DCIT-2(2)(1), MUMBAI, MUMBAI vs. NOSTALGIA BUSINESS CORPORATE SERVICES PVT. LTD., MUMBAI

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ITA 8148/MUM/2025Status: DisposedITAT Mumbai05 June 2026AY 2020-219 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in deeming the assessment order void due to the non-issuance of the mandatory Section 143(2) notice. The assessment was not a best judgment assessment under Section 144, and thus, the precedents relied upon by the Revenue were distinguishable.

What were the facts?

The Department appealed against the CIT(A)'s order which held the reassessment order void. The reassessment was initiated under Section 147, but the Assessing Officer did not issue a mandatory notice under Section 143(2) after the assessee filed a return in response to a Section 148 notice, albeit belatedly.

What were the issues?

Whether the reassessment order is void for non-issuance of notice under Section 143(2) when the assessee filed a belated return in response to a Section 148 notice. Whether the assessment can be considered a best judgment assessment under Section 144.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(2),Section 148,Section 144,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SHRI PAWAN SINGH & HON’BLE SHRI GIRISH AGRAWAL

For Respondent: Shri Bhagirath Ramawat, Sr. DR
Pronounced: 05.06.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: K BEFORE HON’BLE SHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 8148/MUM/2025 िनधा�रण वष�/Assmt. Year: 2020-21) NOSTALGIA BUSINESS CORPORATE SERVICES PVT. LTD. DCIT-2(2)(1), MUMBAI 105, A FORT FOUNDATION, ROOM NO.417, 4TH FLOOR, MAHARASHTRA CHAMBERS AAYAKAR BHAVAN, CHURCHGATE, M K ROAD, OF COMMERCE LANE, KALA Vs. MUMBAI - 400020, MUMBAI- GODA, FORT, MUMBAI - 400020, MAHARASHTRA 400023 MUMBAI-400023, MAHARASHTRA (अपीलाथ� Appellant) (��थ� Respondent) Permanent Account Number of Assessee: AAACN1809K िनधा�रती �ारा/Assessee represented by: Shri Akash Kumar, CA (virtual appearance) राज� व �ारा/Revenue represented by: Shri Bhagirath Ramawat, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 12-Mar-2026 घोषणा की तारीख / Date of pronouncement: 05.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the Department against the order of Ld. CIT(A)/NFAC vide DIN: ITBA/NFAC/S/250/2025-26/1081218892(1) dated 26.09.2025 against reassessment order passed by the Assessment Unit of the Income-tax Department u/s 147 of the Income- tax Act, 1961 (hereinafter referred to as the Act) dated 19.02.2025, for the Assessment Year 2020-21.

2.

Department has raised the following grounds of appeal:

1.

"On the facts and in the circumstances of the case, the Ld.CIT(A) erred in holding assessment order void in the line of the decision of the Hon'ble Delhi High court in the case of Shaily Juneja vs Assistant Commissioner of Income-tax [2024] 167 taxmann.com 90 (Delhi)[27-08-2024] as the notice u/s 143(2) is mandatory to the reopening assessment proceeding ignoring the fact that the assessee has furnished the reply to the show cause notice and filed the return of income u/s 148 of the Act." 2. "On the facts and in the circumstances of the case, the Ld.CIT(A) erred in not appreciating the fact that during the assessment proceeding the assessee had not challenge the assessment proceeding and complied the notices/show cause notice issued therein." 3. "On the facts and in the circumstances of the case, the Ld.CIT(A) erred in ignoring the fact that M/s Nostalgia Business Corporate Services Private Limited provided an unsecured loan of Rs. 40,00,000/- as part of the accommodation entry arrangement."

3.

Though this being an appeal filed by the Department, ld. Counsel for the assessee at the outset raised the issue of appeal being covered by the circular issued by CBDT to be disposed of as not maintainable on account of low tax effect as the tax effect reported in Form no. 36 is Rs.31,20,000/-, which is below the threshold of Rs.60 lakhs as prescribed in the CBDT Circular No. 5 of 2024 dated 15.03.2024. On this, ld. Sr. DR pointed out that it is covered by the exception under clause 3.1(h) of the same circular, as the addition made on account of unsecured loan of Rs. 40 lakhs is part of accommodation entry arrangement entered into by the assessee for which he referred to the information based on which the impugned re-assessment proceedings were initiated. The same are contained in para 3.1 of the impugned re- assessment order. We note that in this information, it is categorically mentioned about the accommodation entries which have been found and booked in the form of unsecured loans in the audited books of accounts. Considering the aforesaid factual matrix, the contention raised by the ld. Counsel of the assessee does not hold good. Accordingly, we proceed to adjudicate on the matter based on grounds raised by the Revenue.

4.

The moot point contested is in respect of re-assessment order held void since notice u/s. 143(2) which is a mandatory requirement has not been issued and served on the assessee while making the impugned re- assessment. Relevant factual matrix in this regard are that assessee filed its original return of income on 13.02.2021, reporting total loss at Rs. 54,47,121/-. This return was processed u/s. 143(1) on 27.03.2021 determining Nil demand. Subsequently, information was flagged under the Risk Management Strategy formulated by CBDT on the Insight portal. Based on this information as received from Central Circle-7(3), Mumbai, assessee had carried out transaction of taking unsecured loan amounting to Rs.40 lakhs and repayment thereof of the same amount through one entity called Compact Capital Ltd. which is alleged to provide accommodation entries to the Omkara ARC in the form of loan and investment. Notice u/s. 148 was issued on 16.03.2024 asking assessee to file its return within 30 days of receipt of the said notice. Subsequently, statutory notices u/s. 142(1) were issued against which no response was received from the assessee. A show cause notice u/s.144 was also issued dated 17.10.2024 against which also no response was received from the assessee.

4.1. Later, another show cause notice was issued on 21.12.2024 against which assessee filed its response on 24.12.2024. During this time, assessee had also furnished its return in response to notice u/s. 148 on 21.12.2024. Fact in this regard is undisputed as ld. Assessing Officer has mentioned it in table forming part of para-5. However, while acknowledging this fact of filing of this return in response on 21.12.2024, ld. Assessing Officer notes about assessee declaring total loss of Rs.2,77,52,432/-. He held this return to be invalid. He proceeded to complete the assessment by taking original return filed by the assessee with total loss at Rs. 54,47,121/-. To this, he made an addition of Rs.40 lakhs u/s. 69A as un-explained money and thus, assessed the total loss at Rs.14,47,121/-

5.

Before the ld. CIT(A), assessee raised the jurisdictional issue of ld. Assessing Officer not issuing notice u/s. 143(2) before completing the impugned re-assessment even though assessee has filed the return in response to notice u/s. 148 though after the prescribed time limit of 30 days. It is pointed out that the return so filed on 21.12.2024 in response to notice u/s. 148 is at the same total loss of Rs. 54,47,121/- as reported in the original return filed u/s. 139. For this. Ld. Counsel referred to para-3.5 of the re-assessment order with sub-para-1, wherein the submissions made by the assessee are reproduced by the ld. Assessing Officer. In this sub-para, it is categorically mentioned that “the assessee has filed its return in response to notice u/s.148 on 21/12/2024 wherein there is no deviation from original return”. He also referred to para-7 of the first appellate order where in the sub-para-4, this factual position is reiterated from the submissions made by the assessee in the first appellate proceedings.

5.1. Ld. CIT(A) while giving his findings on ground no.1 before him, takes note of the factual position from the assessment order itself to note that assessee has filed return of income in response to notice u/s. 148 on 21.12.2024. He also confirmed this fact from CPC about submission of return by the assessee in response to notice u/s. 148 and non-issue of notice u/s. 143(2). Ld. CIT(A) after taking into consideration the jurisdictional issue raised by the assessee of non- issue and service of notice u/s. 143(2) even though assessee has filed its return in response to notice u/s. 148 after the prescribed time limit and after due confirmation from CPC about the factual matrix as well as by placing reliance on the judicial precedents of the Hon’ble High Court of Delhi in the case of Shaily Juneja vs. ACIT [2024] 167 taxmann.com 90 (Del) wherein it was held that issuance of notice u/s. 143(2) is mandatory in absence of which assessment proceedings could be void, gave his findings that the assessment order becomes void and hence directed to delete the addition of Rs.40 lakhs made by the ld. Assessing Officer. Aggrieved by the relief granted by the ld. CIT(A), revenue is in appeal before the Tribunal.

6.

The above stated factual matrix is uncontroverted. Ld. Sr. DR strongly contended that it is a case where the return filed in response to the notice u/s.148 is after the prescribed time limit mentioned in the said notice and therefore, is non est. Ld. Assessing Officer has rightfully treated the said return as invalid and proceeded to complete the re- assessment based on the income reported by the assessee in the original return u/s. 139 whereby reduced the total loss reported originally to the extent of addition made by him. Once the return filed by the assessee is beyond the prescribed time limit as mentioned in notice u/s. 148, it is held as invalid. There is no requirement of issuing notice u/s. 143(2). Ld. Assessing Officer has proceeded by issuing statutory notices u/s. 142(1) and other show cause notices as tabulated in para-2 of the impugned re-assessment order. Thus, the ground raised by the assessee at the first appellate stage of non-issuance of notice u/s. 143(2) is not tenable and therefore, the addition made by the ld. Assessing Officer is ought to be sustained by holding the impugned re-assessment as a valid order.

6.1. For this, he placed strong reliance on the decision of Coordinate Bench of ITAT, Bangalore in the case of Riyaz Ahmed vs. ITO in ITA No. 1130/Bang/2023, dated 15.04.2024. He referred to para-3.7 of this order, wherein it was noted by the Coordinate Bench that assessee filed its return belatedly in response to notice u/s. 148 which has been rightfully treated non est by the ld. Assessing Officer. Based on this factual position, the Coordinate Bench agreed with the Revenue that when there is no return filed u/s. 148, non issuance of notice u/s. 143(2) does not vitiates the proceedings and is not fatal to the assessment so carried out.

7.

Per contra, ld. Counsel for the assessee strongly relied on the findings of the ld. CIT(A) which are given after taking into consideration the decision of Hon’ble High Court of Delhi in the case of Shaily Juneja (supra). He also referred to another decision of the same court in the case of PCIT vs. Dart Infrabuilt (P) Ltd. [2024] 166 taxmann.com 4 (Del). For this, he referred to para 15.1 of this judgement wherein submission of the Revenue on the invalid return in response to notice issued u/s. 148 from the ld. Assessing Officer is not obliged to issue a notice u/s. 143(2) was considered and was held that the ld. Assessing Officer ought to have issued the notice u/s. 143(2). Hon’ble Court in para-15.2 further observed that in absence of such a notice, it impregnates the proceedings with the jurisdictional defect rendering it as invalid in the eyes of law. It placed reliance on another decision of the same Court in the case of PCIT vs. Shri Jai Shiv Shankar traders (P) Ltd. [2015] 64 taxmann.com 220 (Del). Hon’ble Court also dealt with the decision of Hon’ble High Court of Madras in the case of Sapthagiri Finance and Investments vs. ITO [2012] 25 taxmann.com 341 (Mad). In this case, Hon’ble Court observed that if the ld. Assessing Officer found that there were problems in the return which required explanation by the assessee then, the ld. Assessing Officer ought to have followed up with a notice u/s. 143(2).

8.

In this regard, the factual matrix remains uncontroverted in the present case before us as already noted in the above paragraphs. Assessee had filed its return of income reporting the same total loss as reported originally of Rs. 54,47,121/-. From the perusal of the decision relied upon by ld. Sr. DR in the case of Riyaz Ahmed (supra), we note from the observations of the ld. Assessing Officer as reproduced in the para 2.4 that the assessment of the assessee was completed u/s. 144 without issuing notice u/s. 143(2) which has been upheld by the Coordinate Bench.

8.1. In the present case before us, even though in the cause title, ld. Assessing Officer at Sr. No.9 mentions order passed u/s. as 147 r.w.s. 144 r.w.s. 144B of the Act, yet while going through the order, we find that he has dealt with the submissions made by the assessee for which he has put a synopsis of the reply filed by the assessee on the show cause notice issued by him as contained in para 3.5 which runs from the page-5 to page-8 of the impugned re-assessment order. Importantly in para-3.7, he gives point-wise rebuttal of the reply of the assessee including analysis of case laws relied upon.

8.2. He further takes note of the fact of assessee seeking further opportunity to make its submission which was declined even though the impugned re-assessment order is passed on 19.02.2025. He also takes note of the request of the assessee of providing cross examination on person whose statement is relied upon which he declines by mentioning that the assessment is based on integrated enquires conducted by the Department and all relevant materials have been shared with the assessee.

8.3. Thus, in conspectus of this factual position arising out of the impugned re-assessment order, it cannot be said that the impugned re- assessment order is ex parte/best judgement assessment made by the ld. Assessing Officer under section 144. This section requires the ld. Assessing Officer to make the assessment of total income/loss to the best of the judgement after taking into account all relevant material which he has gathered after giving the assessee an opportunity of being heard. From the perusal of the impugned re-assessment order, there is no whisper by the ld. Assessing Officer that he is making the best judgement assessment under section 144 except for mentioning only at one place about the issue of show cause notice u/s. 144 in the table produced in para-2 for which the date of compliance given was 25.10.2024 though the assessee had filed its response to the subsequent show cause notice dated 21.12.2024 which is after taking into account filing of return on 21.12.2024 in response to notice u/s. 148.

8.4. Thus, in the present case, it is not an order u/s. 144 and therefore, the decision of Coordinate Bench in the case of Riyaz Ahmed (Supra) is distinguishable. Having held so, case of the assessee on the given set of facts gets squarely covered by the judicial precedents by the decision of Hon’ble High Court of Delhi (supra) noted in the above paragraphs.

8.5. Respectfully following the same and also taking into account, the undisputed fact verified by the ld. CIT(A) from CPC about non-issuance of notice u/s. 143(2) and assessee having submitted its return in response to notice u/s. 148, and assessment not being ex parte, we do not find any reason to interfere with the findings arrived at by the ld. CIT(A), in this regard. Grounds raised by the Revenue are dismissed.

9.

In the result, appeal of the Revenue is dismissed.

Order is pronounced in the open court on 05 June, 2026 Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Dated: 05 June, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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