ITAT Quashes Assessment for Non-Service of Section 143(2) Notice :

The Income Tax Appellate Tribunal (ITAT), Kolkata, has quashed an assessment framed under Section 143(3) of the Income Tax Act, 1961, holding that the non-service of the mandatory notice under Section 143(2) and the violation of CBDT’s jurisdictional instructions rendered the assessment invalid in the eyes of law.

The Tribunal observed that the notice under Section 143(2), dated 1 August 2016, had been returned by the postal authorities with the remark “Left” on 14 September 2016. The assessment record did not establish that the notice had subsequently been served on the assessee. The Tribunal held that the failure to serve the mandatory notice went to the root of the matter and rendered the assessment a nullity.

The Tribunal further held that the assessment was contrary to CBDT Circular No. 1/2011 dated 31 January 2011, issued under Section 119 of the Income Tax Act, which prescribed guidelines for allocating assessment work between ITOs ACITs or DCITs  based on the returned income of non-corporate assessees. Since the assessee had declared income of Rs 1,96,740, the case fell within the prescribed monetary limits for assessment by an ITO, whereas the notice under Section 143(2) had been issued by the ACIT. 

Relying on the High Court’s decision in Kusum Goyal Vs  ITO & Ors. Case, the Tribunal held that the assessment suffered from a jurisdictional defect in addition to the failure to serve the statutory notice. Accordingly, it quashed the assessment order dated 22 December 2017 and allowed the assessee’s appeal.