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Judgment
Satish Chandra, J.—Present appeal u/s 260A of the Income Tax Act, 1961 has been filed by the department against the judgment and order dated 25.04.2005 passed by the Income Tax Appellate Tribunal, Lucknow in ITA No. 742/L/2002 for the assessment year 1997-98.
The brief facts of the case are that during the assessment year under consideration, the Assessee has filed the return of its income on 26.12.1997 showing the loss of Rs. 57,244/-. A notice u/s 148 of the Act was issued on 17.12.1999. Thereafter, a notice u/s 143(2) of the Act was issued on 22.08.2000 and the assessment was completed on 16.02.2000 at the positive income of Rs. 24,020/-
Being not satisfied, the Assessee filed an appeal before the First Appellate Authority who has enhanced the assessed income to Rs. 2,43,460/-vide order dated 01.03.2002. Being aggrieved, the Assessee has filed an appeal before the Tribunal, where an additional ground was filed by mentioning that No. notice was issued u/s 143(2) of the Act within a period of one year from the date of return. So, the assessment order was ab initio illegal. The Tribunal while admitting the additional ground accepted the plea of the Assessee. Being dissatisfied, the department has filed the present appeal.
With this backdrop, Sri D.D. Chopra, learned Counsel for the department, who admits that the notice u/s 143(2) was issued beyond one year. He submits that this is merely a procedural irregularity and the same is curable. So, he made a request that the impugned order may kindly be quashed.
On the other hand, Sri Mudit Agarwal learned Counsel for the Assessee justified the Tribunal''s order.
We have heard both the parties at length and gone through the material available on record.
It is undisputed facts that No. notice u/s 143(2) of the Act was issued within one year from the end of the month in which the return was filed.
Needless to mention that Section 143(2) of the Act is in two parts. The first part deals with jurisdiction and second with the procedure. The proviso to Section 143(2) of the Act puts an embargo on the assessing officer to exercise jurisdiction after the expiry of 12 months from the end of the month in which the return was filed by the Assessee. It is the discretion of the assessing officer to accept the return as it is or to proceed further with the assessment of income, once the assessing officer decides to proceed, he has to issue notice u/s 143(2) within the prescribed time-limit to make the Assessee aware that his return has been selected for scrutiny assessment.
It may be mentioned that the Hon''ble Supreme Court in the case of Assistant Commissioner of Income Tax and Another Vs. Hotel Blue Moon, observed that the notice u/s 143(2) within the time prescribed, is mandatory. Similar views were expressed by this Court in ITA No. 134 of 2005 (Commissioner of Income Tax v. M/s Bora Polyclinic Pvt. Ltd.) decided on 05.07.2010 as well as in ITA No. 19 of 2004 (Commissioner of Income Tax v. Rajeev Sharma) decided on 24.05.2010.
In view of well settled legal proposition (supra), we are of the view that proviso to Section 143(2) applies to return filed in response to notice u/s 148. Therefore, it was incumbent upon the assessing officer to issue notice u/s 143(2) within the period, as stipulated in the provision.
In the instant case, admittedly, the notice u/s 143(2) has been issued beyond the period of one year from the date of filing of the return. Further, it may be mentioned that omission on the part of the assessing officer to issue notice u/s 143(2) cannot be a procedural irregularity and the same is not curable, and, therefore, the requirement of notice u/s 143(2) cannot be dispensed with as already observed in Hotel Blue Moon (supra).
In view of above, the impugned order passed by the Tribunal is hereby sustained along with the reasons mentioned therein. The answer to the substantial question of law is in favour of the Assessee and against the revenue.
The appeal has No. merit and the same is dismissed.