The assessee, M/s TQR LLP, a registered LLP, is engaged in the wholesale and retail trade of beverages. The assessee debited 5 crores to the Profit…
CA Final · Direct Tax Laws and International Taxation · PYQS · May 2025
The assessee, M/s TQR LLP, a registered LLP, is engaged in the wholesale and retail trade of beverages. The assessee debited 5 crores to the Profit & Loss account in respect of surcharge on sales tax and turnover tax paid to the State Government. In the assessment order under section 143(3) of the Income-tax Act, 1961 the Assessing Officer made an addition of 5 crores on account of disallowance of surcharge on sales tax and turnover tax to the returned income. The assessee contends that the order of the assessment is bad in law as no notice was issued under section 143(2) even though the assessee had participated in the assessment proceedings. The assessing officer, relying on section 292BB, contends that when assessee has participated in assessment proceedings, now he cannot raise any objection on the assessment order. On the basis of relevant case laws and provisions of the Act, Examine the validity of the contentions of both.
Suggested Answer and Working Notes:
(a) Issue Involved: The issue under consideration is whether the participation by the assessee in assessment proceedings would make the omission to issue notice under section 143 (2) a curable defect on account of the deeming provision under section 292BB. Provision applicable: As per section 292BB, any notice which is required to be served upon an assessee shall be deemed to have been duly served and the assessee would be precluded from taking any objection that the notice was - (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner, if he had appeared in any proceedings or co-operated in any enquiry relating to assessment or re-assessment. Where any scrutiny proceeding is proposed to be taken for completion of assessment u/s 143 (3) , notice u/s 143 (2) should be served on the assessee, within the prescribed time. Analysis: Issue of notice under section 143 (2) is mandatory for making a regular assessment under section 143 (3) . Section 292BB is a deeming provision that seeks to cure defects in any notice issued under any provision of the Income-tax Act, 1961, if the assessee has participated in the proceedings. For section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that the section seeks to cure. The section is not intended to cure the complete absence of notice itself. Accordingly, non-issuance of notice under section 143 (2) is not a curable defect under section 292BB in spite of participation by the assessee in assessment proceedings. Conclusion: In the present case, since the assessment of M/s TQR LLP was completed u/s 143 (3) without issuing notice u/s 143 (2) , the assessment is bad in law and not a curable defect u/s 292BB. Therefore, the contention of M/s TQR LLP is valid and the contention of the Assessing Officer is invalid in spite of the fact that M/s TQR LLP participated in the assessment proceedings. Note – The facts given in the question are similar to the facts in CIT v. Laxman Das Khandelwal (2019) 417 ITR 325 (SC). The above answer is based on the rationale of the Apex Court ruling in the said case.
Topics: Dispute Resolution
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