The Income Tax Appellate Tribunal (ITAT), Kolkata Bench ruled that the scrutiny assessment can not be framed in absence of a valid notice and the omission to issue notice is not a curable defect.
The assessee, Shivam Dhatu Udyog Ltd. has assailed the action of the AO to have framed the assessment under section 143(3) of the Act without issuing notice under section 143(2) of the Act.
It is discerned that the notice under section 143(2) was issued on August 8, 2013 by DCIT, Gorakhpur, U. P. The assessee duly objected to the jurisdiction of the DCIT, Gorakhpur stating that the assessee company has its registered office at Kolkata i.e. in the State of West Bengal. Realizing the mistake, DCIT, Gorakhpur transferred the case to the AO, Kolkata who admittedly have not issued the mandatory statutory notice under section 143(2) of the Act; and has issued only notice under section 142(1) of the Act and has framed the assessment under section 143(3) of the Act, which according to the assessee is without jurisdiction and bad in law.
The assessee urged that it is well settled that if the assessing officer who is not having jurisdiction over the case of the assessee issues notice under section 143(2) of the Act, such notice is bad in law and invalid and all subsequent action including the assessment order passed on the basis of such notice is bad in law and void ab initio.
On the other hand the department contended that the AO (DCIT, Circle-3(1), Kolkata) has passed the order under section 143(3) of the Act after issuing notice under section 142(1) of the Act and has framed the assessment, since the DCIT, Gorokhpur has already issued notice under section 143(2) of the Act, therefore, he does not want us to interfere with the order of the AO (DCIT Kolkata).
The Coram of J.S. Reddy and A. T. Varkey in the light of the decision of the Supreme Court in the case of CIT V Hotel Blue Moon wherein it was held that the issue of a legally valid notice under section 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment under section 143(3) of the Act and in the absence of a valid notice under section 143(2) the scrutiny assessment under section 143(3) cannot be framed and omission to issue notice under section 143(2) of the Act is not a curable defect.
Therefore, the Tribunal said, “Since the assessee has been able to demonstrate before us that there has been no notice issued u/s. 143(2) of the Act by the AO (DCIT Circle-3(1), Kolkata before he framed the scrutiny assessment u/s. 143(3) of the Act dated 17.03.2015, the assessment order is null in the eyes of law and the assessee succeeds on the legal issue raised before us. Since the AO (DCIT, Circle-3(1), Kolkata did not issue the mandatory notice u/s 143(2) of the Act, he did not enjoy the jurisdiction to frame the assessment u/s. 143(3) of the Act. Therefore, the order passed by the AO (DCIT, Circle-3(1), Kolkata is null in the eyes of law and it has to be quashed.”
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