CRAVE ENTERTAINMENT (P) LIMITED ,MUMBAI vs. INCOME TAX OFFICER WARD 12(1)(1), MUMAI

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ITA 908/MUM/2026Status: DisposedITAT Mumbai28 October 2026AY 2016-177 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the issuance of a notice under Section 143(2) of the Income Tax Act, 1961, is a mandatory statutory requirement for framing an assessment. The Tribunal referred to the decision of the Hon'ble Supreme Court in CIT v. Laxman Das Khandelwal, which held that while Section 292BB deems a notice valid if the assessee participates in proceedings, it does not cure the complete absence of a notice. In the present case, the Tribunal found that no notice under Section 143(2) was issued by the Assessing Officer within the prescribed period before proceeding to frame the assessment. Consequently, the assessment framed under Section 144 of the Act for Assessment Year 2016-17 was held to be bad in law and was quashed. Ground No. 1 of the assessee's grounds of appeal was allowed. The operative direction was to quash the assessment order.

What were the facts?

The assessee, Crave Entertainment (P) Limited, filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi, for Assessment Year 2016-17. The assessee's grounds of appeal challenged the CIT(A)'s action of annulling the grounds of appeal and setting aside the assessment order for fresh assessment. Specifically, the assessee argued that the CIT(A) failed to decide a legal ground concerning the non-issuance of a notice under Section 143(2) of the Income Tax Act, 1961, before completing the assessment. The assessee contended that the CIT(A) mistakenly believed the return filed in response to a Section 148 notice was not e-verified, which the assessee refuted by providing evidence of e-verification and the e-filing acknowledgement number. The assessee also highlighted that no notice under Section 143(2) was issued between the Section 148 notice and the completion of the assessment under Section 144.

What were the issues?

1. Whether the action of the Ld. CIT(A) to annul the grounds of appeal and set aside the assessment order for fresh assessment is bad in law and on fact, specifically concerning the failure to decide the legal ground relating to the non-issuance of a notice under Section 143(2) of the Income Tax Act, 1961, before completing the assessment? 2. Whether the additions made may be deleted and the original assessment order under Section 147 read with Section 144 and Section 144B of the Income Tax Act, 1961, dated 29.03.2022, be quashed? Assessee's Contentions: - The Ld. CIT(A) failed to decide the legal ground regarding the non-issuance of a notice under Section 143(2) before completing the assessment. - The Ld. CIT(A) was mistaken in believing the return filed in response to the Section 148 notice was not e-verified; the return was e-verified, as evidenced by the acknowledgement number. - No notice under Section 143(2) was issued between the Section 148 notice and the completion of the assessment under Section 144, making the assessment bad in law. - Reliance was placed on decisions in PCIT v. Silver Line, CIT v. Parikalpana State Development (P.) Ltd., PCIT v. Shri Jai Shiv Shankar Traders (P.) Ltd., CIT v. Rajeev Sharma, and CIT v. Salarpur Cold Storage Pvt. Ltd. Revenue's Contentions: - The Ld. DR supported the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 147,Section 144,Section 144B,Section 148,Section 139(1),Section 292BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI G.M. DOSS

Pronounced: 28/10/2026

PER SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi, dated 10.12.2025 for the assessment year 2016-17.

2.

The assessee has raised the following grounds of appeal:

“1. That the action of Ld. CIT(A) to annul the grounds of appeal and set aside assessment order to the Ld. Assessing Officer for fresh assessment is bad both in law and on fact as the Ld. CIT(A) has failed to decide legal ground before him relating to non issuance of notice u/s 143(2) of the Income Tax Act, 1961 before completing assessment. 2. In view of the facts and circumstances of the case the appellant prays that the additions may kindly be deleted and the original assessment order u/s 147 r.w.s 144 read with section 144B of the Income Tax Act, 1961 dated 29.03.2022 be quashed or any other order which this Hon'ble court deems fit and proper be passed. The above grounds of appeals are independent of, and without prejudice to each other.” 2. Referring to Ground No. 1 of grounds of appeal, the Ld. Counsel for the assessee, at the outset, submitted that the Ld. CIT(A) failed to decide the legal ground raised before him relating to non-issuance of notice u/s. 143(2) of the Act before completion of the assessment.

3.

The Ld. Counsel for the assessee referring to page 18, paragraph 7.4.1 of the order of the Ld. CIT(A), submitted that the Ld. CIT(A) was under the mistaken impression that the assessee had filed an invalid return (not e-verified) in response to the notice issued u/s. 148 of the Act and, therefore, in the absence of a valid return of income, the Assessing Officer was justified in not issuing notice u/s. 143(2) of the Act.

4.

The Ld. Counsel for the assessee, referring to page 38 of the paper book, containing the copy of the ITR acknowledgement for assessment year 2016-17 filed on 07.03.2022 in response to the notice issued u/s. 148 of the Act, submitted that the return was e-verified by the assessee and that the e-filing acknowledgement number allotted was 131205560050721. Therefore, the observation of the Ld. CIT(A) that the return filed by the assessee in response to the notice u/s. 148 of the Act was not e-verified is factually incorrect.

5.

The Ld. Counsel for the assessee, referring to page 1 of the paper book, containing the ITR acknowledgement for assessment year 2016-17 filed u/s. 139(1) of the Act and validated by the CPC, submitted that the said return was presumed to be the return filed in response to the notice u/s. 148 of the Act.

6.

The Ld. Counsel for the assessee further referring to pages 34 and 35 of the paper book, containing the notings on the e- portal showing the issuance of notices for e-proceedings and submitted that after the issuance of notice u/s. 148 of the Act by the Assessing Officer on 31.03.2021 and until the completion of the assessment u/s. 144 of the Act on 26.03.2022, no notice u/s. 143(2) was issued, which is a sine qua non before completion of assessment.

7.

The Ld. Counsel for the assessee, therefore, submitted that in the absence of issuance of notice u/s. 143(2) of the Act within the prescribed period and before completion of the assessment, the assessment framed u/s. 144 of the Act is bad in law.

8.

Reliance was placed on the following decisions:

1.

PCIT v. Silver Line, [2016] 65 taxmann.com 137 (Delhi). 2. CIT v. Parikalpana State Development (P.) Ltd., [2013] 40 taxmann.com 248 (All.). 3. PCIT v. Shri Jai Shiv Shankar Traders (P.) Ltd., [2015] 64 taxmann.com 220 (Delhi). 4. CIT v. Rajeev Sharma, [2011] 336 ITR 678 (All.). 5. CIT v. Salarpur Cold Storage Pvt. Ltd., [2014] 50 taxmann.com 195 (All.). 9. On the other hand, the Ld. DR supported the orders of the authorities below.

10.

Heard rival contentions and perused the orders of the authorities below. It is the contention of the assessee that after the issuance of notice u/s. 148 of the Act, the assessee filed the return of income on 07.03.2022, which was e-verified. The said acknowledgement of the return of income is placed at page 39 of the paper book.

11.

We have perused the sequence of notices issued to the assessee, right from the issuance of notice u/s. 148 dated 31.03.2021 until the completion of the assessment on 26.03.2022 and find that no notice u/s. 143(2) was issued by the Assessing Officer within the prescribed period before proceeding to frame the assessment.

12.

In the case of CIT v. Laxman Das Khandelwal, reported in (2019) 417 ITR 325 (SC), the Hon’ble Supreme Court held that the issuance of notice u/s. 143(2) of the Act is a mandatory statutory requirement for framing an assessment. The Hon’ble Supreme Court also held that Section 292BB of the Act deems a notice to be valid despite defects in its service or manner, if the assessee participates in the proceedings, but it does not cure the complete absence of a notice.

13.

In the present case, no notice u/s. 143(2) of the Act was issued by the Assessing Officer. Thus, respectfully following the said decision, we hold that the assessment framed u/s. 144 of the Act for assessment year 2016-17 is bad in law and is hereby quashed.

14.

Ground No. 1 of grounds of appeal of the assessee is allowed.

15.

In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 28/10/2026

Sd/- Sd/- G.M. DOSS CHALLA NAGENDRA PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 28/10/2026 Prabhat Copy to: CRAVE ENTERTAINMENT (P) LIMITED , 110, LINKWAY ESTATE NEW LINK ROAD, 1 MALAD (WEST), MUMBAI-400064, MAHARASHTRA

INCOME TAX OFFICER WARD 12(1)(1), ROOM NO. 129, AAYAKAR BHAVAN, M.K 2 ROAD,, MUMBAI-400020, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE TRUE COPY ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.11.03 14:46:01 +05'30' ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., MUMBAI

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