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Facts
The assessee society filed a Nil income return. Subsequently, a notice under section 148 was issued. The assessee requested their original return be treated as compliance. The AO completed reassessment under section 147 r.w.s. 144, denying deduction under section 80P and treating certain receipts as undisclosed income.
Held
The Tribunal held that the assessee's letter treating the original return as compliance was sufficient. The two sets of directions issued by JCIT without cancelling the first led to procedural irregularity and a breach of natural justice. The assessment order was not sustainable.
Key Issues
Whether the AO was justified in rejecting the assessee's request to treat the original return as compliance to the section 148 notice? Whether the reassessment order was valid given procedural irregularities and non-issuance of a valid notice under section 143(2)?
Sections Cited
147, 144, 148, 144A, 80P, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (in short ‘the CIT(A), NFAC / Delhi dated 15.07.2025, passed under section 250 of the Income Tax Act, 1961 for the Assessment Year (in short ‘AY’) 2016-17, confirming the assessment under section 147 r.w.s. 144 of the Act.
Facts in Brief of the case are that the assessee society filed its return of income on 04.12.2018 admitting Nil income, which was duly acknowledged
- 2 - ITA. No:2345/Chny/2025 vide Ack. No. 384571811014122018. Subsequently, a notice under section 148 dated 10.02.2020 was issued by the Assessing Officer (AO). In response, the assessee submitted a letter dated 30.08.2021 requesting that the return already filed be treated as compliance to the notice under section 148.
During the course of reassessment, the Joint Commissioner of Income Tax (JCIT) issued directions under section 144A dated 24.09.2021 and subsequently issued modified directions dated 29.09.2021 without cancelling the earlier one. The AO, following such directions, completed the assessment under section 147 r.w.s. 144 on 30.09.2021 determining the total income after making additions, including denial of deduction under section 80P and treating certain receipts as undisclosed income.
The assessee preferred an appeal before the ld.CIT(A) on 15.12.2021, which was dismissed by order dated 15.07.2025.
Now, assessee is in appeal before us.
The ld. counsel for the assessee contended that once a letter dated 30.08.2021 was filed requesting the return already filed be treated as compliance to notice under section 148, the AO ought to have accepted the same as a valid return in terms of law. Reliance was placed on 147 ITR 599 (Cal) and 154 ITR 109 (Raj). He further pleaded that the reassessment order passed without issuing a notice under section 143(2) is void and bad in law, following the ratio of the decisions in 226 Taxman 103 (Madras) and dated 21.08.2024. The ld. counsel futher contended that the directions issued by JCIT under section 144A on 24.09.2021 having not been cancelled, the subsequent direction dated 29.09.2021 is invalid and beyond jurisdiction. Further, the assessee was not furnished a copy of the letter dated 28.09.2021 referred to in the modified direction. He further pleaded that the JCIT exceeded jurisdiction by giving directions on eligibility under section 80P and inclusion of capital gains, which fall within the exclusive
- 3 - ITA. No:2345/Chny/2025 domain of the Assessing Officer. Even during appellate proceedings, repeated requests were made seeking certified copies and clarifications from the AO, which were not acceded to. Hence, he prayed that the assessment may be set aside with a direction to furnish such documents.
Per contra, the ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted that the assessee failed to file a valid return in response to notice under section 148 and did not comply with several notices under section 142(1). It was further contended that the assessment has been made following due procedure and directions of the JCIT under section 144A.
We have carefully considered the rival submissions and perused the material available on record. It is evident from the sequence of events that the assessee had filed its original return on 04.12.2018 declaring Nil income. Upon issuance of notice under section 148, the assessee, vide letter dated 30.08.2021, requested to treat the earlier return as compliance. In our considered view, once the assessee intimated the AO that the original return may be treated as the return filed in response to notice under section 148, such compliance is deemed sufficient in terms of judicial precedents (Calcutta High Court and Rajasthan High Court decisions cited supra). The AO’s rejection of the same as invalid return is not sustainable in law. Further, the record indicates that two sets of directions u/s. 144A were issued by the JCIT; one on 24.09.2021 and another on 29.09.2021 styled as modified directions. The second direction, issued without cancelling the earlier one, has led to procedural irregularity. Moreover, the assessee was not provided a copy of the letter dated 28.09.2021 forming the basis of the modified direction. This clearly shows breach of natural justice. The ld.CIT(A) has not properly appreciated the repeated submissions and responses of the assessee and - 4 - ITA. No:2345/Chny/2025 dismissed the appeal primarily on the ground of non-compliance, ignoring that multiple communications were filed on record.
Having regard to the facts and the procedural lapses, particularly non- service of certain documents and non-issuance of valid notice under section 143(2), we are of the view that the assessment framed under section 147 r.w.s. 144 cannot be sustained in its present form. Accordingly, we set aside the impugned order of the ld.CIT(A) as well as the assessment order passed by the Assessing Officer (AO) and restore the matter to the file of the Assessing Officer for fresh assessment (i.e; denovo) after affording adequate opportunity of being heard to the assessee. The Assessing Officer shall also furnish copies of the relevant correspondence and consider the assessee’s submissions in accordance with law. All legal issues if any, are kept open.
In the Result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in open Court on the 10th day of November 2025, in Chennai.