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Facts
The assessee appealed against the CIT(A)'s order for AY 2017-18, with a 61-day delay that was condoned due to bonafide reasons. The core issue raised as an additional legal ground was the validity of the notice issued under Section 143(2) of the Income Tax Act, which the assessee contended was not in the format prescribed by CBDT instructions, thus rendering the subsequent assessment void ab initio.
Held
The Tribunal admitted the additional legal ground, finding it to be a pure question of law requiring no fresh factual verification, and relying on Apex Court and High Court precedents. It held that the Section 143(2) notice, not conforming to the mandatory CBDT instruction F.No. 225/157/2017/ITA-II, was invalid. Consequently, the assessment framed based on this invalid notice was quashed.
Key Issues
Whether a notice issued under Section 143(2) of the Income Tax Act, which does not conform to the format prescribed by CBDT instructions, renders the assessment invalid; and the admissibility of such an additional legal ground at the appellate stage.
Sections Cited
143(2), 119, 119(2)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
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 31.07.2024 for the AY 2017-18.
2. At the outset, we note that the appeal of the assessee is barred by limitation by 61 days, for which condonation petition along with affidavit of the assessee is filed.
After hearing the rival contentions and perusing the materials available on record, we find that there are plausible reasons to condone the delay. In our opinion, the delay is for bonafide and genuine reasons. Hence, we condone the delay and adjudicate the appeal.
“1. For that the notice u/s 143(2) issued by the Assessing Officer is bad in law and the entire assessment is liable to be quashed.
For that the Asst. completed is without jurisdiction and therefore, the entire asst. is liable to be quashed."
The ld. Counsel for the assessee submitted that the said ground is purely a legal issue and the assessee is within his legal right to raise the same before any of the appellate authority at any stage whatsoever. The ld. Counsel for the assessee submitted that the notice u/s 143(2) of the Act dated 24.09.2018 has been issued in an invalid format in violation to the CBDT instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017 and accordingly, the assessment order passed consequently is void ab initio, ultra virus and nullity in the eyes of law. The ld. Counsel for the assessee submitted that since the issue raised is legal issue which goes to the root of the matter and since no further verification of facts is required to be done from any quarter whatsoever, the legal ground raised by the assessee may kindly be admitted for adjudication. In defense of his arguments the ld. AR relied on the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal).
The ld. DR on the other hand submitted that the issue was not raised before any of the authorities below and therefore, may kindly be restored to the file of any of the authorities below for adjudication.
The ld. AR vehemently submitted that the notice u/s 143(2) of the Act vide order dated 24.09.2018, does not specify whether it is a limited scrutiny or a complete scrutiny or a compulsory manual scrutiny. The ld. AR submitted that the CBDT has issued specific instruction vide instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017, that the notice u/s 143(2) can be issued in one of the three formats specifically mentioned and prescribed but the present notice issued is not in accordance with such said instruction and therefore, the assessment framed consequently is invalid and void ab initio. The ld. AR in defense of his argument relied on the decision of Tapas Kumar Das Vs. ITO in vide order dated 11.03.2025 for A.Y. 2017-18, wherein similar issue has been decided in favour of
The ld. DR on the other hand submitted that this is a computer- generated notice and the non-mentioning of the fact of either limited or complete scrutiny or compulsory manual scrutiny would not render the issuance of notice u/s 143(2) of the Act as invalid. Therefore, additional ground raised by the assessee may kindly be dismissed.
After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the notice issued u/s 143(2) of the Act dated 24.09.2018, specified only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceeding would also be invalid. The case of the assessee find support from the decision of the co-ordinate Bench in the case of Tapas Kumar Das Vs. ITO (supra), wherein a similar issue has been decided in favour of the assessee. The operative part of the same is extracted below:-
“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, a copy of which is available at page no. 25 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 Notice under section 143(2) of the Income-tax Act, 1961 संवीक्षा (कंप्यूिरआिाररतसंवीक्षाचयि Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेससस,
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.08.2025.