The Income Tax Appellate Tribunal (ITAT), Kolkata Bench held that Order that suffers from patent irregularity, cannot be made foundation for subsequent proceedings.
M/s. Goyal Solar Systems Pvt. Limited preferred appeal before the Tribunal with regard to the order from Principal Commissioner of Income Tax. The Counsels for the assessee, Akshay Ringasia and Taraknath Jaiswal submitted that though the Assessing Officer has passed an assessment order under section 143(3) read with section 147, but he did not issue any notice under section 143(2) of the Income Tax Act. According to him, if the Assessing Officer failed to issue a notice under section 143(2) of the Income Tax Act, then assessment order would be void ab initio and on that wrong order, no Section 263 actions can be taken.
In order to buttress his argument, that no notice under section 143(2) was issued, paragraph No. 6 of the impugned order was referred, where the Commissioner himself admitted this fact. The Counsel for the Revenue,Sudipta GuhaCIT(DR) did not controvert this fact.
The Bench consisting of Rajpal Yadav, Vice-President and Girish Agrawal, Accountant Member observed that “Even before doubting the claim of assessee disclosing nil income, he has to first issue a notice under section 143(2), so that the assessee can submit evidence in support of its claim while it has shown nil income. After this notice only, he can verify other details and change the status of nil income. Thus, the assessment order itself is not sustainable. If an order itself suffers from the patent irregularity, it cannot be made a foundation for subsequent proceedings either 263 or any other proceeding.It is also pertinent to note that as far as the fact regarding non-issuance of notice is concerned, it has been specifically observed by the ld. Commissioner in paragraph no. 6 of the impugned order”
“In view of the above discussion, the impugned order is not sustainable and accordingly it is quashed. For fortifying ourselves, we draw the support from the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs. Oberoi Hotels (P)” the Tribunal added.
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