In a recent case, the Income Tax Appellate Tribunal ( ITAT ) Pune Bench held that the basic requirement of completing assessment under Section 143(3) of the Income Tax Act is that notice under section 143(2) of the Act must be issued.
The ITAT also said that, Section 292B of the Income Tax Act cannot be pressed into action to cure such defect in the assessment
Briefly, in the facts of the case, the assessee had furnished one return of income for the assessment year 2006-07, which admittedly was the non-est return and cannot stand in the eyes of law. The Assessing Officer recorded reasons for reopening the assessment and issued the notice under section 148 of the Act. The assessee failed to furnish any return of income in response to the said notice. Thereafter, no notice under section 143(2) of the Act was issued but the Assessing Officer issued the notice under section 142(1) of the Act. The assessee participated in the assessment proceedings and the order was passed under section 143(3) r.w.s. 147 of the Act. The aforesaid order is questioned by the assessee and it is the case of the assessee that the basic requirement of completing assessment under section 143(3) of the Act is that notice under section 143(2) of the Act must be issued.
The learned Authorized Representative for the assessee pointed out that the assessee had filed the first return of income, which admittedly, was non-est. Thereafter, notice was issued under section 148 of the Act in response to which the assessee did not file any return of income. In the initial dates of hearing, the learned Authorized Representative for the assessee had stressed that when no notice under section 143(2) of the Act has been issued to the assessee, then the assessment completed against the assessee in the absence of same was void and bad in law. The learned Departmental Representative has filed a report of Assessing Officer that the assessee had not filed any return of income in response to notice under section 148 of the Act and consequently, there was no requirement to issue the notice under section 143(2) of the Act. However, proceedings were initiated by the issue of notice under section 142(1) of the Act and the assessee had duly participated in assessment proceedings.
The bench comprising of members Ms Sushma Chowla, Jm And Shri Anil Chaturvedi, held that the assessee had failed to file any return of income under any of the provisions of section 139 of the Act and had failed even in terms of notice issued under section 142(1) of the Act, then the provisions of section 144 of the Act are attracted and the Assessing Officer has the power to pass an order to the best of his judgment. The third condition of having filed the return of income and not complying with the notice issued under section 143(2) of the Act does not apply to the present facts. In such scenario, the authority held that the order passed under section 143(3) r/w section 147 of the Act suffers from infirmity and the Act itself provides an alternative for completing the assessment under section 144 of the Act.
The connected issue which arises is whether the defect in applying the said section is curable under section 292B of the Act. In the light of the judgement of the Mumbai Bench of Tribunal in S.Kumar Enterprises (Synfabs) Ltd. Vs. JCIT the authority held that section 292B of the Act cannot be pressed into action to cure the defect in the assessment made in the present case. Accordingly, the assessment order passed in the present case is both invalid and bad in law. Thus, the additional ground of appeal raised by the assessee is allowed.