ITAT: Exclusion to serve Income Tax Act Notice u/s 143(2), not a Treatable Flaw

ITAT: Exclusion to serve Income Tax Act Notice u/s 143(2), not a Treatable Flaw

As per the Income Tax Appellate Tribunal (ITAT), Bangalore bench, while removing an assessment order held that the omission to serve a notice under section 143(2) of the Income Tax Act, 1961, does not constitute a curable defect where the provisions of section 292BB of the Act are concerned.

In its income tax return for the year under review, the assessee, a partnership firm engaged in real estate, declared taxable income as NIL (loss of Rs. 26,83,80,898). Shri Dayananda Pai and his group were the targets of a search and seizure operation on 12th April 2011 under section 132, in which the office premises of the assessee were also searched. To the assessment under section 142(1) of the Income Tax Act of 1961 dated 30th July, 2013, the assessee submitted a response letter dated 20th September, 2013. It included the return filed on 31st July, 2012.

The assessee argued before the tribunal that the 143(2) notice was issued to the assessee on 17th October, 2013, which was beyond the due date and that the assessment order is ineligible.

As a result, the Tribunal bench comprises of Accountant Member Mr. B R Bhaskaran and Judicial Member Ms. Beena Pillai held that section 292BB of the Act contemplated situations of irregularities wherein the notice was sent to the assessee in time and according to its provisions.

Having not received the notice under section 143(2) in time, the taxpayer has no basis for extending the argument raised by the revenue," the panel concluded.

The bench held the Assessing Officer u/s acted without due diligence under Section 143. It is impossible for Section 143(2) to be considered a procedural irregularity and it can never be rectified.

Taking into account that the notice u/s was not served within the period of limitation, the empathetic statement of law in the absence of service under Section 23. The revenue will be able to utilize the provisions of section 143(2) within the limitation period, therefore benefitting the assessee," the letter continued.

As the Tribunal held when quashing the assessment, "the Statute mandates that notice be given under section 92. As per 143(2), the notice must be given within the period of limitations; any omission would be seen as a challenge to the jurisdiction using the principles set forth by the Supreme Court in various judgments. We therefore declare that the assessment order passed by the Ld.AO is illegal under law and the same is quashed.