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Facts
The assessee failed to file his return of income for AY 2010-11, despite receiving a notice u/s 148. He later filed a return, but the AO proceeded to complete the assessment without serving a notice u/s 143(2). The assessee appealed the assessment order, which was restored to the AO by the CIT(A) for fresh consideration.
Held
The Tribunal held that the service of a notice u/s 143(2) is a jurisdictional requirement for framing a reassessment order after a return is filed in response to a notice u/s 148. Non-service of this notice is fatal and cannot be cured. Therefore, the case was restored to the AO to verify the service of notice u/s 143(2).
Key Issues
Whether the assessment order passed u/s 147/144 is valid without service of notice u/s 143(2) of the Act after the assessee filed a return in response to notice u/s 148.
Sections Cited
148, 143(2), 250, 144, 147, 142(1), 133(6), 292BB, 139
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)-15, Bengaluru dated 30.1.2025 vide DIN: ITBA/APL/F/APL_1/2024-25/1072743030(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2010-11.
The assessee has raised the following grounds of appeal:
1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT(A) erred in sustaining the impugned order of assessment passed on 27.2.2015 without service of a valid notice u/s 143(2) of the Act and therefore, the assessment framed ought to have been cancelled under the facts and circumstances of the appellant’s case.
3. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”
3. At the outset, there is a delay of 2 days in filing the appeal before this Tribunal. Before us, the ld. A.R. of the assessee drew our attention on an application for condonation of delay filed along with an affidavit in original dated 28.7.2025 by the assessee stating the reasons for the delay. The main contention is that the assessee was under a honest and Bonafide belief that the case was set aside back to the AO for being done afresh and thus there was no need to take any further action at this point of time. However, the counsel of the assessee advised him to file an appeal challenging the validity of the assessment on the ground that there was no valid service of notice u/s 143(2) of the Act. Thereafter, in the last week of March, 2025, the assessee also fallen sick and could not travel from Mangaluru to Bengaluru to sign the appeal bunch and in that process, there is a delay of 2 days in filing the appeal.
Perused the records and having heard ld. Counsel for the assessee as well as the ld. D.R., it is perceived that the explanation offered in the condonation application as well as in the affidavit is plausible and sufficient cause being shown by the assessee, which prevented him from filing the appeal within the specified period and accordingly we inclined to condone the short delay of 2 days and admit the appeal for adjudication.
Now the brief facts of the case are that as verified from the AIR information, the assessee had deposited cash amounting to Rs.1,10,69,000/- during the financial year 2009-10, however, the assessee had not filed his return of income for the assessment year 2010-11. As the income chargeable to tax had escaped assessment, Sri Girish Sanu, Mangaluru Page 3 of 7 a notice u/s 148 of the Act was issued on 20.2.2014 which is duly served on the assessee on 22.02.2014. Thereafter, notices u/s 142(1) of the Act were issued on different dates, however the assessee did not respond to any of the notices. During the course of assessment proceedings, the assessee filed his return of income on 7.1.2015 declaring total income of Rs.4,37,000/- i.e. after a gap of more than 9 months from the due date of filing the return (more than 10 months from the service of the notice). This return was filed along with a letter dated 6.1.2015 by enclosing also the return of income for the assessment year 2011-12 & 2012-13. As observed by the AO, in the assessment order, a notice u/s 143(2) of the Act was also issued on 7.1.2025 i.e. the same day on which the assessee filed his return. The AO u/s 133(6) of the Act obtained the statements of two Banks maintained by the assessee at Axis Bank. Further, as the assessee did not furnish any documents/statement/evidences in support of his case and failed to submit any plausible explanation supported by valid evidences with regard to the credits in the bank account, the AO held the entire credits in the bank accounts as unexplained deposits and liable to be taxed. Further, as the assessee had also not declared any saving bank interest under the head “income from other sources”, and the assessee had failed to submit the breakup of business income as declared in the return, the AO had also added interest income of Rs.1,18,399/- separately and brought to tax. Thus the AO completed the assessment proceedings on a total assessed income of Rs.7,10,76,399/- as detailed below: a. Income as per return Rs.4,37,000/- b. Unexplained cash Rs.1,10,82,500/- deposit in bank accounts c. Unexplained deposits Rs.5,94,38,500/- (other than interest and cash deposit in bank accounts) d. Interest credited in the Rs.1,18,399/- bank account Total Rs.7,10,76,399/- Sri Girish Sanu, Mangaluru Page 4 of 7 6. Aggrieved by the assessment order passed u/s 144 r.w.s. 147 of the Act dated 27.2.2015, the assessee preferred an appeal before the ld. CIT(A)-15, Bengaluru.
Before the ld. CIT(A)-15, Bengaluru, the assessee contended that the AO had passed the order without considering the details and submissions made in contravention of the principles of natural justice. Further, the assessee also contended that the assessee did not receive any notice u/s 143(2) of the Act claimed to be issued by the AO.
7.1 The Ld. CIT(A) noticed that the appeal filed by the assessee is against the order u/s 144 of the Act and therefore, in the interest of justice and fair play as well as in view of the amendment to section 251(1)(a) of the Act, restored back the matter to the file of AO for fresh consideration as per law after giving reasonable opportunity of being heard to the assessee and accordingly allowed the appeal for statistical purposes.
Again, aggrieved by the order of ld. CIT(A)-15, Bengaluru, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 20 pages containing therein the copy of written submissions, details of notices issued in the course of assessment proceedings, copy of notice issued u/s 142(1) of the Act as well as copy of the response filed dated 21.1.2015.
Before us, the ld. A.R. of the assessee vehemently submitted that the ld. CIT(A) grossly erred in law in sustaining the order of assessment passed on 27.2.2025 without service of a valid notice u/s 143(2) of the Act. The ld. A.R. of the assessee also contended that during the course of assessment proceedings, assessee had filed Sri Girish Sanu, Mangaluru Page 5 of 7 return of income on 7.1.2025 in response to notice u/s 148 of the Act, however, on or before the completion of the assessment proceedings, ld. AO did not serve any notice u/s 143(2) of the Act on the assessee and accordingly, the entire assessment proceedings is illegal and void-ab-initio.
The Ld. D.R. on the other hand, relied on the orders of the authorities below and submitted that the case may be remanded back to the file of the AO in order to verify whether the valid service of notice was made or not?
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the notice u/s 148 of the Act was issued on 20.2.2014 directing the assessee to file his return of income before the expiry of 30 days from the date of service of notice u/s 148 of the Act. It is also an undisputed fact that the assessee almost after a gap of more than 9 months from the due date of filing the return had filed the return on 7.1.2015 declaring total income of Rs.4,37,000/-. On going through the order of assessment, we also take a note of the fact that in paragraph 8 of the assessment order, the AO has categorically stated to have issued notice u/s 143(2) of the Act on the same day of filing the return i.e. on 7.1.2015 by posting the case for hearing on 22.1.2015. However, the assessee not only before us but also before the ld. CIT(A) has vehemently contended that the notice u/s 143(2) of the Act was never served upon him on or before the completion of the assessment proceedings.
11.1 Undisputedly while passing the assessment proceedings, the AO had computed the assessed income by taking into consideration the income as declared by the assessee in the return of income filed on 7.1.2015. It is not a case that no return of income was filed in Sri Girish Sanu, Mangaluru Page 6 of 7 response to notice u/s 148 of the Act on or before the completion of assessment proceedings u/s 147 of the Act. We are of the considered opinion that once the return is filed, it is open to the AO to accept the same or to require further investigation. If he accepts the return of escaped income as it is, then, there would be no necessity of service of any notice u/s 143(2) of the Act. However, if the AO is not satisfied with the return so filed, then he is required to serve further notice u/s 143(2) of the Act before an assessment order is passed u/s 143(3)/144/147 of the Act. We are of the considered opinion that once the return in response to notice u/s 148 of the Act is filed, then the AO is duty bound to serve the statutory notice u/s 143(2) of the Act in order to assume jurisdiction as the notice u/s 143(2) of the Act is the jurisdictional notice and non-issuance of the same is not curable. The service of notice on the assessee u/s143(2) of the Act within the prescribed period of time is a pre-requisite for framing the reassessment once the return has been filed by the assessee.
11.2 We also make it clear that during the assessment year in appeal, there was also no such provision under the Act that if the assessee furnished any return as required u/s 148 of the Act, beyond the period allowed, then said return shall not be deemed to be a return u/s 139 of the Act. In fact, the third proviso to section 148 of the Act was only introduced by the Finance Act, 2023 w.e.f. 1.4.2023, which are reproduced below: “[Provided also that any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed shall not be deemed to be a return u/s 139]”
11.3 Therefore, we are of the considered view that even if the assessee filed his return beyond the period allowed as per the notice u/s 148 of the Act, still the same will be treated as return furnished u/s 139 of the Act and the AO is duty bound to serve notice u/s 143(2) of the Act being a jurisdictional notice and non-service of Sri Girish Sanu, Mangaluru Page 7 of 7 notice u/s 143(2) of the Act is fatal one as cannot be cured u/s 292BB of the Act. In holding so, we draw our support and guidance from the judgement of Hon’ble Supreme Court in the case of Asst. Commissioner of Income Tax Vs. Hotel Blue Moon reported in (2010) 321 ITR 362 (SC).
11.4 With the above observations, we restore the case to the file of AO to verify whether the notice u/s 143(2) of the Act was served on the assessee on or before completion of the assessment proceedings or not? If the AO found that notice u/s 143(2) of the Act was not served on the assessee as contended by the assessee, then the entire assessment proceedings shall be null and void. However, if the AO demonstrate that the notice u/s 143(2) of the Act was validly served on the assessee, then AO after giving fresh opportunity of being heard to the assessee, pass an order on merit as per the law. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 1st Dec, 2025