Flovel Energy Pvt Ltd vs ACIT Circle-9(1), New Delhi | Assessment Year 2010-11 | Reassessment Invalid Due to Lack of Notice

Flovel Energy Pvt Ltd vs ACIT Circle-9(1), New Delhi: Assessment Year 2010-11

Case Number: ITA 6484/DEL/2019

Appellant: Flovel Energy Pvt Ltd, New Delhi

Respondent: ACIT Circle-9(1), New Delhi

Assessment Year: 2010-11

Order Date: 16th October 2019

Pronounced On: 16th October 2019

Order Type: Final Tribunal Order

Background

Flovel Energy Pvt Ltd, the appellant in this case, challenged the reassessment order passed by the Assistant Commissioner of Income Tax (ACIT) Circle-9(1), New Delhi, for the assessment year 2010-11. The reassessment was initiated under section 147/143(3) of the Income Tax Act, 1961, after the original assessment was completed. However, the appellant argued that the reassessment was invalid due to the non-issuance of a statutory notice under section 143(2) within the prescribed period.

Grounds of Appeal

The appellant raised several grounds of appeal, including:

• The reassessment order was passed without assuming proper jurisdiction and without complying with the statutory conditions stipulated under sections 147 to 151 of the Income Tax Act, 1961.
• No notice under section 143(2) was issued or served within the statutory period, rendering the reassessment order invalid.
• Disallowances made by the Assessing Officer (AO) were based on incorrect facts and in violation of the principles of natural justice.
• The AO also made an addition on account of scrap sales without proper justification.
• The appellant contested the charging of interest under sections 234B and 234C of the Income Tax Act, 1961.

Key Issue: Non-Issuance of Notice under Section 143(2)

The primary issue in this case was the non-issuance of a notice under section 143(2) of the Income Tax Act within the statutory period. The facts of the case revealed that the notice under section 143(2) was issued on 15th March 2016, well after the due date of 30th September 2016.

The appellant argued that this delay rendered the reassessment proceedings invalid. The appellant’s representative, Dr. Rakesh Gupta, pointed out that the failure to issue the statutory notice within the stipulated time was a critical lapse that could not be cured or overlooked.

Arguments by Revenue

The Revenue, represented by Ms. Ashima Neb, Senior Departmental Representative (DR), contended that the appellant did not raise this objection during the assessment proceedings and, therefore, was precluded from raising it at this stage under section 292BB of the Income Tax Act. Section 292BB stipulates that if the assessee has cooperated in the assessment proceedings, they cannot later object to the service or timeliness of the notice.

Tribunal’s Findings

The Tribunal, comprising Dr. B. R. R. Kumar (Accountant Member) and Ms. Sushma Chowla (Judicial Member), examined the facts and arguments presented by both parties. The Tribunal noted that the appellant had indeed filed a return under section 139(1) and had responded to the notice under section 148 by indicating that the original return should be considered as filed in response to the notice.

In this context, the Tribunal emphasized that the issuance of a notice under section 143(2) is a mandatory requirement, even in cases of reassessment. The Tribunal relied on the judgment of the Jurisdictional High Court in the case of Alpine Electronics Asia Pvt. Ltd. vs. CIT (341 ITR 247), where it was held that the omission to issue a notice under section 143(2) is not curable and cannot be dispensed with. The Tribunal further referenced the Supreme Court’s decision in Hotel Blue Moon (321 ITR 362), which reinforced the necessity of issuing a notice under section 143(2).

Conclusion

Based on the above findings, the Tribunal held that the reassessment proceedings initiated by the Revenue were invalid due to the failure to issue a notice under section 143(2) within the prescribed period. Consequently, the reassessment order was quashed, and the appeal was allowed in favor of Flovel Energy Pvt Ltd.

As the assessment was quashed ab initio, the Tribunal did not adjudicate on the other grounds raised by the appellant, rendering them infructuous.

Final Judgment

The appeal filed by Flovel Energy Pvt Ltd was allowed, and the reassessment order passed by the ACIT Circle-9(1), New Delhi, was declared null and void.

This case underscores the importance of adhering to procedural requirements in reassessment cases, particularly the issuance of statutory notices within the prescribed time frame.

Flovel Energy Pvt Ltd vs ACIT Circle-9(1), New Delhi | Assessment Year 2010-11 | Reassessment Invalid Due to Lack of Notice