ITAT Rules No Fresh 143(2) Notice Needed After Section 263 Revision:

ITAT Rules No Fresh 143(2) Notice Needed After Section 263 Revision The assessee, M/s. G Corp Pvt. Limited, engaged in real estate development, filed its return declaring a loss. The original assessment under Section 143(3) was completed, determining income after certain disallowances. Subsequently, the Principal Commissioner of Income Tax invoked revisionary powers under Section 263, holding that the assessment order was erroneous and prejudicial to the interests of revenue, particularly on the issue of taxation of the annual value of 1MG Mall as house property income.

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Pursuant to the directions under Section 263, the Assessing Officer passed a fresh assessment order under Section 143(3) read with Section 263, making additions towards income from house property. The assessee challenged the order before CIT(A), contending that no notice under Section 143(2) was issued in the set-aside proceedings. Accepting this plea, CIT(A) quashed the assessment order relying on the Supreme Court ruling in Hotel Blue Moon. Aggrieved, the Revenue preferred an appeal before the Tribunal. Issue Before Tribunal: Whether issuance of a fresh notice under Section 143(2) is mandatory when an assessment is framed pursuant to a revisionary order under Section 263 of the Income Tax Act, 1961.

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Tribunal Decided: The Tribunal held that the issuance of notice under Section 143(2) is not mandatory when an assessment is made pursuant to an order under Section 263. It was observed that proceedings under Section 263 are in continuation of the original assessment proceedings, where a valid notice under Section 143(2) had already been issued. The Tribunal clarified that in such cases, the Assessing Officer’s jurisdiction is confined to the specific issues identified in the revisionary order, and the process does not amount to a fresh or de novo assessment requiring a new notice under Section 143(2). It distinguished the Supreme Court’s ruling in Hotel Blue Moon as applicable to block assessments involving fresh returns, which was not the situation here. Accordingly, the Tribunal set aside the order of CIT(A) and restored the matter to its file for adjudication on the merits of the additions. To Read Full Order, Download PDF Given Below