NIMMANA NARASIMHARAO,ELURU vs. INCOME TAX OFFICER, WARD-2, ELURU

Facts

The assessee deposited Rs. 10,49,000/- during demonetization but initially did not file a return of income. Following a notice under Section 142(1), a belated return was filed on 31.03.2019, claiming the deposits were from his firm. The Assessing Officer rejected this explanation, treated the belated return as invalid, and completed the assessment under Section 144 without issuing a Section 143(2) notice, making additions of Rs. 65,50,000/-. The CIT(A) upheld the AO's order, leading to the present appeal.

Held

The Tribunal held that a belated return filed in response to a Section 142(1) notice is a valid return of income, even if delayed, attracting interest under Section 234A. The Assessing Officer erroneously treated this return as invalid and wrongly dispensed with the mandatory requirement of issuing a notice under Section 143(2) of the Act. The absence of a Section 143(2) notice renders the assessment order void for want of valid assumption of jurisdiction, and this defect cannot be cured by Section 292BB.

Key Issues

Whether a belated return of income filed in response to a Section 142(1) notice is to be considered invalid, and whether an assessment framed under Section 144 without issuing a mandatory Section 143(2) notice is sustainable in law, thereby affecting the assumption of jurisdiction by the Assessing Officer.