelve months from the end of the month in which the return was furnished, have been held ‘invalid’ on the ground that the notice was actually received by the assessee after the limitation date and there was no “service” as postulated under the section. This is notwithstanding the fact that the assessee has attended the assessment proceedings in response to the notice served on him. Instances have also come to notice where the orders of the Assessing Officer is being quashed on the consideration that there is no evidence of issue or service of notice, even though the assessee and his authorized representative have attended the hearing before the Assessing Officer during the assessment proceedings. Further, the design of the limitation period with reference to the end of the month leads to administrative inconvenience inasmuch as the last day of every month becomes a time barring date.

42.3 In order to address these issues and to reduce litigation, a new section 292BB in the Income-tax Act has been inserted and the provision of sub-section (2) of section 143 has been amended.

If we go through these para 42.2 & 42.3 carefully, it becomes clear that the basic intention of the law makers to take care of situations arising after a notice is ISSUED & SERVED BUT DO NOT take into consideration situations where notice is either NOT ISSUED AT ALL OR NOT SERVED AT ALL OR SERVED BEYOND TIME LIMIT PRESCRIBED IN THE RESPECTIVE SECTIONS

As professionals, we all know that a notice u/s 143(2) or s 148 rws s 147 is necessary to assume jurisdiction over assessee for the purpose of making assessment & the same has been underlined in various judgements of different Triubunals & High Courts too.

However, as a matter of fact, it so happens that, many a times when assessee raises an objection with respect to either Issue of Notice or Non Service of Notice, the AO tries to stress on the fact that the assessee has taken part in the proceedings & co-operated with the department & therefore barred from taking such a stand by virtue of proviso to section 292BB.

Therefore it becomes more important to see how the judiciary has interpreted the section, with specific reference to the situation where there is no issue of notice –

1. Whether scope of section 292BB is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of assessee and section does not save complete absence of notice and, thus, for section 292BB to apply, section 143(2) notice must have emanated from department and it is only infirmities in manner of service of notice that section seeks to cure and it is not intended to cure complete absence of notice itself – Held, yes [Paras 7 to 9] [In favour of assessee]INCOME TAX: For section 292BB to apply, section 143(2) notice must have emanated from department and it is only infirmities in manner of service of notice that section seeks to cure and it is not intended to cure complete absence of notice itself – [2019] 108 taxmann.com 183 (SC)/[2019] 266 Taxman 171 (SC)/[2019] 417 ITR 325 (SC) – Commissioner of Income-tax vs. Laxman Das Khandelwal

2. Whether on facts, impugned assessment order based on invalid notice, could not survive and, same was liable to be quashed – Held, yes [Paras 8, 9 and 10] [In favour of assessee]INCOME TAX : Revenue authorities could not dispute delay in service of notice under section 143(2) as evidenced from date shown in e-portal maintained by them by taking a plea that there was some technical error in said e-portal – [2019] 108 taxmann.com 45 (Karnataka)/[2019] 265 Taxman 277 (Karnataka) – Nittur Vasanth Kumar Mahesh vs. Assistant Commissioner of Income-tax, Circle 3(2)(1), Bengaluru

3. Whether non-issuance of notice under section 143(2) is not a procedural irregularity and same cannot be cured under section 292BB – Held, yes – Whether, therefore, an assessment order passed without issuance of valid notice under section 143(2) would be rendered invalid – Held, yes – Whether in view of aforesaid legal position, where notice under section 143(2) was issued to assessee prior to filing of return of income, said notice being invalid, assessment order passed in pursuance of same deserved to be set aside – Held, yes [Para 24] – [2019] 106 taxmann.com 399 (Gujarat) – Principal Commissioner of Income Tax vs. Marck Biosciences Ltd.

4. Whether, on facts, if original assessee had lived and later participated in proceedings, then, by reason of section 292BB, she would have been precluded from saying that no notice was factually served upon her – Held, yes – Whether, however, in instant case, since notice was issued in name of assessee when she was no longer alive, it was inconceivable that she could have participated in reassessment proceedings to be estopped from contending that she did not receive it – Held, yes – Whether, therefore, provisions of section 292BB were not applicable to assessee’s case and as a consequence, impugned reassessment proceedings deserved to be quashed – Held, yes [Para 9] [In favour of assessee]IT : Where notice seeking to reopen assessment was issued in name of deceased assessee, since she could not have participated in reassessment proceedings, provisions of section 292BB were not applicable to assessee’s case and as a consequence, impugned reassessment proceedings deserved to be quashed – [2019] 101 taxmann.com 233 (Delhi)/[2019] 260 Taxman 412 (Delhi)/[2019] 414 ITR 286 (Delhi) – Rajender Kumar Sehgal vs. Income Tax Officer, Ward 56(1), New Delhi

5. Where Assessing Officer had completed assessment of assessee under section 143(3) read with section 147 without issuing any notice under section 143(2), assessment order passed was legally unsustainable and same could not be justified by invoking provision of section 292BB – Held, yes [Paras 9, 10 and 13] [In favour of assessee]IT : Where Assessing Officer had completed assessment of assessee under section 143(3) read with section 147 without issuing any notice under section 143(2), re-assessment order passed was legally unsustainable and same could not be justified by invoking provisions of section 292BB – 96 taxmann.com 104 – Principal Commissioner of Income-tax vs. Oberoi Hotels (P.) Ltd.

6. Section 148, read with section 292BB, of the Income-tax Act, 1961 – Income escaping assessment – Issue of notice for (Service of notice) – Assessment year 2009-10 – Whether where notice for reopening of assessment was issued to assessee after expiry of period of limitation at old address of assessee which had already been changed by assessee in official record by updating PAN data base, it could be said that there was no service of reassessment notice upon assessee – Held, yes – Whether, further, service of notice to Chartered Accountant of assessee was not service at all and merely because assessee had participated in reassessment proceedings by filing return and filing objection to reassessment, notice issued to it through its Chartered Accountant, to sought reasons to believe, same could not make service of notice valid – Held, yes – Whether, therefore, reassessment proceedings on assessee was bad in law and deserved to be quashed – Held, yes [Paras 25 and 45] [In favour of assessee]IT : Where reassessment notice under section 148(1) was issued against assessee after expiry of period of limitation at old address of assessee which was already changed by assessee before date of issuance of said reassessment notice in official record by updating PAN data base, it could be said that there was no service of reassessment notice upon assessee – [2018] 94 taxmann.com 95 (Chhattisgarh)/[2018] 405 ITR 422 (Chhattisgarh)/[2018] 302 CTR 362 (Chhattisgarh) – Ardent Steel Ltd. vs. Assistant Commissioner of Income-tax (Central)-2, Raipur

7. Whether where assessee has (a) appeared in any proceedings; or (b) co-operated in any enquiry and, thus, aware of nature of proceedings, he shall not be allowed to take advantage of procedural defects in serving of notice – Held, yes – Notice under section 263 was served upon assessee which was returned with endorsement ‘addressee deceased’ – Same notice was then served to legal heir through a messenger – Legal heir participated in proceedings – Whether proceedings were initiated against deceased-assessee in which legal heir participated and, therefore, said legal heir could not be deprived of right to challenge service of notice – Held, yes [Para 16] [In favour of assessee] – [2016] 68 taxmann.com 22 (Madras)/[2016] 239 Taxman 533 (Madras)/[2016] 384 ITR 177 (Madras) – Commissioner of Income-tax -VIII, Chennai vs. M. Hemanathan

8. Where Assessing Officer issued notice seeking to reopen assessment on wrong address and person alleged to be an employee of assessee was not authorized to receive notice, presumption of service of notice under section 292BB would not be attracted and, therefore, impugned additions made in reassessment proceedings deserved to be set aside – [2014] 42 taxmann.com 387 (Allahabad)/[2014] 226 Taxman 71 (Allahabad)(MAG.) – Commissioner of Income-tax vs. Dr. Ajay Prakash

Conclusion –

As can be seen from the above, section 292BB does not help the AO in following situations

i) Where a notice is not ISSUED at all

ii) Where a notice is served after expiry of time limit prescribed in the respective section

iii) Where a notice is served before filing of return

iv) Where a notice is served on a dead person

v) Where a notice is served on an address not on record

vi) Where a notice is served on a person who is not authorized to receive it

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