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Facts
The assessee filed an appeal challenging an order passed by the National Faceless Appeal Centre (NFAC) for the assessment year 2016-17. The primary ground raised by the assessee was that the assessment was made without issuing a notice under Section 143(2) of the Income Tax Act.
Held
The Tribunal noted that the issue of non-issuance of notice u/s 143(2) was raised for the first time before the Tribunal and required factual verification. Therefore, to meet the ends of justice, the matter was restored to the Assessing Officer (AO) to consider the issue and supporting documents.
Key Issues
Whether the assessment order is bad in law due to the non-issuance of a notice under Section 143(2) of the Income Tax Act, especially when the ground is raised for the first time before the Tribunal.
Sections Cited
143(2), 250, 148, 147, 139(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN&
Date of Hearing 04.09.2025 Date of Pronouncement 21.11.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
1. The present appeal has been filed by the assessee challenging the impugned order 16.05.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2016-17. The assessee has raised the following grounds of appeal:
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On the facts and circumstances of the case and in law, the assessment made without issuing the notice u/s. 143(2) may please be annulled and declared as bad in law.
On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance of expenses incurred for transferring the capital asset amounting to ₹25,000 which was claimed as deduction while computing the long-term capital gains.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance of incidental expenses incurred while acquiring the capital asset amounting to 38,792 which was claimed as part of its cost of acquisition while computing the long-term capital gains. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance of cost of improvement amounting to 14,12,500 which was claimed as deduction while computing the long-term capital gains. 5. On the facts and circumstances of the case and in law, on a without prejudice basis, the Ld. CIT(A) has erred in confirming the addition of 15,00,000 made under the head income from other sources which was representing the sale consideration of furniture being personal effects. 2. Ground No.1 raised by the assessee relates to challenging the order of assessment as the same was made without issuing the notice u/s 143(2) of the Act.
From the records I noticed that this ground No. 1 has been raised by the assessee for the first time. Therefore, After having heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records I found that this ground is 3 Azim Kassam Boblai legal in question and can be raised before me, therefore I allow the assessee to raise this ground and the same is admitted to be heard on merits.
In this regard Ld. AR submitted that the assessment in question was made without issuing the notice u/s 143(2) of the Act therefore the same is null and void and thus bad in law.
Whereas on the contrary, Ld. DR submitted that initially the assessee has not filed any Return of income and the reopening notice u/s 148 of the Act was issued and served upon the assessee on 28.02.2022 but to that too assessee had not filed any response. Even thereafter on 26.02.2024 a reply was filed by the assessee but she failed to the same. As per Ld. DR since the return was invalid, therefore there was no requirement for issuance of notice u/s 143(2) of the Act. In this regard reliance was placed upon the decision of coordinate Bench of Hon’ble ITAT in the case of Rakesh Aggarwal Vs. ITO, the operative portion is reproduced herein below:
7. Coming to the judicial precedent stated before us by the Ld. AR of Shri Jai Shiv Shankar Traders Pvt. Ltd. (supra), the Hon'ble Delhi High Court observed that the assessee has filed return of income u/s 139(1) of the Act in time and further stated that the return filed may be treated as return filed in response to the notice u/s 148 of the Act. Therefore, in this case, the return was available before the Assessing Officer. In the case of Alpine Asia Pvt. Ltd. (Supra), the fact also shows that the assessee has filed original return of income in time and in 4 Azim Kassam Boblai response to notice u/s 148 of the Act, stated the original return filed may be treated as return in response u/s 148 of the Act. In case of Shri Rajiv Sharma (supra) of the Hon'ble Allahabad High Court also speaks about the same facts. Therefore, in all the above judgments cited before us, it was apparent that there was original return available with the Assessing Officer u/s 139(1) of the Act and the assessee has stated that such return filed may be treated as return and response to the notice u/s 148 of the Act. Therefore, even before the expiry of the time limit of 30 days in the issuance of notice u/s 148 of the Act, the Assessing Officer was having return of income and notice u/s 143(2) could have been issued. The Hon'ble High Court in all these judgments has categorically held that in such case notice u/s 143(2) of the Act is mandatory even in case of reopened assessment u/s 147 of the Income Tax Act. Facts in the present case are different and distinguishable. In the present case, the assessee did not file the original return of income as well as also not filed return of income in response to the notice u/s 147 of the Act within the time allowed by the Assessing Officer of 30 days. Therefore, the assessee does not gate any support from the above judicial precedent.
Thus the issue is whether in case the return filed by the assessee as late as in the month of September, 2017 can be treated as valid return or not. The answer is clearly 'No' as even after 30 days any return of income filed by the assessee would not have been taken cognizance by the Assessing Officer. There is no requirement of the law that if the return is filed any time before Assessing Officer_u/s 148 read with 143 (3) of the Act, the Assessing Officer should have been issued notice u/s 143(2). The question will arise then that if the assessee was issued a notice u/s 148 of the Act and he does not file any return of income till the date of framing of the assessment order or also filed a return before passing of the assessment order u/s 143(2) of the Act, then what is the stand Revenue should take? In such case, it is not at all possible that the assessee can contest that notice u/s 143(2) should have been issued, in all such cases where reassessment is required to be made. The 5 Azim Kassam Boblai onus of filing of return of income on the assessee is a responsibility which is cast upon him to be fulfilled by him, if he fails to take benefit of any of the provisions of law the assessee cannot plea that he will not comply with the law and not follow time limit before the Assessing Officer and the Assessing Officer he is duty bound to follow the law even in belated compliance by the assessee.
In rebuttal Ld. AR submitted that the return was e- verified in response to notice issued u/s 148 of the Act in this regard has placed the screen shot of the same which is at paper book page No. 6 indicating that ITR 5 was sent through email by the assessee.
Be that as it may since this ground was never raised by the assessee before any of the revenue authorities and the same also requires factual verification of the assessment record, therefore without commenting anything on the merits of the issue, I am of the view that this issue goes to the roots of the case and touches the very maintainability of Assessment order and therefore that the interest of justice would be met only in case the matter is restored back to the file of AO with the direction to consider the various documents and supporting evidence submitted by the assessee and to call for any other documents, if so required and thereafter to adjudicate this issues raised by the assessee on merits in accordance with law. At the same time, the assessee is also directed to be vigilant to respond to all the queries in this regard.
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8. Consequently, this ground raised by the assessee is allowed for statistical purposes. Other grounds raised by the assessee are kept open and are not being adjudicated at this stage, till AO passed a fresh order on this issue.
Before parting, I make it clear that my decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute which shall be adjudicated by the AO independently in accordance with law.
In the result the appeal filed by the assessee is allowed for statistical purposes.