RAVI RAJGARHIA,KOLKATA vs. I.T.O., WARD - 33(1), KOLKATA

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 05.01.2026 for the AY 2013-14.

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 3. The issue raised in ground no.1 is against the assessment order passed by the NFAC prior to 29.03.2022, which is invalid and bad in law and consequently the assessment is liable to be quashed.

3.1. The facts in brief are that the assessee did not file the return of income. Based on the information with the AO, the case of the assessee was reopened u/s 147 of the Act. Accordingly , notice u/s 148 dated 31.03.2021, was issued to the assessee and the assessee complied the same by filing the return of income on 28.05.2021, declaring total income at ₹1,95,430/-. Thereafter, notice u/s 143(2) and 142(1) were duly issued, which were complied with on 21.01.2022 and 22.01.2022 by filing bank details, Form 26AS, Balance sheet and other details as asked for. Finally, the assessment was framed by the NFAC vide order dated 22.03.2022, passed u/s 147 read with section 144/144B of the Act.

3.2. After hearing the rival contentions and perusing the materials available on record, we find that the assessment has been framed by the NFAC, Delhi even prior to the notification issued on 29.03.2022 conferring jurisdiction on NFAC, which in our opinion, is without jurisdiction as the Provisions of Section 151A of the Act which provides for faceless assessment were notified from 29.03.2022 vide notification no. 18/2022/F. No. 370142/16/2022-TPL(Part) though the same were brought on statute book by the Taxation and Other Law (realization and amendment of certain provisions) Act, 2020 with effect from 01.11.2020. Considering these facts, the assessment framed by the National Faceless Appeal Centre is null and void as the same is without jurisdiction and Page | 2

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 cannot be sustained. The case of the assessee find support from the decision of the co-ordinate Bench in case MD Mahimud SK Vs ITO ITA No. 2230 & 2229/Kol/2024 order dated 4.3.2025. Similarly, the Telangana High Court in case of Kankanala Ravindra Reddy vs. Income-tax Officer [2023] 156 taxmann.com 178 (TELANGANA)/[2023] 295 Taxman 652 (TELANGANA)[14-09-2023], Hon'ble jurisdictional Jurisdictional High Court in case of Triton Overseas (P.) Ltd. vs. Union of India [2023] 156 taxmann.com 318 (Calcutta)[13-09-2023], Bombay High Court in Samp Furniture (P.) Ltd. vs. Income-tax Officer [2025] 477 ITR 187 (Bombay)[05-08-2024] laid the same ratio. Ground no.1 is allowed.

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 however, while generating the notice u/s 143(2) of the Act in ITBA portal displayed following error “ you cannot generate notice u/s 143(2) for this case as no valid return exist u/s 148 of the Act for this PAN and assessment”. The assessment was framed accordingly after taking into account all the evidences filed by the assessee during the course of assessment proceedings by making the addition of ₹1,20,84,624/- to the income on account of income received .

4.2. In the appellate proceedings, the appeal of the assessee is dismissed.

4.3. After hearing the rival contentions and perusing the materials available on record, we note that the assessee has filed the return of income in response u/s 148 of the Act on 28.05.2021, which has been stated by the ld. AO in para no.2 of page no.2 of the assessment order. We also note that the ld. AO has stated that ITBA Portal deployed error while generating notice u/s 143(2) of the Act and the same could not be generated. It is the submission of the assessee that no notice u/s 139(9) of the Act was ever issued by the ld. AO giving show cause notice for rectification of error in the return of income. Therefore, the assessee is not at fault as the assessee has filed the valid return in compliance to notice u/s 148 of the Act. The ld. AR therefore, prayed that the assessment framed by the ld. AO sans notice u/s 143(2) of the Act is nullity and bad in law. In defense of his argument, the ld. AR relied on the decision of the Bangalore Tribunal, Shri Krishnamurthy Vs. DCIT in ITA No. 570/Bang/2025 vide order dated 28.08.2025, wherein the co-ordinate bench has held as under:- Page | 4

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 “9. Considering the rival submissions, we noted that the assessee filed return of income originally u/s 139(1) declaring income of Rs.58,29,483/- on 16.09.2012 showing tax payable of Rs. 10,28,370/- placed at paper Book Page No. 27. Thereafter a notice u/s 143(2) dated 19.08.2013 was issued to examine the return filed on 16.09.2012 for the AY 2012-13 Further, a notice was issued under section 148 of the Act dated 04.03.2014 placed at paper Book page No. 42 for the AY 2012-13. Pursuant to the notice issued under section 148 of the Act, assessee fled return on 10.03.2014 as scanned supra, where the assessee has shown tax payable of Rs.8,57,000/- and gross total income shown by the assessee is Rs.1,08,25,483/-. On going by the provision of section 139(9) of the Act, the return is defective return. However, the AO did not issue any defective notice to the assessee to cure the defect within the specified time. During the course of hearing, the learned DR conceded that no notice has been issued to the assessee to cure the defect by the AO. If the assessee files any return which is defective, the AO ought to have been issued notice under section 139(9) of the Act to cure the defect. Therefore, the judgment relied on by the learned Counsel supports the case of the assessee. The relevant part of the Order is as under: “6. We have considered the submissions of the counsel for the appellant and the respondent. 7. The assessment which is subject matter of this appeal is for the assessment year 1986-87. Section 139 (1) of the Act provides for filing of a return by an assessee if his total income during the previous year exceeds the maximum amount which is not chargeable to income tax. At that relevant time (i.e. in 1986-87), there was sub-section (2) in Section 139 which provided as follows: "Section 139(2) : In the case of any person who, in the Income Tax Officer's opinion is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income Tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed .." This sub-section (2) in section 139 was omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 01-04-1989. But since the subject matter of the present case is the assessment made on 20.3.1989 for assessment year 1986-87, we have to consider the effect of subsection (2) of section 139 and it cannot be ignored. 8. Section 144 of the Act provides for best judgment assessment of tax by an assessing officer. For the subject assessment year 1986-87, Section 144(1)(a) provided for a best judgment assessment being made by the assessing officer if an assessee failed to make the return required "by any notice given under sub-section (2) of Section 139" Page | 5

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 and has not made a return or revised return under sub-section (4) of sub-section (5) of Section 139. By the Direct Tax Laws (Amendment) Act, 1987, w.e.f.1.4.1989, the words "by any notice given under sub- section (2) of Section 139" in section 144(1)(a) were substituted by the words "under sub-section (1) of s. 139". But since this amendment came into force only with effect from 01-04-1989, the pre-amended provision applied to the present case (as the subject assessment year is 1986-87). Therefore best judgment assessment can only be made under Section 144(1)(a) if an assessee fails to make the return required by any notice given under subsection (2) of Section 139 and has not made a return or revised return under sub-section (4) or sub- section (5) of that Section. 9. Section 144 also provides for a best judgment assessment to be made under clause 1(b) (which is not relevant for the present case) and under clause 1(c) thereof. Section 144 (1)(c) provided that a best judgment assessment can be made by the assessing officer if the assessee having made a return, failed to comply with all the terms of a notice issued under Section 143(2) of the Act. 10. Shri S.R. Ashok, submits that in the present case, since a notice under Section 143(2) of the Act has been issued by the assessment officer, the circular of the C.B.D.T. had no application and the best judgment assessment can be made invoking section 144(1)(c) of the Act. We do not agree with this submission. 11. No doubt Section 144(1)(c) provides for a situation where a best judgment assessment can be made when the assessee having made a return fails to comply with all the terms of a notice issued under Section 143 (2). But the interplay between section 144(1)(a) and section 144(1)(c) and the proper course of action to be followed by an assessing officer before making a best judgment assessment where a return filed is defective is set out by the above circular. Accepting the contention of the Revenue would mean that one has to ignore section 139(9) (which states that where a return is filed and defects therein are intimated to the assessee and he does not rectify them, it is to be treated as an "invalid return" and provisions of the Act would apply "as if the assessee had filed to furnish the return"), section 139(2) (as it stood then) (which entitled the assessing officer to issue notice to the assessee to file a return when he is of the opinion that the assessee has taxable income) and section 144(1)(a) (as it then stood) of the Act. One has to interpret a statute by giving effect to every provision thereof and in a manner which does not render any provision otiose. Therefore, in our opinion, the said circular is not contrary to the provisions of the Act and it correctly guides the assessing officer as to what is to be done before proceeding to make best judgment assessment when a return filed suo motu by the assessee is found defective. Moreover, the circular is beneficial to the assessee as it provides him a further opportunity to give his correct income details after his earlier return is found to be defective (as he can give them at least after receiving the notice U/S.139(2)). Page | 6

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 12. It is settled law that said circulars which are issued under Section 119 by the Central Board of Direct Taxes have to be followed and observed by the authorities and other persons employed in the execution of the Act. The Supreme Court in Commissioner of Customs v. Indian Oil Corpn. Ltd. [2004] 136 Taxman 491 held as follows: ".......The circulars issued by the CBDT under the Income-tax Act, 1961 and CBEC under Section 37-B of the Central Excise Act, 1944 have been held to be binding primarily on the basis of the language of the statutory provisions buttressed by the need of the adjudicating officers to maintain uniformity in the levy of tax/duty throughout the country." 13. Having considered the same, we are of the view that the C.B.D.T. circular is in the nature of a clarification to the assessing authorities that when there is a default in rectifying a defect in the return as intimated by the I.T.O. by the assessee, the return of income has to be treated as an invalid return and further proceedings will have to be taken on the footing that the assessee had failed to file the return. The C.B.D.T. has rightly directed that in case where the return is furnished voluntarily under Section 139 (1), the I.T.O. cannot proceed to make ex parte assessment under Section 144 without serving notice under Section 139(2) or as the case may be under Section 148. This circular is binding on the assessing officer. 14. On the facts of the present case, when the assessee filed a defective return, and did not rectify the defects which were pointed out by the I.T.O., the assessing officer was bound to treat the return of income as invalid and take further proceedings on the footing that the assessee had failed to furnish the return. The assessing authority could not have proceeded to make ex parte assessment under Section 144 without serving notice under Section 139(2) or as the case may be under Section 148. 15. In this view of the matter and in view of the law declared by the Supreme Court in the above decision, we are of the view that the decision of the I.T.A.T. confirming the decision of the Commissioner (Appeals) does not warrant any interference by this Court. Therefore, we hold that the substantial questions of law raised in this appeal have to be decided against the Revenue. 12. Considering the submissions of the ld. AR and the section referred by the ld. AR we found substance in arguments of the ld. AR the assessee had filed defective return beyond the time provided of 30 days in the notice issued u/s 148 of the Act and not following the provision of section 140A of the Acct. The explanation aa of section 139(9) reproduced as above are very much applicable to the assessee and return is defective which is treated as invalid return. therefore, the assessment made on the basis of the return filed by the assessee is incorrect assessment. In view of the above view and respectfully following the judgment, we held that the defective return filed by the assessee is non-est and no assessment / reassessment can be made Page | 7

ITA No. 1284/KOL/2026 Ravi Rajgarhia; A.Y. 2013-14 in the invalid/defective return. Therefore, the income assessed by the AO is not correct.” 4.4. Consequently, the order passed by the ld. AO is invalid and cannot be sustained. Ground no.3 is allowed.

Order pronounced on 03.09.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 03.09.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

(Manish Bhoi) Dy. Registrar Income Tax Appellate Tribunal, Kolkata