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Facts
The assessee filed a return for AY 2013-14. The case was reopened under section 147 of the Income Tax Act, 1961, and a notice under section 148 was issued. The assessee requested that the original return be considered as filed in response to the Section 148 notice. The assessment was completed without issuing a notice under section 143(2) of the Act.
Held
The Tribunal held that the assessment completed without issuing a notice under section 143(2) of the Act, after a return was filed in response to a notice under section 148, is bad in law and void ab initio. Such an assessment is vitiated.
Key Issues
Whether the assessment framed under section 144B read with section 147 of the Act is valid in the absence of a notice under section 143(2) of the Act, when a return was filed in response to a notice under section 148.
Sections Cited
147, 148, 143(2), 142(1), 144B, 139
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
This appeal preferred by the assessee against the order dated 26.06.2025 of Ld. NATIONAL FACELESS APPEAL CENTRE
P a g e | Chanchal Bansal (AY:2019-20) (NFAC),DELHI (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No : ITBA/NFAC/S/250/2025- 26/1077830740(1)arising out of the assessment order dated 24.03.2022 u/s 147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by National Faceless Assessment Centre, Delhi,for AY: 2013-14.
At the time of arguments ld. Counsel has pointed out raising the additional ground that the assessment is not completed in accordance with procedure established under the Act and it was submitted that no notice u/s 143(2) was issued. It comes up that assessee’s return was filed on 31.03.2014 declaring total income of Rs.1,98,600/- and on the basis of information that assessee has made credit entries amounting to Rs.51,28,000/- in respect of bogus LTCG from sale of shares during the year under consideration the case of assessee was reopened by notice u/s 148 of the Act dated 28.03.2021. On going through the assessment order we find that there is no mention of any notice u/s 143(2) being issued and there is mere mention of notices u/s 142(1) of the Act issued on 28.11.2021 and 23.01.2022.
P a g e | Chanchal Bansal (AY:2019-20) 3. The ld. DR has defended the action of not issuance of notice u/s 143(2) on the basis that as assessee had not filed return in response to the notice u/s 148 of the Act so there was no requirement of issuance of notice u/s 143(2) of the Act.
4. It comes up from the order of ld. First Appellate Authority that assessee did not file her return of income u/s 147/148 in view of prevailing Covid-19 pandemic. However, she requested assessing officer to treat the original return filed on 31.03.2014 as the return filed in response to Section 148 of the Act. At page 9 of the paper book copy of letter dated 04.03.2022 has been filed in which assessee had mentioned in response to notice u/s 142(1) of the Act dated 23.01.2022 that the return filed on 31.03.2014 may be considered to be return filed u/s 148 of the Act.
As, we go through the assessment order, we find that the income as per return filed on 31.03.2014 of Rs.1,98,600/- has been taken for making additions and calculating total income assessed. Thus, very apparently the assessing officer has taken the returned income only. The Coordinate Bench in the case DCIT Vs. Ashutosh Foods vide in which one of us, the judicial member, was also in the coram, had considered the P a g e | Chanchal Bansal (AY:2019-20) contention of department that as no return of income was filed in response to notice u/s 148 of the Act, so non-compliance of notice u/s 143(2) of the Act is not detrimental. The Bench had decided the issue against the department by following findings:
“3. Thus the case of department as per the AO and the ld. DR is that as assesse has not filed ROI in response to the notice u/s 148 of the Act so non compliance of notice 143(2) of the Act is not detrimental. But the law seems to be otherwise settled and extensively discussed in a co-ordinate bench decision in Anil Aggarwal HUF versus ITO, Ward 28(1), New Delhi order dated 30.07.2025, as relied by ld. Counsel and for completeness and to avoid cost of repetition in laying principles afresh we reproduce the relevant part here below; “5. The Ld. Counsel for the assessee submitted that assessee has filed return on 28.10.2021 in response to notice issued u/s 148 dated 30.03.2021. However, the Assessing Officer did not issue notice u/s 143(2) of the Act. Ld. Counsel invited our attention to 21 to 22 of the PB which contains the notice issued u/s 148 dated 30.03.2021 and a copy of return filed on 28.10.2021 in response to the notice issued u/s 148 of the Act. Therefore, the Ld. Counsel submitted that non issuance of notice u/s 143(2) makes the impugned assessment order as bad in law. Reliance is placed on the following decisions in support of his contentions: 1. CIT vs. Laxman Das Khandewal 417 ITR 325 (SC); 2. Rajender Kumar Sehgal vs. ITO 414 ITR 286 (Del.); 3. PCIT vs. Paramount Biotech Industries Ltd. 398 ITR 701 (Del); 4. PCIT vs. Jai Shiv Shankar Trading P. Ltd. 388 ITR 448 (Del.); 5. CIT vs. Rajiv Sharma 336 ITR 678 (All.); 6. PCIT vs. Staunch Marketing Pvt. Ltd. 404 ITR 299 (Del).
6. On the other hand, the Ld. DR submitted that the assessee did not file return within the time specified in the notice issued u/s 148 of the Act and therefore the Assessing Officer treated the return as invalid return and since the return was treated as invalid the Assessing Officer need not issue notice u/s 143(2) before completion of assessment.
In rebuttal the Ld. Counsel for the assessee submitted that the Hon’ble Jurisdictional High Court in the case of PCIT vs. Staunch Marketing Pvt. Ltd. (supra) held that even in ex parte assessment when once return is filed by the assessee in response to notice issued u/s 148 of the Act issuance of notice u/s 143(2) is mandatory even though the assessee failed to furnish return u/s 139 of P a g e | Chanchal Bansal (AY:2019-20) the Act. Ld. Counsel submits that the Hon’ble High Court held that once return is filed in response to notice u/s 148 of the Act even ex parte assessment cannot be made without issue of notice u/s 143(2) of the Act.
Heard rival contentions, perused the orders of the authorities below and the case laws relied on by the assessee. In this case, the assessee filed return on 28.10.2021 in response to notice issued u/s 148 of the Act dated 30.03.2021. The Assessing Officer completed the assessment on 30.03.2022 u/s 144 r.w.s. 147 of the Act determining the income of the assessee at Rs.84,32,240/-. While computing the income the Assessing Officer started with the income declared by the assessee in the return of income of Rs.69,040/- declared by the assessee in the return in response to notice issued u/s 148 of the Act, whereby the Assessing Officer acted upon the return filed by the assessee. The Assessing Officer before completion of assessment u/s 144B r.w.s. 147 of the Act appears to have not issued any mandatory notice u/s 143(2) of the Act. The Revenue also could not show that the Assessing Officer had issued any notice u/s 143(2) of the Act for the assessment year under consideration. Therefore, the question now to be adjudicated this appeal is whether the assessment framed u/s 14B r.w.s. 147 of the Act is a valid assessment in the absence of issue of notice u/s 143(2) of the Act.
The Hon’ble Jurisdictional High Court in the case of PCIT vs. Staunch Marketing Pvt. Ltd. (supra) considered almost an identical situation examined “whether the Tribunal fell into error in holding that the assessment for the concerned year was not effective because of lack of notice u/s 143(2) of the Income Tax Act in the given facts of the case” the Hon’ble Jurisdictional High Court decline to answer the question on an appeal filed by the Revenue. The Hon’ble High Court further affirming the order of the Tribunal held as under: “14. In any event, factually the Assessee filed a return pursuant to notice issued u/s 148 of the Act, notwithstanding that it may not have filed a return in the first place u/s 139 of the Act for the assessment year in question. Once a return is filed notice u/s 143(2) of the Act to the assessee is mandatory prior to framing an assessment. The question of framing an assessment ex parte without even issuing a notice u/s 143(2) of the Act did not arise. The mandatory nature of that requirement is settled not only by the decision of the Supreme Court in the case of ACIT Vs. Hotel Blue Moon (supra) but also by a decision of this court in Commissioner of Income Tax-08 vs. Jai Shiv Shankar Traders Pvt. Ltd. (2016) 388 ITR 448 Del.
For all the aforementioned reasons, the question framed does not arise in the present appeal and is declined to be answered. In any event, the court does not find any substantial question of law arise from the impugned order. The appeal is, accordingly, dismissed.”
P a g e | Chanchal Bansal (AY:2019-20) 10. In all the case laws relied on by the Ld. Counsel for the assessee which are referred to above, it was held that assessment/reassessment finalized without issue of notice u/s 143(2) of the Act is not a valid assessment/reassessment. Thus, respectfully following the above decisions, we hold that the assessment framed by the AO u/s 144B r.w.s. 147 of the Act for the AY 2016-17 without issue of notice u/s 143(2) is bad in law and void ab initio and consequently the same is hereby quashed.”
Resultantly we sustain the ground no. 3 in cross objections and hold the impugned assessment order to be vitiated. The Cross objections are allowed and appeal of revenue is dismissed.”
In the light of aforesaid discussion we are inclined to sustain the additional ground raised. The appeal of assessee is allowed. The impugned assessment is quashed.
Order pronounced in the open court on 08.04.2026