Notice u/s 143(2) of Income Tax Act is Condition Precedent for Framing of Income Tax Assessment: Madras HC [Read Order]

In a recent decision the Madras High Court ruled that the notice under Section 143(2) of Income Tax Act, 1961 is a condition precedent for framing of the income tax assessment.

The petitioner, Angusamy Gounder Subbu Rathinamun, has in the affidavit filed in support of the writ petition raised various grounds assailing the order of assessment. However, in the course of hearing, V.Srikanth, counsel for the petitioner has restricted the arguments only to the veracity or otherwise of notice under Section 143(2) of the Income Tax Act.

According to the Counsel, a notice under Section 143(2) of the Income Tax Act is a condition precedent to pass an order of assessment under the provisions of Section 143(3) of the Income Tax Act.

In this case, such a notice has been issued. According to the petitioner however, the notice under Section 143(2) of the Income Tax Act is inadequate as it merely states that the issue of ‘share capital/capital’ has been identified for examination. An opportunity was afforded under that notice to the petitioner to produce evidence to support the return of income filed.

The statutory provision was pressed into service to state that the notice must be speaking as regards the lacuna found in the return of income in regard to which the assessing officer solicits supporting information. In the present case according to the petitioner, the requirements under the statutory provision have not been complied with. As a consequence, the counsel contended that the order of assessment is itself liable to be set aside.

R.S.Balaji, Senior Standing Counsel, who appeared for the respondent submitted that the notice under Section 143(2) of the Income Tax Act confirmed to all statutory prescriptions and has rightly identified the issue of share capital/capital for further enquiry and further submitted that the addition has been properly made after application of mind and that the assessment order should be sustained.

A Single Bench comprising Dr Justice Anita Sumath, observed that “I am of the considered view that there is no merit in the argument advanced by the petitioner. Undoubtedly, a notice under Section 143(2) of the Income Tax Act is a condition precedent for framing of an income tax assessment and in the present case, such notice has been issued.”

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