Judgment:
1. This appeal by the assessee is directed against the order passed by the CIT(A) on 21st May, 1996 in relation to asst. yr. 1993-94. It is a recalled matter, inasmuch as the earlier ex parte order passed by the Bench was recalled vide its later order dt. 29th Aug., 2005.
3. Briefly stated, the facts of this case are that the assessee furnished his return of income on 30th June, 1993. It was processed under Section 143(1)(a) wherein certain addition was made. In the first appeal against the said intimation, the learned CIT(A) held that the AO was not entitled to put the capital gain to tax. He, therefore, held that such a course was open only in regular assessment proceedings to be framed under Section 143(3). He, therefore, restored the matter to the file of the AO for allowing a hearing to the assessee, Thereafter the AO issued notice under Section 143(2) dt. 26th Sept., 1995, which was served on the assessee on 4th Oct., 1995. Copy of such notice is placed at p. 16 of the paper book. Pursuant to that the assessment was completed on 29th Dec., 1995.
4. At the outset, it was contended by the learned Authorized Representative that the AO was debarred from issuing notice under Section 143(2) after the expiry of 12 months from the end of the month in which the return was filed. It was contended that the proviso to Section 143(2) was applicable in this case and as such, notice of assessment and consequential assessment was invalid. In the opposition, the learned Departmental Representative relied on the impugned order.
5. I have heard the rival submissions and perused the relevant material on record. It is obvious that the AO made adjustment under Section 143(1)(a) which was assailed before the first appellate authority who opined that such a course of action was not open to the AO in proceedings under Section 143(1)(a). He, therefore, directed the AO to pass a fresh assessment order after issue of notice under Section 143(2). The primary question which calls for my consideration is to decide as to whether such a direction given by the first appellate authority was within his jurisdiction or not? There is no dispute about the fact that the issue raised in the appeal before him against intimation was to examine the validity of action of the AO emanating from Section 143(1)(a). He was confined to deciding the issue within the parameters laid down under this section. By directing the AO to issue notice under Section 143(2), he transgressed his jurisdiction by totally ignoring the fact that the time-limit for issue of notice under Section 143(2) had already expired. Proviso to Section 143(2), at the material time, provided that "no notice under this sub-section shall be served on the assessee after the expiry of 12 months from the end of the month in which the return was filed". It is seen that the return in this case was filed on 30th June, 1993 and the maximum period available with the AO for issuing notice under Section 143(2) was upto 30th June, 1994. Having not issued any notice within the prescribed time-limit, it was beyond his competence to issue notice under this section on 26th Sept., 1995. Even the learned CIT(A) In appeal against Section 143(1)(a) had no power to issue direction to the AO which was contrary to the provisions of the Act. As in the instant case, notice under Section 143(2) was issued after the expiry of 12 months from the end of the month in which the return was filed, such a notice and proceedings emanating therefrom are liable to be quashed. In view of this legal position, I quash the assessment and set aside the impugned order. As the appeal of the assessee has been allowed on the primary legal issue, there is no justification for deciding the grounds on merits as well.
An announcement to this effect was made in the open Court on the completion of hearing.