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Facts
The assessee did not file the return under section 139(1). A notice under section 148 was issued. The assessee filed a return beyond the prescribed time, which the AO treated as non-est. However, the AO proceeded to compute total income based on this return and made additions.
Held
The Tribunal held that if a return filed beyond the due date is treated as non-est, its basis cannot be used for computation of income. The CIT(A)'s action was unsustainable. Following a Delhi High Court decision, the Tribunal held that if the AO considers the belated ROI, a notice under section 143(2) should have been issued.
Key Issues
Whether the AO can compute income based on a return treated as non-est due to delay, without issuing a notice u/s 143(2) after considering such return.
Sections Cited
139(1), 148, 148A(d), 147, 143(1), 142(1), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals)(hereinafter referred to as the “Ld. CIT(A)”] dated 06.02.2025 for the AY 2018-19.
At the time of hearing, the learned Counsel of the assessee pressed the legal issue raised in round number 3, which is extracted as under: - “3. For that the ld. CIT (A) erred in upholding the assessment order which was passed without issuing notice u/s 143(2) despite valid return being filed in response to notice u/s 148.” 03. The facts in brief are that the assessee did not file the return of income under section 139(1) of the Act. Thereafter, the notices under section 148 of the Act was issued on 26.3.2022, in consequence to
The said order of the Learned AO was affirmed by ld. CIT (A). The Learned CIT (A) dismissed the appeal of the assessee on legal issue by observing and holding as under: - “Ground No. 2 and 3: Return was filed and no notice u/s 143(2) issued 2.4 The appellant has stated that return was filed in response to notice u/s 148 and no notice uls 143(2) was issued. In this regard the AO has clearly specified that in response to notice dated 26-03-2022 a return was filed on 13-03-2023 which was beyond the prescribed time limit and hence treated as invalid. Since the return was treated as invalid there is no scope for issuing notice u/s 143(2) as there was no valid return of income. Therefore, Ground No. 2 and 3 are dismissed.”
After hearing the rival contentions and perusing the materials available on record, we find that in this case though the assessee has not filed the return of income within the time limit allowed in the “4.2 In response to the notice issued u/s 148 of the Act, the assessee has filed his return for A.Y. 2018-19 vide Ack. No. 981038840130323 on 13.03.2023 declaring total income at ₹19,14,770/- and the same is treated as non-east as the assessee has not filed his ITR within the prescribed time limit, however the income shown by the assessee is taken for computation of income.”
In our opinion, if the return of income filed by the assessee in response to notice under section 148 of the Act beyond the due date time which has been treated as non-est, then the basis for computation of income cannot be taken from the said return. Therefore, the action of the ld. CIT (A) is wrong and unsustainable in the eyes of law. We also note from the Para 11 of the assessment order that the ld. AO had taken the income as per ITR filed in response to notice under section 148 of the Act as the basis for computation and then made the additions thereto. Therefore, the order of the ld. CIT (A) cannot be sustained. The case of the assessee finds support from the decision of Delhi High Court in the case of PCIT Vs. M/s Dart Infrabuild (P) Ltd. in Order dated 17- 11-2023 wherein, via Para 15.1, the Hon'ble Court held that where the return of income filed by the assessee is not disputed and the ROI has taken into account, then before framing the assessment order, the AO ought to have issued the notice under section 143(2) of the Act. The relevant part is extracted below: -
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15.09.2025.