Whether, after 18 years of the Search conducted, documents obtained under RTI Act can be relied upon for establishing that no notice u/s 143(2) was issued - YES: HC

THE issue before the Bench is - Whether document obtained under Right to Information Act for establishing the non issuance of notice u/s 143(2) can be accepted as an evidence, although there has been a lapse of 18 years since the search was first conducted. And the answer favours the assessee.

Facts of the case

The assessee was assessed to income tax for the block period from 1.4.1985 to 15.9.1995 u/s 143(3) read with Section 158BC, pursuant to a search u/s 132. The assessee filed Nil return of income and subsequently, the AO passed an order u/s 143(3) read with Section 158 BC determining the total undisclosed income at Rs. 9,55,380/- and demanding income tax of Rs. 5,73,228/-. On appeal, it was contended before the Tribunal that since no notice u/s 143(2) was issued, the entire assessment should have been set aside. The Tribunal observed that t he assessee was subjected to search in 1995 and the appeal was being heard afresh in 2013, therefore, the possibility of misplacing the 143(2) notice cannot be ruled out in this span of almost 18 years. It was also observed that the assessee did not urge this legal issue at the time of filing appeal before the Tribunal, but urged for the first time before us after a lapse of considerable years. The Tribunal reduced the addition only to a limited extent. Aggrieved, this appeal has been filed in which the assessee has produced a document based on the Right to Information Act, which suggests that no such notice was issued.

Having heard the parties, the High Court held that,

++ apparently, on the basis of Annexure-D, it is not open for the Department to contend that notice was issued under Section 143(2). The Tribunal has proceeded on the basis that notice would have been issued especially since the matter was being considered after 18 years and it would have been misplaced. This finding of the Tribunal is now found to be incorrect on the basis of the specific answer given by the authority concerned under the RTI Act;

++ it is not in dispute that in order to make assessment under Section 143(3) read with Section 158 BC, notice should be issued under Section 143(2) and omission to issue such a notice is not a procedural irregularity and is not curable. The judgment relied upon is Assistant Commissioner of Income-tax & another v. Hotel Blue Moon . Having regard to the law laid down by the Supreme Court in the above judgment and having regard to the fact that it is now admitted by the Department that no notice was issued under Section 143(2) of the Income Tax Act to the assessee, we are inclined to set aside the orders passed by the Tribunal as well as the Assessing Officer and accordingly, this appeal is allowed answering the questions of law in favour of the assessee.