ITAT Mumbai Quashes Reassessment Against Global Cricket Corporation Over Failure To Issue Mandatory Notice

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings against Global Cricket Corporation Pte. Ltd.. The tribunal did so after finding that the Income Tax Department failed to establish that it had issued the mandatory notice before completing the reassessment.

Global Cricket Corporation Pte. Ltd. is a Singapore-based sports rights and sports event management company involved in the management and promotion of sporting events.

The tribunal also held that the Assessing Officer (AO) violated the mandatory procedure by issuing a demand notice, a tax computation sheet and penalty notices along with what was described as a draft assessment order.

A bench of Vice President Saktijit Dey and Accountant Member Bijayananda Pruseth observed,

"In view of the aforesaid, we have no hesitation in holding that the draft assessment orders passed by the AO are invalid and without jurisdiction, as the AO has failed to fulfill the mandatory requirement of issuing a notice u/s. 143(2) of the Act before completing the assessment."

The company challenged the reassessment for Assessment Years 2005-06 and 2006-07. It contended that no notice under Section 143(2) had been issued after the assessments were reopened.

It also argued that although the AO labelled the orders as draft assessment orders, he simultaneously issued a tax computation sheet, a demand notice, and penalty notices. According to the company, this showed that the assessments had already been finalised.

The tribunal noted that the assessment orders referred to the issuance of a notice under Section 142(1). However, they were silent on any notice under Section 143(2). It also recorded that, in a report furnished during the proceedings, the Revenue acknowledged that copies of any notice under Section 143(2) were not available on record.

Relying on decisions of the Supreme Court and the Bombay High Court, the tribunal held that issuing a notice under Section 143(2) is mandatory even in reassessment proceedings. It rejected the Revenue's contention that such a notice was unnecessary after reopening an assessment.

The tribunal also examined whether the AO had complied with the procedure governing draft assessment orders. It found that the AO had computed the tax liability and issued a demand notice while describing the order as a draft assessment order. The AO had also initiated penalty proceedings at the same stage.

The tribunal observed, "The aforesaid facts clearly demonstrate that the AO, instead of framing draft assessment orders at the first instance proposing variation, if any, in terms with section 144C(1) of the Act, has essentially passed final assessment orders, not only computing the tax liability, but also issuing demand notices and has initiated penalty proceedings u/s.271(1)(c) of the Act..."

The tribunal allowed the company's additional legal grounds after holding that the reassessment was invalid because no notice under Section 143(2) had been issued and that the AO had also violated the mandatory procedure under Section 144C.

It consequently quashed the reassessment orders for Assessment Years 2005-06 and 2006-07.

For Appellant: Senior Advocate P. J. Pardiwala, Jeet Kamdar, Asavari Kadam

For Revenue: CIT-DR Arju Garodia, Senior DR Krishna Kumar