Loading judgment…
Facts
The assessee, Ms. Komma Reddy Satyanarayan Reddy, did not file a return for AY 2017-18, leading the AO to issue a notice under Section 142(1). Although the assessee filed a belated return on 13.10.2019 during the pendency of assessment proceedings, the AO completed the assessment under Section 144, treating bank credits of Rs. 1,81,95,640/- as unexplained money under Section 69A, without issuing a mandatory notice under Section 143(2). The Ld. CIT(A) set aside the assessment for fresh examination, against which the assessee appealed to the Tribunal.
Held
The Tribunal held that a belated return filed in response to a Section 142(1) notice, and during the pendency of assessment proceedings, is a valid return. Citing judicial precedents, it ruled that the issuance of a Section 143(2) notice is a mandatory jurisdictional requirement for scrutiny assessments, and its complete absence renders the assessment order void ab initio. Section 292BB does not cure the total non-issuance of notice, only infirmities in its service.
Key Issues
1. Whether a belated return of income filed in response to a Section 142(1) notice during the pendency of assessment proceedings is a valid return. 2. Whether the assessment framed under Section 144 is void due to the complete absence of a mandatory notice under Section 143(2).
Sections Cited
142(1), 143(2), 143(3), 144, 139(1), 139(4), 148, 69A, 133(6), 234A, 292BB, 54F, 80P, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri Ravish SoodShri Madhusudan Sawdia
(िनधा�रण वष�/Assessment Year: 2017-18) Ms. Komma Reddy Vs. Income Tax Officer Satyanarayan Reddy, Ward 8(2) Hyderabad Hyderabad PAN:BGSPR2381A (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri Sayyad Sadak and Shri K.A. Sai Prasad, CVA राज� व �ारा/Revenue by:: Shri Waseem UR Rehman, Sr. DR सुनवाई की तारीख/Date of hearing: 04/12/2025 घोषणा की तारीख/Pronouncement: 19/12/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.:
This appeal is filed by Ms. Komma Reddy Satyanarayan Reddy (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 26.08.20925 for the A.Y.2017-18. 2. The assessee has raised the following grounds of appeal:
3. The assessee has submitted that the ground number 4 raised in Form No.36 is in the nature of additional ground. The assessee has also filed a petition for admission of such additional ground.
The Learned Authorized Representative (“Ld. AR”) submitted that additional ground raised by the assessee is admissible in view of judgment rendered by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The prayer for admission of additional ground raised by the assessee is admitted for adjudication in terms of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objections raised in additional ground is legal in nature for which relevant facts are stated to be emanating from the existing records.
The brief facts of the case are that the assessee is an individual who did not file any return of income for the Assessment Year 2017–18. Accordingly, the Learned Assessing Officer (“Ld. AO”) issued a notice under section 142(1) of the Income Tax Act, 1961 (“the Act”) on 09.02.2018 calling upon the assessee to file her return of income on or before 11.03.2018. In response to the said notice, the assessee filed her return of income for the Assessment Year 2017–18 only on 13.10.2019 declaring a total income of Rs.8,46,360/-. However, in the assessment order, the Ld. AO recorded that no return of income had been filed by the assessee. The Ld. AO further observed that the assessee did not comply with any of the notices issued during the assessment proceedings. Based on the bank statement obtained from the Bank under section 133(6) of the Act, the Ld. AO found that the assessee had total credit of Rs.1,81,95,640/- in her bank account. Since the assessee failed to explain the source of such credits, the Ld. AO treated the entire credits as unexplained money under section 69A of the Act and added the same to the income of the assessee. The Page 3 of 17 assessment was completed by the Ld. AO under section 144 of the Act vide order dated 26.11.2019 assessing total income of the assessee at Rs.1,81,95,640/-.
Aggrieved with the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). Since the assessment was completed under section 144 of the Act, the Ld. CIT(A) set aside the matter to the file of the Ld. AO for fresh examination.
Aggrieved with the order of the Ld. CIT (A), the assessee is in further appeal before this Tribunal. During the course of hearing, the Learned Authorized Representative (“Ld. AR”) submitted that the legal ground raised by the assessee goes to the root of the matter. The Ld. AR submitted that the assessment order passed by the Ld. AO is invalid in law as no notice under section 143(2) of the Act was ever issued to the assessee. He submitted that the assessee had filed her return of income on 13.10.2019, though belatedly, yet the return was filed during the pendency of the assessment proceedings. Therefore, it became a valid return in the eyes of law. He further submitted that once a return of income is filed, whether original or belated, the Ld. AO acquires jurisdiction to frame a scrutiny assessment only if a statutory notice under section 143(2) of the Act is issued within the prescribed time. In this regard, the Ld. AR relied upon the decision of the Coordinate Bench of the ITAT in the case of Nimmana Narasimharao, Eluru v. ITO, for AY 2017–18 dated 30.09.2025, wherein it was held that even if the return of income is filed after the specified date, so long as it is filed during the pendency of the assessment proceedings it is to be treated as a Page 4 of 17 valid return. If the Ld. AO completes the assessment without issuing notice under section 143(2) of the Act, the assessment is liable to be quashed. Accordingly, the Ld. AR submitted that the assessment proceedings completed by the Ld. AO without issuing any notice under section 143(2) of the Act is invalid and is liable to be quashed.
Per contra, the Learned Departmental Representative (“Ld. DR”) supported the orders of the lower authorities. The Ld. DR submitted that the assessee did not file the return voluntarily under section 139(1) of the Act. Even when notice under section 142(1) of the Act required the assessee to file her return by 11.03.2018, the assessee neither filed the return by the due date prescribed in the notice nor by the due date prescribed under section 139(4) of the Act, i.e., 31.03.2018. The Ld. DR submitted that the return filed on 13.10.2019 cannot be treated as a valid return since it was beyond the time permitted under section 139(4) of the Act. Therefore, according to the Ld. DR, there was no requirement for issuance of notice under section 143(2) of the Act, and the assessment framed under section 144 of the Act was valid.
We have considered the rival submissions and perused the material available on record. It is an undisputed fact that the assessee filed her return of income on 13.10.2019 before the Ld. AO during the pendency of assessment proceedings. It is also not in dispute that the Ld. AO completed the assessment without issuing any notice under section 143(2) of the Act. The only question that arises is whether a notice under section 143(2) of the Act is mandatory when the return of income is filed belatedly and Page 5 of 17 beyond the time permitted under section 139(4) of the Act. In this regard, we have gone through para nos. 15 to 23 of the order of the Coordinate Bench of this Tribunal in the case of Nimmana Narasimharao, Eluru v. ITO (supra), which is to the following effect:
Page 6 of 17 Page 7 of 17 Page 8 of 17 Page 9 of 17 Page 10 of 17 Page 11 of 17 Page 12 of 17 Page 13 of 17 Page 14 of 17
On perusal of the above, we find that the Tribunal, after considering the statutory scheme, held that even if a return of income is filed after the specified date, so long as it is filed during the pendency of the assessment, it is a valid return and the Ld. AO must issue notice under section 143(2) of the Act if he wishes to proceed with scrutiny assessment. Failure to do so renders the assessment order void. In the present case, the assessee filed her return of income before the Page 15 of 17 completion of assessment. Therefore, the Ld. AO was mandatorily required to issue notice under section 143(2) of the Act before completion of the assessment. In our considered view, the issuance of notice under section 143(2) of the Act is a jurisdictional requirement. Failure to serve such notice before completing the assessment vitiates the entire proceedings. In the present case, the Revenue has not brought any material on record to show that notice under section 143(2) of the Act was ever issued to the assessee. In the absence of such notice, the assessment completed by the Ld. AO under section 144 of the Act cannot be sustained in the eyes of law. Therefore, respectfully following the decision of the Coordinate Bench in the case of Nimmana Narasimharao, Eluru v. ITO (supra), we hold that the assessment order passed by the Ld. AO without issuance of notice under section 143(2) of the Act is invalid and liable to be quashed. Accordingly, the assessment order dated 26.11.2019 passed under section 144 of the Act is quashed.
As we have allowed the appeal of the assessee on legal grounds, we do not propose to adjudicate on the other grounds raised
by the assessee, which are left open.