Substantial Question of Law — Whether reassessment made without issue of notice u/s.143(2) of the Act is invalid, is a substantial question of law.
L. N. Hota and Company v. CIT (2008)
The Assessing Officer issued a notice on 3-12-1998 to the assessee u/s.148 of the Act, requiring the assessee to file the return of its income for the A.Y. 1997-98, which was served on 7-12-1998. The assessee filed the return of income on 5-1-1999, whereafter the AO issued a notice u/s.142(1) on 28-6-2000. The AO, vide his order dated 27-11-2000, completed the assessment estimating the income of the assessee from the business by applying the provisions of S. 145 of the Act. The assessee’s appeal was dismissed by the Commissioner of Income-tax (Appeals) vide his order dated 4-1-2002 without adjudicating the issue of legality of the assessment. An application u/s.154 was also rejected by the Commissioner of Income-tax (Appeals) vide his order dated 25-2-2002. The Tribunal vide its order dated 13-4-2004, rejected the priority prayer of the assessee that assessment made without issuance of notice u/s.143(2) within a period of one year was invalid, but on the merits of the case, remanded the matter to the AO. On appeal, the Orissa High Court in its order dated 14-8-2006 dismissing the appeal held that as the assessment order had not come about by way of scrutiny, the provisions of S. 143(2) would not be applicable. On an appeal by way of special leave to the Supreme Court, it was held that though the question of the applicability of S. 143(2) was specifically raised throughout, prima facie, no finding based on law as it stood, had been recorded. The Supreme Court therefore remitted the matter to the High Court for a fresh decision in accordance with the law.