· CIT(A) and ITAT had set aside the block assessment made by AO on the ground that no notice u/s 143(2) was issued to the assessee.
· The contentions of Revenue before High Court were two-fold:
(i) Since there is no specific format prescribed, letter written to assessee for supplying certain details should be treated as notice u/s 143(2)
(ii) Since in response to notice u/s 158BC, assessee filed its return after a long delay, the return should be treated invalid and non est, and therefore, there was no requirement of issuing notice u/s 143(2)
· With regard to the first contention, High Court was of the view that the letter seeking information from assessee was clearly not a notice in any format. High Court further stated that only after issuance of notice u/s 143(2), the AO can frame an assessment u/s 143(3), and such a notice is necessary even in case of block assessment.
· Regarding the second contention, High Court observed that section 143(2) requires the AO to issue a notice where a return has been furnished and the AO considers it necessary to ensure that income is not under-stated.
· High Court was of the view that had the assessee not filed its return in response to notice issued by AO, or the return filed had been treated as invalid or non est by the AO, then Revenue’s contention that no notice u/s 143(2) was necessary and the AO could have proceeded to frame assessment u/s 144 would have required further consideration.
· High Court, however, observed that in the present case, assessee did file the return, though belatedly. The AO did not discard the return but proceeded on the basis of such return and framed the assessment assessing higher income than the income returned. Therefore, High Court concluded that for rejecting such income, issuance of notice u/s 143(2) was necessary.
For further reading, refer the attachment.
Further Reading