Validity of additions made without issuing show cause notice
- The Assessee had filed its return of income on 29.11.2014 for the assessment year 2013-14. The return was processed under section 143(1) of the Income Tax Act. Subsequently, notice under section 143(2) of the Act was issued and served on the Assessee on 28.08.2015 by the Assessing Officer. Notice under section 142(1) read with section 129 of the Act dated 06.10.2015 was issued and the same was served on the Assessee on 09.10.2015 by the Assessing Officer and various details including of profit and loss account, balance sheet, business activities, books of account, ledger extract and details of bills/ vouchers, additions made to fixed deposits for the financial year 2012-2013 relevant to the assessment year 2013-2014 were called for. Thereafter, the assessment was completed under section 143(3) of the Act on 10.03.2016.
- The Assessee went in appeal before the Commissioner of Income Tax (Appeals) challenging that there was no proper notice issued under section 143(2) of the Act. The Commissioner of Income Tax (Appeals) observed that, perusal of records showed notice under section 143(2) was issued by ITO Ward 6(2)(2) on 28.8.2015. It was noted that although assessment order was passed by ITO Ward 6(2)(3) due to transfer of cash under section 129, original notice under section 143(2) was to be treated as valid notice and the assessment was valid.
- Reliance was placed on the decision of Supreme Court in the case of CIT V Hotel Blue Moon, wherein it was concluded that “issue of a legally valid notice under section 143(2) was mandatory for usurping jurisdiction to frame scrutiny assessment under section 143(3) of the Act and absence of a valid notice under section 143(2) was not a curable defect.”
- It was inferred that no valid notice was issued under section 143(2) which was must for undertaking assessment under section 143(3) of the Act and accordingly the assessment was to be quashed.