Summary of the Dispute:
a) The Re-assessment: The Income Tax Department initiated reassessment proceedings against the Assessee under Section 147 by issuing notices under Section 148 for the three relevant assessment years.
b) Assessees Response: In response to the Section 148 notices, the Assessee formally requested the Assessing Officer to treat their original returns of income (originally filed under Section 139) as the returns filed in response to the reassessment notices.
c) The Flaw: Following this request, the Assessing Officer proceeded to pass the final reassessment orders under Section 147 read with Section 144/143(3) without issuing or serving the mandatory statutory notice under Section 143(2).
Arguments Presented:
a) Assessees Stand: The Authorized Representative argued that once an assessee requests that their original return be treated as the return in response to a Section 148 notice, it constitutes a valid return.
Consequently, issuing a notice under Section 143(2) is a mandatory statutory requirement. Failing to do so makes the assessment void ab initio (invalid from the start).
b) Revenue’s Stand: The Departmental Representative argued that the omission was a minor procedural oversight that did not cause any prejudice to the assessee, attempting to save the validity of the orders.
ITAT Ruling and Conclusion:
a) Mandatory Jurisdiction: The Tribunal emphasized that issuing a notice under Section 143(2) is not a mere procedural formality, it is an absolute jurisdictional prerequisite for conducting a scrutiny assessment or reassessment.
b) Legal Precedents: Relying on binding judgments from the Hon’ble Calcutta High Court and coordinate ITAT benches, the Tribunal reaffirmed that a failure to issue a Section 143(2) notice post-response is fatal to the
assessment.
c) Section 292BB Inapplicable: The Bench noted that such a fundamental statutory defect concerning jurisdiction cannot be cured or saved by Section 292BB of the Act.
d) Final Outcome: The ITAT quashed the reassessment orders for all three assessment years as legally invalid and set aside the orders of the National Faceless Appeal Centre (NFAC). The appeals filed by the Assessee were fully allowed.