2023 (3) TMI 208 - AT - Income Tax

Validity of reopening of assessment - Issue of notice where income has escaped assessment - Necessity to issue notice u/s 143(2) - Whether the issue of notice under section 143(2) of Act was mandatory to frame assessment under section 143(3) r.w.s. 147 - HELD THAT:- AO was under the obligation to issue a notice under section 143(2) of the Act for making the assessment or reassessment as the case may be. In case AO has not done so, the order framed under section 143(3) read with section 147 of the Act becomes invalid.

Whether the notice under section 143(2) issued beyond the statutory time limit provided under the Act can be held invalid or the provisions of section 292BB of the Act come to rescue the revenue? - Assessee had filed return of income dated 24th October 2015. To carry out the assessment of such return, the AO was required to issue notice under section 143(2) of the Act on or before 30th September 2016 i.e. 6 months from 31st March 2016. However, the notice was issued dated 07th December 2016. Thus, in our considered opinion, the notice issued after the prescribed time limit is not valid for the reason that the AO has no power to issue such notice after expiry of 6 months from the end of financial year in which return has been field. Therefore, any assessment made based on notice which itself is not valid will also become void ab initio. In holding so we also draw support and guidance from the judgment of Hon’ble Gujarat High Court in case of DCIT vs. Mahi Valley Hotels & Resorts [2005 (8) TMI 84 - GUJARAT HIGH COURT].

The provision of section 292BB of the Act does not deal about the issuance of notice. In the present case, the issue is whether the assessment framed under section 147/143(3) of the Act is valid in a situation where the mandatory notice under section 143(2) of the Act was issued beyond statutory time limit prescribed. Accordingly, we hold that, the provision of section 292BB of the Act does not extend any benefit to the Revenue.

We conclude that there was not issued the valid statutory notice under section 143(2) of the Act within the prescribed time. The Ld. DR has also not brought anything on record contrary to the arguments advanced by the Ld. AR for the assessee. Thus in the absence of the valid statutory notice, the assessment framed under section 143(3)/147 of the Act is not sustainable. Hence, the ground raised by the assessee is allowed.