Income Tax Appellate Tribunal

Khushi Commotrade Pvt. Ltd. Vs. Principal Commissioner of Income Tax-2, Kolkata

MANU/IK/0078/2021

11.05.2021

Direct Taxation

Before the scrutiny assessment is made under Section 143(3) of IT Act, issuance of notice under Section 143(2) of IT Act is mandatory

Present appeal preferred by the assessee is against the order of Learned Principal Commissioner of Income Tax, passed under Section 263 of the Income Tax Act, 1961 (IT Act) on ground that, since the initial assessment order is itself null and void, order passed under Section 263 of IT Act on the same is without jurisdiction and fit to be quashed.

Supreme Court in the case of CIT vs. Hotel Blue Moon has held that, before the scrutiny assessment is made under Section 143(3) of the IT Act, the issuance of notice under Section 143(2) of the IT Act is mandatory which is applicable also in the case of reopening of assessment, once the assessee has filed return pursuant to notice under Section 148 of the IT Act. In present case, in the impugned order itself, the Learned Principal CIT has clearly given a finding of fact that, the AO has not issued notice under Section 143(2) of the Act after the event of the assessee having filed the return of income pursuant to the notice under Section 148 of the IT Act. Present Tribunal find merit in the contention of the assessee that, the AO while passing the order under Section 147/143(3) of the Act has not issued notice under Section 143(2) of the IT Act. And, therefore, the mandatory requirement of law to usurp the jurisdiction to frame the assessment under Section 143(3)/147 of the IT Act pursuant to reopening is absent and, therefore, the legal effect is that, the order of the AO is null in the eyes of law.

Further, in view of ratio of the decision of the Supreme Court in CIT vs. Laxman Das Kandelwal, there is no merit in the contention of the Revenue that, Section 292BB of the IT Act would cure the defect of non-issuance of notice under Section 143(2) of the IT Act and since the AO in present case had not issued notice under Section 143(2) of the IT Act before framing the re-assessment under Section 143(3)/147 of the Act, the order passed by the AO under Section 143(3)/147 of the Act is without jurisdiction and, therefore, is non-est in the eyes of law and therefore, the CIT could not have interfered by exercising his power under Section 263 of the IT Act in respect of non-est order and, therefore, his action to pass the impugned order is also null in the eyes of law and is quashed. The appeal of the assessee is allowed.

Tags : Assessment Jurisdiction Validity

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