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Facts
The assessee filed an original return which was processed under section 143(1). The AO reopened the assessment under section 147. The assessee filed a revised return which was treated as non-est by the AO as it was not e-verified. The reassessment proceedings were completed with additions.
Held
The Tribunal held that the AO's failure to issue a notice under section 143(2) and furnish reasons for reopening the assessment, even after taking cognizance of the assessee's return, rendered the reassessment proceedings void. The assessee's failure to e-verify the return was rectified subsequently.
Key Issues
Whether the reassessment proceedings are valid when the AO fails to issue a notice under section 143(2) and furnish reasons for reopening, despite the assessee rectifying a defect in the return.
Sections Cited
147, 148, 143(1), 143(2), 68, 69C, 144B, 292BB
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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI C. N. PRASAD & SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2015-16, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2023- 24/1058725703(1) dated 13.12.2023 against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.03.2022 by the Assessing Officer, NFAC, Delhi (hereinafter referred to as ‘ld. AO’).
The only effective issue to be decided in this appeal of the revenue is as to whether the Learned CITA was justified in quashing the reassessment proceedings as bad in law in the facts and circumstances of the instant case.
We have heard the rival submissions and perused the materials available on record. The return of income for the assessment year 2015-16 was originally filed by the assessee on 15-09-2015 declaring taxable income of Rs 9,42,790/-.
This return was duly processed under section 143(1) of the Act accepting the returned income. Subsequently, based on the information received from DDIT investigation, the assessment of the assessee was sought to be reopened vide issuance of notice under section 148 of the Act. In response to the said notice, the assessee filed the return on 25-05-2021 declaring the same taxable income of Rs 9,42,790/- as was admitted in the original return. Since this return of income was not e-verified, the same was treated as invalid and non-est by the Learned AO. The assessee had also sought for furnishing of reasons recorded for reopening of assessment. Since the return filed by the assessee in response to notice under section 148 of the Act was treated as non-est, the Learned AO did not furnish the reasons for reopening of assessment and also did not issue notice under section 143(2) of the Act in the reassessment proceedings. Ultimately, the reassessment proceedings stood completed after making an addition of Rs 43,54,001 under section 68 of the Act and a sum of Rs 1,30,620/- under section 69C of the Act to the returned income of Rs 9,42,790/- under section 147 read with section 144B of the Act on 30-3-2022.
The assessee preferred an appeal before the Learned CITA who observed that the Learned AO had not issued notice under section 143(2) of the Act to the assessee and also had not furnished the reasons recorded for reopening of assessment. Both these deficiencies become fatal to the entire reassessment proceedings and accordingly quashed the reassessment.
It is not in dispute that no notice under section 143(2) of the Act was ever issued to the assessee in the reassessment proceedings. It is also not in dispute that reasons recorded for reopening the assessment were also not furnished by the Learned AO to the assessee despite making a specific request in that regard. The only shield of the revenue is that the return filed by the assessee in response to notice under section 148 of the Act on 25-05-2021 was not e- verified and accordingly the Learned AO had treated the return as non-est. Since the return was treated as non-est, the stand of the revenue is that there was no requirement for the Learned AO to either issue notice under section 143(2) of Page | 2 the Act or furnish the reasons recorded for reopening the assessment. But we find from the final page of the assessment order, the Learned AO had started the computation of income from the returned income of Rs 9,42,790/- for computing the assessed income of the assessee. This goes to prove that return filed by the assessee either the original return or the return filed in response to notice under section 148 of the Act has been taken due cognizance by the Learned AO. Having done so, it is mandatory for the Learned AO to issue notice under section 143(2) of the Act first in the reassessment proceedings and also furnish the reasons recorded for reopening of the assessment. Further we find that the Learned AO had intimated on 14-2-2022 to the assessee that the return of income was not e-verified. The assessee immediately on 15-2-2022 (i.e. the very next day) rectifies the same and duly e-verifies the return of income filed in response to notice under section 148 of the Act. The evidence in this regard is enclosed in Page 4 of the Paper Book. This excruciating fact has been ignored by the Learned AO while framing the re-assessment. Admittedly, notice under section 143(2) of the Act was not issued to the assessee in the reassessment proceedings and reasons recorded for reopening the assessment were also not furnished to the assessee by the Learned AO. These become jurisdictional defect and hence not curable even in terms of section 292BB of the Act. Reliance in this regard is placed on the decision of Hon’ble Supreme Court in the case of CIT Vs Hotel Blue Moon reported in 321 ITR 362 (SC) wherein it was held that when no notice under section 143(2) of the Act has been issued, the entire assumption of jurisdiction fails and the assessment proceedings are required to be quashed. Further the Hon’ble Bombay High Court in the case of CIT vs Trend Electronics reported in 379 ITR 456 (Bom) had categorically held that where no reasons recorded for reopening of assessment were furnished to the assessee, it becomes fatal to the entire reassessment proceedings per se and accordingly, the reassessment proceedings are required to be quashed.
In view of the above, we find no infirmity in the action of the Learned CITA in quashing the reassessment proceedings. Accordingly, the grounds raised by the revenue are hereby dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 30/06/2025.