Reopening of Assessment Without Complying with S. 143(2) Procedure Is Bad in Law: Madras HC [Read Order]

The Madras High Court has held that reopening of an income tax assessment without issuing a mandatory notice under Section 143(2) of theIncome Tax Act, 1961 is invalid in law.

A reassessment notice under Section 148 and the subsequent completion of proceedings under Section 143(3) read with Section 147 without issuing a notice under Section 143(2) were at the center of the case.

This procedural error was brought up by the assessee, Siva Industries & Holdings Limited before the Dispute Resolution Panel and then again before the Tribunal. The assessee turned to the High Court when the Tribunal was unable to reach a decision on the matter.

The Revenue conceded before the Court that no notice under Section 143(2) was ever issued. The Bench, comprising Chief Justice K.R. Shriram and Justice Sunder Mohan, ruled that the matter need not be remanded to the Tribunal as the legalposition on this issue is well-settled.

The bench of Chief Justice K.R. Shriram and Justice Sunder Mohan restated that if a notice under Section 143(2) is not issued prior to completing a reassessment, the entire process is invalidated referring to its previous decisions in Sapthagiri Finance & Investments v. ITO and CIT v. Alstom T & D India Ltd.

Accordingly, the Court held the reopening of assessment to be legally untenable and allowed the appeal in favour of the assessee. Since the reopening itself was declared bad in law, the Court declined to examine the merits of the case.

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