No Assumption of Jurisdiction allowable for Income Tax Reassessments without issuance of Notice u/s 143(2): ITAT [Read Order]

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that reassessment proceedings initiated without issuance of a mandatory notice under Section 143(2) of the Income Tax Act, 1961 are invalid and without jurisdiction.

The assessee, M/s Suncity Niketan Pvt. Ltd., engaged in investment and finance, filed its return of income declaring ₹3,950. The return was initially processed under Section 143(1). Subsequently, the Assessing Officer (AO) reopened the assessment under Section 147 based on information from the Investigation Wing, alleging that the assessee was a beneficiary of accommodation entries totaling ₹17.99 crore routed through various accounts.

The assessee objected to the reopening, contending that all transactions were duly reflected in its books and bank accounts and that the same information had been used to reopen its assessment for the preceding year (AY 2012–13), in which no addition had been made after due examination. The AO, however, dismissed the objections and made additions treating the bank credits as unexplained income, without addressing the objections or correlating the credits with the books of account.

Appearing for the assessee, Advocate Manoj Kataruka argued that the AO failed to apply his independent mind and merely relied on borrowed satisfaction from the Investigation Wing. He emphasized that no notice under Section 143(2) was ever issued or served upon the assessee after the reassessment notice, rendering the assessment void ab initio.

He relied on judicial precedents, including ACIT v. Hotel Blue Moon, PCIT v. Nopany & Sons [2022], and PCIT v. Dart Infrabuild (P) Ltd.(2023), all holding that issuance of notice under Section 143(2) is a jurisdictional requirement that cannot be dispensed with or cured under Section 292BB of the Income Tax Act.

Shri Subhendu Datta, CIT-DR, represented the Revenue and supported the orders of the lower authorities.

The Tribunal observed that the AO’s order was “cryptic” and failed to discuss the nature of the transactions, the sources of credits, or the assessee’s objections. The Bench noted that identical reasons had been recorded for reopening the earlier assessment year, yet no addition was made then.

The Bench, comprising Shri Sanjay Garg (Judicial Member) and Shri Sanjay Awasthi (Accountant Member), further held that the reassessment was unsustainable since the mandatory notice under Section 143(2) of the Income Tax Act was never issued. Referring to the Supreme Court ruling in Hotel Blue Moon (supra), the Bench reiterated that the issuance of notice under Section 143(2) is a sine qua non, “a fundamental precondition” for assuming jurisdiction to make an assessment or reassessment. Absence of such notice renders the entire proceedings null and void.

The Tribunal also cited rulings of the Delhi and Calcutta High Courts, affirming that Section 292BB cannot cure the complete absence of issuance of notice.

The Kolkata bench of the ITAT thus quashed the reassessment proceedings and deleted the addition of ₹17.99 crore, holding that the absence of a valid notice under Section 143(2) vitiates the jurisdiction of the Assessing Officer.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates