The case ITA No. 5301/DEL/2019 involves the appellant Classic Display Systems Pvt. Ltd., New Delhi, contesting the reassessment order passed by the respondent ITO, Ward 6(2), New Delhi, for the assessment year 2004-05. The appeal was filed on June 10, 2019, against the order of the CIT(A)-31, New Delhi, dated April 2, 2019.
The appellant challenged the reassessment order on several grounds, primarily focusing on the failure of the Assessing Officer (AO) to issue a notice under Section 143(2) of the Income Tax Act before passing the reassessment order. The absence of this notice rendered the entire reassessment proceedings invalid.
The appeal was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench “SMC”, New Delhi, with Judicial Member Shri C.M. Garg presiding over the case. The hearing took place on May 9, 2023, and the order was pronounced on July 7, 2023.
The appellant’s counsel argued that the AO had proceeded to pass the reassessment order without issuing a notice under Section 143(2) of the Act, which was a mandatory requirement. The counsel cited various judgments, including the Hon’ble Delhi High Court’s judgment in the case of PCIT vs. Silver Line, to support this argument.
The Senior Departmental Representative (DR) contended that such defects were covered under Section 292BB of the Act, which states that non-service of notice does not invalidate the reassessment proceedings if the assessee had participated in the proceedings.
However, the tribunal noted that the AO’s report dated April 26, 2023, confirmed that the notice under Section 143(2) was not found in the relevant assessment records. Consequently, the tribunal concluded that the failure to issue the notice under Section 143(2) rendered the reassessment order invalid. The tribunal relied on the Delhi High Court’s ruling in PCIT vs. Silver Line, which held that the mandatory requirement of issuing a notice under Section 143(2) could not be obviated by referring to Section 292BB.
Based on the findings, the tribunal quashed the reassessment order, deeming it invalid due to the lack of a notice under Section 143(2) of the Act. As a result, the appeal was partly allowed on legal grounds.
Order pronounced in the open court on July 7, 2023.
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