Notice U/S 143(2) is a precondition for income tax assessments in limited scrutiny cases: Madras HC


Notice U/S 143(2) is a precondition for income tax assessments in limited scrutiny cases: Madras HC


Angusamy Gounder Subbu Rathinamun Vs Assistant Commissioner (W.P.No.6698 of 2020)

1. A notice under Section 143(2) of the Income Tax Act is a condition precedent to pass an order of assessment under the provisions of Section 143(3). In this case, such a notice has been issued to the petitioner.

2. According to the petitioner however, the notice under Section 143(2) is inadequate as it merely states that the issue of ‘share capital/capital’ has been identified for examination. An opportunity was afforded under that notice to the petitioner to produce evidence to support the return of income filed.

3. Reliance is placed by the petitioner on a decision of the Delhi High Court in Hyosung Corporation v. Authority for Advance Rulings and Others [(2016) 382 ITR 371 (Del)]. In the present case according to the petitioner, the requirements under the statutory provision have not been complied with. As a consequence, the petitioner contends that the order of assessment is itself liable to be set aside.

4. Writ Petition is filed under Article 226 of the Constitution of India, praying to issue a writ of Certiorari, to call for the records on the files and quash the same as being without jurisdiction and violative of principles of natural justice and hence arbitrary, invalid and illegal.

Hon. Madras HC held as under:
1. The officer has rightly issued notice under Section 143(2) in the format normally utilised for this purpose and at paragraph 1 thereof, has conveyed to the addressee, the petitioner herein, that the return has been selected for limited scrutiny and that the issue of share capital/capital is what has been identified for further verification.

2. The officer has proceeded to fix the matter for hearing and provides opportunity to the petitioner to appear and cause evidence in support of the return of income. There is nothing further that is required to be set out as far as notice under Section 143(2) is concerned and with this, in my considered view, the notice under Section 143(2) is complete.

3. Reliance on the decision of the Delhi High Court does not advance the case of the petitioner as that decision has been rendered in an entirely different context. The assessee in that case had approached the Authority for Advance Ruling (AAR) with an application seeking advance ruling on a question of law.

4. I am of the categoric view that the notice under Section 143(2) issued in this case does not suffer from any legal infirmity as it satisfies all ingredients under that provision.

5. The petitioner is permitted to approach the appellate authority by way of statutory appeal and such appeal, if filed, within a period of two (2) weeks from date of receipt of this order, shall be taken on file by the Commissioner of Income Tax (Appeals) without reference to limitation, but ensuring compliance with all other statutory conditions.

6. This writ petition is dismissed with liberty. No costs.


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