SESHAM RAMANAIAH,PRAKASAM vs. ITO., WARD-1, ONGOLE

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-B ‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 1062/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2016-17) Shri Sesham Ramanaiah Vs. Income Tax Officer PRAKASAM Ward-1 PAN:AZIPR0354H ONGOLE (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA Swathi Sheela राज� व �ारा/Revenue by:: Dr. Sachin Kumar, Sr. AR सुनवाई की तारीख/Date of hearing: 15/04/2026 घोषणा की तारीख/Pronouncement: 29/04/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Sesham Ramanaiah (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 23.05.2025 for the A.Y.2016-17. 2. The original order in the present appeal was passed by this Tribunal on 08.10.2025, wherein the issues involved in the appeal were restored to the file of the Learned Assessing Officer (“Ld. AO”) for fresh adjudication. Subsequently, the assessee filed a Miscellaneous Application under section 254(2) of the Income Tax

Act, 1961 (“the Act”), pointing out that Ground Nos.7 and 17 raised in the appeal, which were legal grounds challenging the validity of the reassessment proceedings, were not adjudicated. This Tribunal, vide order in MA No.85/Hyd/2025 dated 10.12.2025, accepted the contention of the assessee and recalled the original order for the limited purpose of adjudication of Ground Nos.7 and 17, which are to the following effect :

“7. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in dismissing the ground nos. 1 & 2 relating to reopening the assessment under section 147 of the Act without considering that the Income Tax Officer Ward-1 Ongole has no jurisdiction to issue notice under section 148 of the Act as per the provisions of 151A of the Act which issue was not discussed in the said appellate order which results in the same is not a speaking order and is against to the principles of natural justice. 17. The Ld. CIT (A) ought to have considered that the assessment completed under section 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 is invalid and without jurisdiction as no statutory notice under section 143(2) of the Act was issued and served on the assessee for the assessment year under consideration” 3. Ground No.17 of the assessee pertains to the validity of assessment order passed under section 147 read with sections 144 and 144B of the Act, dated 15.03.2024, on the ground that no notice under section 143(2) of the Act was issued by the Ld. AO. In this regard, the Learned Authorized Representative (“Ld. AR”) submitted that the notice under section 148 of the Act was issued by the Ld. AO on 23.03.2023. In response thereto, the assessee filed return of income on 05.10.2023, declaring total income of Rs.3,98,584/-. The Ld. AR submitted that after filing of return, the Ld. AO proceeded to complete the assessment under section 147 read with sections 144 and 144B of the Act without issuing any notice under section 143(2) of the Act. The Ld. AR vehemently contended that issuance of notice under section 143(2) of the Act is a mandatory jurisdictional requirement for framing an assessment

under section 147 of the Act. In the absence of such notice, the entire assessment proceedings are rendered void ab initio. In support of this contention, reliance was placed on the decision of the Hon’ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon (321 ITR 362), wherein it has been held that issuance of notice under section 143(2) of the Act is mandatory and not a procedural requirement. Accordingly, it was prayed that the assessment order passed by the Ld. AO be quashed. 4. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the assessment order and submitted that the notice under section 148 of the Act was issued on 23.03.2023 granting 30 days’ time to the assessee to file return of income. It was submitted that the assessee failed to file the return within the stipulated time and instead filed the return on 05.10.2023, i.e., beyond the time allowed under the notice issued under section 148 of the Act. The Ld. DR further submitted that in view of the third proviso to section 148 of the Act, inserted by the Finance Act, 2023, any return filed beyond the time allowed in the notice issued under section 148 of the Act shall not be treated as a return under section 139 of the Act. Accordingly, it was contended that in such a situation, the Ld. AO was not required to issue notice under section 143(2) of the Act. Thus, it was argued that there is no infirmity in the assessment order passed by the Ld. AO. 5. In rejoinder, the Ld. AR submitted that the Revenue’s reliance on the third proviso to section 148 of the Act, inserted by the Finance Act, 2023 with effect from 01.04.2023, is misplaced. It was submitted that since the notice under section 148 of the Act was issued on 23.03.2023, i.e., prior to the introduction of the said proviso, the same is not applicable to the present case. Accordingly,

it was prayed that the assessment order passed by the Ld. AO be quashed. 6. We have considered the rival submissions and perused the material available on record, including the original order of the Tribunal placed on record and the order passed in Miscellaneous Application recalling the issue for limited adjudication. At the outset, we note that there is no dispute on the following facts that: (i) notice under section 148 of the Act was issued on 23.03.2023; (ii) the assessee filed return of income on 05.10.2023 in response thereto; and (iii) no notice under section 143(2) of the Act was issued by the Ld. AO prior to passing the assessment order. 6.1 The core issue for our consideration is whether the assessment framed by the Ld. AO without issuance of notice under section 143(2) of the Act is valid in law. The contention of the Revenue is based on the third proviso to section 148, inserted with effect from 01.04.2023. However, we find that the said proviso was not in existence on the date of issuance of notice under section 148, which is 23.03.2023. It is a settled legal position that a provision affecting jurisdiction cannot be applied retrospectively unless expressly provided. The third proviso to section 148 alters the legal consequence of delay in filing return and has a direct bearing on the requirement of issuance of notice under section 143(2) of the Act. Therefore, the same cannot be applied to notices issued prior to 01.04.2023. Accordingly, we hold that the third proviso to section 148 of the Act is not applicable to the present case. Therefore, as per the provisions of section 148 of the Act, the return of income filed by the assessee on 5.10.2023 will be treated as return filed under section 139 of the Act. Therefore, once the return filed by the

assessee in response to notice under section 148 of the Act is treated as a return under section 139 of the Act, issuance of notice under section 143(2) of the Act becomes mandatory. The same has also been held by the Hon’ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon (Supra). In the present case, admittedly, no notice under section 143(2) has been issued. Therefore, the Ld. AO has proceeded to complete the assessment without assuming valid jurisdiction. Hence, the assessment order passed under section 147 read with sections 144 and 144B of the Act is void ab initio and liable to be quashed. Accordingly, Ground No.17 raised by the assessee is allowed, and the assessment order is quashed. 7. Since we have allowed the appeal of the assessee on the ground that no notice under section 143(2) of the Act was issued by the Ld. AO, we are not inclined to adjudicate on the Ground No.7 of the assessee, which is kept open. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 29th April, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 29th April, 2026. Vinodan/sps Copy to: S.No Addresses 1 Shri Sesham Ramanaiah, 5-1360, Kurichedu Road, Kothamissin Bazar, Darsi Mandal, Prakasam, Ongole 2 Income Tax Officer Ward-1 Office of the Income Tax Officer, Ward-1 Ongole, Prakasam 3 Pr. CIT - Guntur 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.04.29 RAO 15:20:32 +05'30'