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Facts
The assessee filed an appeal with a delay of 138 days, which was due to non-receipt of notice from the appellate authority. During the hearing, an additional ground was raised challenging the validity of the notice issued u/s 143(2) of the Income-tax Act, 1961, arguing it did not conform to CBDT instructions and rendered the subsequent assessment void ab initio.
Held
The tribunal condoned the delay in filing the appeal, finding the reasons bonafide. It admitted the additional ground, holding that the notice u/s 143(2) was invalid as it failed to specify the type of scrutiny (limited, complete, or compulsory manual) as required by CBDT instructions. Consequently, the assessment order was quashed as void ab initio.
Key Issues
Whether an assessment order is valid if the preceding notice issued u/s 143(2) of the Income Tax Act, 1961, does not specify the type of scrutiny in accordance with CBDT instructions.
Sections Cited
143(2), 119
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Income Tax Appellate Tribunal, “B” 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 19.06.2024 for the AY 2017-18.
At the outset, we observe from the appeal folder that there is a delay of 138 days in filing the appeal for which the condonation petition along with affidavit was filed, stating the reasons for delay in filing the appeal to be on account of non-receipt of notice issued by the appellate authority. It became known to the assessee only when the department asked the assessee to deposit the outstanding demand over telephone. The assessee enquired the status of the appeal in the appellate proceedings and only then the Chartered Accountant, who
After hearing the rival contentions and perusing the materials available on record including the contents of the condonation petition, we are inclined to condone the delay by treating the reasons for delay to be bonafide and genuine.
The assessee raised an additional ground during the hearing which was against the invalid notice issued u/s 143(2)of the Income-tax Act, 1961 (the Act) on 24.09.2018, which was not as per 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. AR submitted that the issue raised in the additional ground is a purely a legal issue which goes to the root of the assessment and does not require any verification of facts from any quarter whatsoever. Therefore the same may kindly be admitted for adjudication by relying on the decisions 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.
After hearing the rival contentions and perusing the material on record, the issue has been raised for the first time by the assessee
The ld. AR vehemently submitted that the notice u/s 143(2) of the Act, a copy of which is available at page no.61 of the Paper Book, 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 to the effect that the notice u/s 143(2) can be issued in one of the three formats which were 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 assessee. The ld. AR therefore prayed that the additional ground raised by the assessee may kindly be allowed.
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, the ground raised by the assessee may kindly be dismissed.
“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, Sir/Madam/ M/s, आपकोसूधचतककयाजाताहैककनििासरणवर्स केपावतीसंख्या 2017-18 269322761301017 केअिुसारआपकेद्वाराटदिांक 30/10/2017 कोदाखिलकीगईआयकरवववरणीकोसंवीक्षाकेललएचुिागयाहै। This is for your kind information that the return of income filed by you for assessment year 2017-18 vide ack, no. 269322761301017 on 30/10/2017 has been selected for Scrutiny. इससंबंिमें, आपकोटदिीक को 2. 16/11/2018 01:00 PM तकसाक्ष्यप्रस्तुतकरिेअथवासाक्ष्यप्रस्तुतकरािेकाअवसरप्रदािककयाजारहाहैजजसपरआपउक्तआयकरवववरणीकेसमथसि मेंनिभसरहैं/ रहेंगे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 16/11/2018 at 01:00 PM.
Since, we have allowed the appeal of the assessee on legal issue, the other grounds raised on merit are not being adjudicated at this stage
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 19.05.2025.