2019 (2) TMI 2136 - AT - Income Tax

Validity of reopening of assessment - absence of issuance of notice u/s 143(2) - whether defect is of technical nature which is curable under s. 292B/292BB? - HELD THAT - We find no reference to the issuance of such notice u/s 143(2) of the Act in the re-assessment order. We also notice that CIT (A) has requisitioned the assessment records and has come to a categorical finding that no such notice u/s 143(2) of the Act has been issued. Revenue could not bring anything to contradict the allegation of non-issuance of notice. In view of the decision of Sukhini P. Modi 2014 (11) TMI 50 - GUJARAT HIGH COURT and other hosts of judgments the legal challenge that re-assessment order which is subject matter of appeal as void ab initio is well settled. In the absence of notice u/s 143(2) of the Act issued to assessee the re-assessment order passed under s. 144 r.w.s. 147 of the Act dated 26.03.2015 in question is rightly held to be without authority of law and consequently rightly quashed by the CIT(A). Appeal of the Revenue is dismissed.

Summary

ISSUES:

Whether the reassessment order passed under section 144 read with section 147 of the Income Tax Act, 1961 is valid in the absence of issuance of notice under section 143(2) of the Act.Whether the defect of non-issuance of notice under section 143(2) is a curable defect under sections 292B/292BB of the Income Tax Act.Whether the initiation of reassessment proceedings without discussion or details in the original assessment order constitutes a valid change of opinion under the law.Validity of addition made on account of unexplained investment in purchase of land based on evidence found during survey and admissions of co-purchaser.

RULINGS / HOLDINGS:

On the issue of notice under section 143(2): The reassessment order is held to be "bad in law" and "void ab initio" due to non-issuance of mandatory notice under section 143(2) of the Act, which is a substantive requirement for framing reassessment under section 143(3) read with section 147.Regarding curability under sections 292B/292BB: The defect of non-issuance of notice under section 143(2) is not curable under sections 292B or 292BB of the Act, as these provisions do not apply to such substantive jurisdictional defects.On change of opinion and initiation of reassessment: The reassessment proceedings were not initiated based on a valid change of opinion since there was no discussion on the issue in the original assessment order nor were any details called for, rendering the reassessment invalid.Concerning the addition for unexplained investment: The appellate authority deleted the addition of Rs. 4,97,44,712/- as it was not sustained on the basis of valid evidence, despite the Revenue's reliance on survey findings and admissions of the co-purchaser.

RATIONALE:

The Court applied the statutory framework of the Income Tax Act, 1961, emphasizing the mandatory nature of notice issuance under section 143(2) before framing an assessment or reassessment under section 143(3) read with section 147.Judicial precedents from various High Courts and ITAT benches were extensively relied upon to affirm that non-issuance of notice under section 143(2) renders the reassessment order invalid and non-est, and that such defect is not curable under sections 292B/292BB.The Court noted that the first appellate authority conducted a thorough examination of the assessment records and found no issuance of the notice under section 143(2), a fact uncontested by the Revenue.The decision aligns with a settled legal position that procedural compliance with notice requirements is a jurisdictional condition precedent, and failure to comply results in the reassessment being without authority of law.No dissent or doctrinal shift was indicated; the judgment follows established jurisprudence reinforcing the mandatory nature of section 143(2) notices in reassessment proceedings.