DHIRENDRA CHANDRA BISWAS,JIRAT vs. ACIT, CIRCLE 24(1),, HOOGHLY

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ITA 1722/KOL/2025Status: DisposedITAT Kolkata04 November 2025AY 2017-20186 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 143(2) of the Income-tax Act, 1961, was invalid because it was not issued in consonance with the prescribed format in CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017. The Tribunal relied on the co-ordinate bench's decision in Shib Nath Ghosh Vs. ITO, which held that CBDT instructions are mandatory and binding on income tax authorities, and failure to adhere to them renders proceedings invalid. The Tribunal further cited the Supreme Court's decision in UCO Bank, emphasizing that CBDT circulars issued under Section 119 of the Act are binding. Consequently, the Tribunal found the notice to be an invalid notice and the assessment framed consequentially to be invalid and void ab initio. The assessment order was quashed. Other grounds raised on merit were left undecided.

What were the facts?

The assessee, Dhirendra Chandra Biswas, filed its return of income for Assessment Year 2017-18 on 02.11.2017, declaring a total income of ₹10,44,240. The case was selected for scrutiny under CASS. A notice under Section 143(2) of the Income-tax Act, 1961, was issued on 10.08.2018. During assessment proceedings, the assessee did not comply with requests for details regarding cash deposits during demonetization. The Assessing Officer (AO) assessed the total income at ₹1,16,44,240 vide order dated 23.12.2019. The National Faceless Appeal Centre, Delhi (NFAC), upheld the AO's order. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the assessment order framed under Section 143(3) of the Income-tax Act, 1961, is invalid due to an invalid notice issued under Section 143(2) of the Act, which was not in accordance with CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017? Assessee's contention: The assessee argued that the notice issued under Section 143(2) was invalid as it contravened the mandatory CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017, rendering the subsequent assessment order arbitrary, unwarranted, and perverse. Revenue's contention: The judgment does not record any specific contention from the revenue regarding the validity of the notice or the assessment order.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 143(2),Section 139(1),Section 119

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 23.07.2025 for the AY 2017-18.

2.

The issue raised in ground no.2 is against the order of the ld. CIT (A) upholding the assessment order u/s 143(3) of the Income-tax Act, 1961 (the Act) which is passed consequent to invalid notice issued u/s 143(2) of the Act which is not in accordance with instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017, issued by the CBDT. The assessee has raised ground no. 2, which reads as under:-

4.

In the appellate proceedings also the ld. CIT (A) confirmed the order of the ld. AO when there is no compliance made on the part of the assessee.

5.

After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act on 10.08.2018, a copy of which is available at page no. 53 of the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:-

“आमकरअधिनियम 1961 कीिारा 143(2) केअिीििोटिस

सील/seal भवदीय Yours faithfully, Anil Kumar De Ward 24(1), Hooghly” 06. In our opinion, the notice issued u/s 143(2) of the Act which is not in the prescribed format as in the CBDT instruction is an invalid notice and accordingly, all the subsequent proceedings thereto would be invalid and void ab initio. The case of the assessee find support from the decision of Shib Nath Ghosh Vs. ITO in for A.Y. 2018-19 vide order dated 29.11.2024, wherein the co-ordinate Bench has held as under:-

“10. After hearing both the sides and the materials available on record, we find that the notice issued u/s 143(2) dated 9th August, 2017 was not in any of the formats as provided in the CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017. We have examined the notice, copy of which is available at page no.1 of the Paper Book and find that the same is not as per the format of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 as stated above. In our opinion, the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon'ble Apex Court in case of UCO Bank (supra) held that the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases Which can be properly categorized as belonging to a class, can thus be given the

8.

The other grounds raised on merit are not being decided at this stage and are being left open to be decided if need arises for the same at later stage.

9.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 04.11.2025.

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