ITAT deletes Addition due to Time-Barred Issuance of Notice u/s 143(2) [Read Order]

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition due to time-barred issuance of notice under Section 143(2) of the Income Tax Act.

The assessee M/s Osian Stock Broking Pvt. Ltd was aggrieved by the action of the lower authorities in treating the unsecured loans of Rs.15,00,000/- taken by the assessee as unexplained income.

The assessee had contested the impugned addition on various grounds, inter alia, that the Assessing Officer had no reason to believe that the income of the assessee has escaped assessment; that the concerned Assessing Officer did not have territorial jurisdiction to frame the assessment and further that the notice issued under Section 143(2) of the Income Tax Act was time-barred and, therefore, the assessment framed was void ab initio. 

Counsel for the assessee submitted that the last date for issue of notice under Section 143(2) of the IT Act was in 30.09.2015. Though the notice had been shown to be signed on 30.09.2015 itself, however, the same was sent to the email address of the assessee on 03.11.2015.

He further argued that by the mere signing of the notice by the concerned Assessing Officer, it would not mean that the same was issued on the said date. That the date of issue of the said notice would be the date on which the email was sent on 03.11.2015.

Counsel for the revenue submitted that the notice for reopening the assessment under Section 148 of the Income Tax Act was issued within the time. Once the notice under Section 148 of the Income Tax Act was issued, there was no relevance to the delayed issuance of notice under Section 143(2) of the Income Tax Act.

He further submitted that even otherwise the identity of issuance of notice will be the date on which the Assessing Officer signed the said notice which was on 30.09.2015 and hence it cannot be said that the notice under Section 143(2) of the Income Tax Act was time-barred.

The bench, consisting of two members, Judicial Member Sanjay Garg and Accountant Member Manish Borad, observed that signing of the notice would not constitute the issuance of notice. The date of issuance of notice will be when it is set in motion for delivery to the assessee.

The Bench further added that the issuance of notice within the specified period under Section 143(2) of the Income Tax Act is mandatory and that the Assessing Officer cannot assume jurisdiction under Section 143(3) of the Income Tax Act without the issuance of notice under Section 143(2) of the Income Tax Act and this defect cannot be cured by taking recourse to the deeming fiction provided under Section 292BB of the Income Tax Act.

Since the Assessing Officer did not issue a notice under Section 143(2) of the Income Tax Act within the specified time period, therefore, the Assessing Officer could not have assumed jurisdiction to frame the assessment under Section 143(3) of the Income Tax Act and, therefore, the impugned assessment order was bad in law and the same was accordingly held to be non-est. 

As a result, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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