INCOME TAX ACT, 1961

Section 143(2)

Assessment - Notice under section 143(2) - Absence of notice under section 143(2) -

Assessee-company did not file its return for the assessment year 1995-96. AO issued notice under section 142(1) directing the assessee to file the return on or before 24-1-1996, which was served on the assessee on 24-1-1996. The assessee's chartered accountant by letter dated 27-1-1996, sought time of one month to file the return, but no return was filed. By another letter dated 1-10-1997, AO asked assessee to file the balance sheet, profit and loss account and produce the books of account, vouchers, etc., in respect of the relevant previous year. The assessee filed the return on 24-3-1998 and the assessment was completed on best judgment basis on 30-3-1998. Before the Tribunal, the assessee raised the additional ground for the first time relating to non-issuance of notice under section 143(2). Tribunal admitted the said additional ground and remanded the matter to CIT(A). Aggrieved by the same, Revenue preferred appeal contending that the issuance of notice under section 143(2) was an impossibility to comply with because the assessment order was getting time-barred. Held: If assessee failed to adhere to the commitment made through its chartered accountant by letter dated 27-1-1996, there was no reason why the AO should have waited for more than 20 months and issued another letter to the assessee to file the return along with the books of account, vouchers, etc. The reason for not taking any action since February 1996 till October 1997 remained unexplained. Even after the expiry of peremptory time limit fixed in the letter dated 1-10-1997, i.e., up to 23-10-2997, the AO did not take any action immediately but waited. There was no necessity for the AO to have waited beyond February 1996 to complete the best judgment assessment under section 144. Hence, Tribunal was justified in remitting the case to the file of CIT(A) with a direction to consider the additional ground raised by the assessee with regard to non-issue of notice under section 143(2) before completion of assessment.

REFERRED : CIT v. T. Rangroopchand Chordia (2017) 10 1TR-OL 44 (Mad) National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC): 1998 TaxPub(DT) 0342 (SC)

FAVOUR : In assessee's favour

A.Y. : 1995-96

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