Taxation Lawyer: Reassessment by Income Tax authorities without giving notice under Sec 143(2) is void-ab-initio; SC.

Supreme Court of India

Justice U U Lalit and Justice Vineet Saran

The SC {COMMISSIONER OF INCOME TAX v. LAXMAN DAS KHANDELWAL} holds that according to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. It was held that the scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It was further held that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. In case of absence of notice reassessment by the Income Tax authorities is void-ab-initio.

It was held by the SC, while dismissing the appeal of the revenue, that the facts of the case are clear that no notice under Section 143(2) of the Act was ever issued by the Department, the findings rendered  by the High Court and the Tribunal and the conclusion arrived, i.e. entire reassessment proceedings are vitiated due to absence of notice, were correct.