Facts of the Case

The present appeal was filed by the Revenue challenging the order dated 23rd March 2021 passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2011–12.

The core contention of the Revenue was that the assessee had actively participated in the assessment proceedings and had not raised any objection regarding the non-service of notice under Section 143(2) of the Income Tax Act, 1961 during the proceedings.

It was argued that due to such participation, the assessee was precluded from raising objections later in light of Section 292BB of the Act.

Issues Involved

  1. Whether non-issuance of notice under Section 143(2) can be cured by Section 292BB of the Income Tax Act, 1961.
  2. Whether objection regarding jurisdiction can be raised at a later stage despite participation in proceedings.
  3. Applicability of Section 124(3) regarding limitation on jurisdictional objections.

Petitioner’s (Revenue’s) Arguments

  • The assessee participated in assessment proceedings without objection; hence, by virtue of Section 292BB, notice is deemed valid.
  • The Tribunal failed to consider Section 124(3), which bars jurisdictional objections after the prescribed period.
  • Reliance was placed on CIT vs. Laxman Das Khandelwal (SC) to argue that procedural defects in service of notice are curable.

Respondent’s (Assessee’s) Arguments

  • There was complete absence of notice under Section 143(2) within the statutory period.
  • Section 292BB applies only to defects in service of notice and not to complete absence of notice.
  • Jurisdictional defect goes to the root and can be raised at any stage.

Court’s Findings / Order

The Delhi High Court upheld the ITAT’s decision and dismissed the Revenue’s appeal, holding:

  • Section 292BB does not cure the complete absence of notice, but only defects in service.
  • For Section 292BB to apply, notice must have been issued; mere participation cannot validate non-issuance.
  • The Supreme Court in CIT vs. Laxman Das Khandelwal clearly distinguished between “non-service” and “non-issuance” of notice.
  • Failure to issue notice under Section 143(2) within the prescribed period renders the assessment invalid.
  • Jurisdictional issues can be raised at any stage, including appellate proceedings.

Final Outcome:
The appeal was dismissed as no substantial question of law arose.

Important Clarification by Court

  • Section 292BB is limited to curing defects in service of notice and cannot cure complete absence of notice.
  • Issuance of notice under Section 143(2) is mandatory and a jurisdictional requirement.
  • Participation of the assessee does not override statutory compliance.
  • Jurisdictional defects are fundamental and can be raised at any stage.

Sections Involved

  • Section 143(2) – Issue of notice
  • Section 292BB – Deemed service of notice
  • Section 124(3) – Bar on jurisdictional challenge
  • Section 143(3) – Assessment proceedings

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1069-DB/MMH25032022ITA632022_201403.pdf

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