KAMLESH PRAMOD GANDHI,AHMEDNAGAR vs. INCOME TAX OFFICER, WARD 1, AHMEDNAGAR, AHMEDNAGAR,

Although a number of grounds have been raised by the assessee, however, the Ld. Counsel for the assessee confined his argument to only one issue i.e. the validity of the re-assessment order in absence of issue of notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

Facts of the case, in brief, are that the assessee filed his return of income on 12.02.2015 declaring total income of Rs.3,34,250/-. Information was received by the department regarding substantial cash deposit of Rs.30,70,470/- in the bank

The Assessing Officer further noted that there are certain cash deposits made by the assessee in his bank account. He, therefore, asked the assessee to explain the same. The assessee in response to the same submitted that he is engaged in the business of automobile spare parts under the name and style of M/s. Gandhi Tempo and the cash so deposited was out of cash sales made over the counter. Apart from this he also used to send spare parts by transport to different buyers at the given address and after receiving the goods buyers deposit the cash in his account. It was submitted that sometimes he used to collect the sale value in advance and thereafter send the goods. The deposits are received in bank through RTGS and cheques transfer and cash deposited by the buyers from their home

Before the Ld. CIT(A) / NFAC, the assessee apart from challenging the addition on merit, challenged the validity of the re-assessment order in absence of notice issued u/s 143(2) of the Act. However, the Ld. CIT(A) / NFAC dismissed both the grounds.

So far as the validity of the order in absence of issue of notice u/s 143(2) is concerned, he held that the return in response to the notice u/s 148 has been treated as invalid return by the system. Therefore, once the return itself is treated as invalid, the Assessing Officer was justified in proceeding with the re-assessment by issuing notice u/s 142(1) of the Act. He held that the issuance of notice u/s 143(2) pre-supposes a valid return which was absent in the present case. Therefore, non-issue of notice u/s 143(2) of the Act does not vitiate the re- assessment proceedings.

So far as the merit of the case is concerned, he held that the assessee was unable to discharge the burden cast on him. The assessee in the instant case failed

Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee at the outset submitted that the assessee in response to the notice u/s 148 of the Act dated 31.03.2021 filed its return of income on 27.01.2022 which was subsequently e-verified on 02.03.2022 which is evident from the screenshot of the return filed on income tax portal, copy of which is placed at pages 5 to 8 of the paper book. Therefore, the finding of the Ld. CIT(A) / NFAC that the return was treated as invalid by the system is incorrect. He submitted that a return which has been e-verified and is appearing as filed return on the income tax portal cannot be characterized as invalid return. He submitted that it is an undisputed fact that no notice u/s 143(2) of the Act was ever issued by the Assessing Officer after filing of the return in response to the notice u/s 148 of the Act. He has only issued notice u/s 142(1) of the Act. Relying on the decision of the Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad reported in (2023) 156 taxmann.com 19 (Patna), he submitted that the Hon’ble High Court in the said decision has held that where notice was issued by the

Referring to the decision of the Co-ordinate Bench of the Tribunal in the case of Bababhai Sadarbhai Shaikh vs. ITO vide ITA No.144/PUN/2025 order dated 23.10.2025 for assessment year 2015-16, he submitted that in that case also notice u/s 148 of the Act was issued on 31.03.2021 and the assessee vide letter dated 14.03.2022 requested the Assessing Officer to consider the original return as return filed in response to notice u/s 148. Since no notice u/s 143(2) of the Act was issued, the Tribunal, following the decision of the Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad (supra), held that there should have been a notice issued u/s 143(2) which is a requirement and which cannot be dispensed with.

Referring to the decision of the Co-ordinate Bench of the Tribunal in the case of Bharat Kantilal Chengede vs. ITO vide ITA No.1902/PUN/2025 order dated 13.01.2026 for assessment year 2012-13, he submitted that in that case also notice u/s 148 was issued on 25.03.2019 and the assessee filed his return in response to the said notice on 11.12.2019 which is after the statutory period of 30 days given by the Assessing Officer. The notice u/s 143(2) was not issued and the

The Ld. DR on the other hand submitted that the assessment record and assessment order clearly indicate that the return filed in response to the notice u/s 148 was not accepted by the system as a valid return and was reflected as an invalid return. The Assessing Officer has specified this fact in the assessment order. Therefore, there is no requirement of issue of notice u/s 143(2).

So far as the contention of the assessee that the return subsequently stood e- verified on 02.03.2022 is concerned, he submitted that the matter requirs verification from the assessment record. He submitted that mere production of a screenshot at the appellate stage cannot automatically displace the contemporaneous record relied upon by the Assessing Officer while framing the assessment. He submitted that this screenshot or the fact that the return subsequently stood e-verified was not on the record of the file of the Ld. DR.

So far as the various decisions relied on by the Ld. Counsel for the assessee are concerned, he submitted that these decisions are distinguishable and not applicable to the facts of the present case. In all these cases, there existed a valid return on record and the Hon’ble Courts found complete absence of notice u/s 143(2) despite such valid return. However, in the present case, the assessment order itself records that the return filed in response to notice u/s 148 was treated as invalid by the system and the re-assessment proceedings were continued through statutory notices u/s 142(1).

Without prejudice to the above, the Ld. DR submitted that the matter may be restored to the file of the Assessing Officer for examination of the assessment records and portal records regarding the exact status, date of validation and processing of the return purportedly filed in response to the notice u/s 148 of the Act. Further, the assessee has not challenged the validity of reopening on merits before the Tribunal. He submitted that the reopening was based on specific information relating to substantial cash deposits and therefore, re-assessment proceedings were initiated on a valid foundation. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions

It is the submission of the Ld. DR that since the return was treated as invalid by the system, therefore, there was no valid return filed and therefore, there was no requirement of issuing any notice u/s 143(2). However, a perusal of the assessment order shows that the Assessing Officer has proceeded to compute the income on the basis of the return filed in response to the notice u/s 148 by observing as under:

A perusal of the paper book shows that the return filed by the assessee has been e-verified by the system and the same reads as under:

Once the system shows that the return has been e-verified, therefore, merely because the Assessing Officer mentions in the order that the return was treated as invalid return by the system, the same in our opinion cannot be accepted. We, therefore, hold that the return filed by the assessee is not an invalid return.

Once the return is treated as a valid return, the next question that arises for our consideration is as to whether the assessment order can be held as valid in absence of any notice issued u/s 143(2) when the assessee files the return in response to the notice u/s 148, though, belatedly.

We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of Bharat Kantilal Chengede vs. ITO (supra). In that case, notice u/s 148 of the Act was issued to the assessee on 25.03.2019 and the assessee filed his return of income in response to the same on 11.12.2019 which was after the statutory period of 30 days given by the Assessing Officer. No notice u/s 143(2) of the Act was issued by the Assessing Officer before completion of the assessment. The Tribunal relying on various decision quashed the assessment order by observing as under:

Since the facts of the in the instant case are identical to the facts of the case already decided by the Co-ordinate Bench of the Tribunal cited (supra), therefore, we hold that the order passed by the Assessing Officer without following the mandatory requirement of issue of notice u/s 143(2) makes the re-assessment order an invalid assessment. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and the grounds raised by the assessee on this issue are allowed.

In the result, the appeal filed by the assessee is allowed.