A division bench of the Delhi High Court comprising Justice Manmohan and Mr. Justice Dinesh Kumar has held that the absence of a notice cannot be rectified and cured by invoking section 292BB of the Income Tax Act, 1961.
The Court was considering an appeal against the Tribunal order wherein relief was granted to the assessee.
Before the High Court, the department contended that the assessee had appeared and cooperated in the assessment proceedings and had not raised any objection about non-service of notice under Section 143(2) of the Income Tax Act, 1961 during the entire assessment proceedings and therefore, the assessee was precluded from taking any objection that the notice was not issued in time in accordance with Section 292BB of the Act.
The assessee, on the other hand, stated that the Tribunal has erred in ignoring Section 124(3) of the Act which mandates that issue regarding jurisdiction of Assessing Officer cannot be challenged after one month from issuance of notice under Section 143(2) of the Act or after completion of assessment proceedings, whichever is earlier.
Upholding the Tribunal order, the division bench held that Section 292BB does not give the power to condone the failure or delay in issuing the statutory notice required to be issued under Section 143(2) of the Act. Section 292BB deals with failure of service of notice and not with regard to failure to issue notice.
Relying on precedents, the Court observed that “The Supreme Court in Commissioner of Income-Tax vs. Laxman Das Khandelwal (supra) has clearly stated that the scope of Section 292BB is to make service of notice having certain infirmities to be proper and valid. However, the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. In fact, a Division Bench of this Court in Pr.Commissioner of Income-tax Vs. Shri Jai Shiv Shankar Traders (P.) Ltd. [2015] 64 taxmann.com 220 (Delhi) has categorically held that the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act.”
“Therefore, on the basis of admitted fact that notice under Section 143(2) of the Act was not issued within the period of six months prescribed for the purpose, jurisdiction assumed by the Assessing Officer under Section 143(3) of the Act was assumed erroneously,” the Court concluded.
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