Facts of the Case

The assessee filed its income tax return on 30.03.2007 declaring income of Rs. 36,609/-. The return was initially processed under Section 143(1) of the Income Tax Act. Thereafter, the case was selected for scrutiny and assessment was completed on 11.12.2009.

According to the Assessing Officer, notice under Section 143(2) was issued on 15.09.2008 and thereafter dispatched by speed post. Further notices under Section 142(1) along with questionnaires were also issued when the assessee did not respond initially.

Subsequently, the Assessing Officer made additions on account of salary expenses, web designing expenses, share application money, and current liabilities, determining total income at Rs. 1,02,15,446/-.

The assessee challenged the assessment before CIT(A), and thereafter the matter reached the ITAT, where relief was granted to the assessee.

Issues Involved

  1. Whether valid issuance of notice under Section 143(2) was established by the Revenue?
  2. Whether assessment proceedings could survive without proof of valid statutory notice?
  3. Whether ITAT was justified in deleting the additions made by the Assessing Officer?

Petitioner’s Arguments (Revenue’s Arguments)

  • The Revenue argued that notice under Section 143(2) was duly issued at the address provided by the assessee.
  • It was contended that all procedural requirements were complied with.
  • The Revenue further argued that the assessee had participated in the proceedings at later stages, thereby validating the assessment process.
  • It was submitted that ITAT erred in holding that no valid notice was issued.

Respondent’s Arguments (Assessee’s Arguments)

  • The assessee contended that there was no proper evidence on record establishing issuance of notice under Section 143(2).
  • It was argued that issuance of notice under Section 143(2) is mandatory and foundational for assumption of jurisdiction.
  • The assessee relied upon procedural defects and challenged the legality of the entire assessment. 

Court Findings / Court Order

The Delhi High Court upheld the findings of the ITAT and observed that:

  • The ITAT had examined the entire record and concluded that there was no satisfactory material proving issuance of notice under Section 143(2).
  • The Court relied upon the Supreme Court judgment in Additional Commissioner of Income Tax vs Hotel Blue Moon (2010) 321 ITR 362 (SC), reiterating that issuance of notice under Section 143(2) is mandatory.
  • The Court held that the assessment order could not be sustained in absence of compliance with mandatory statutory requirements.
  • The additions deleted by the ITAT were based on concurrent factual findings and did not warrant interference.

Accordingly, the appeals filed by the Revenue were dismissed.

Important Clarification

This judgment reinforces that mere assertion by the Revenue regarding issuance of notice is insufficient unless supported by proper records and evidence. Jurisdictional notice under Section 143(2) is a mandatory legal requirement and non-compliance renders the assessment invalid.

Participation by the assessee at a later stage does not automatically cure jurisdictional defects where statutory compliance is absent.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2017:DHC:7299-DB/SAS28112017ITA10622017.pdf

 

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