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Facts
The assessee filed a return of income on 30.09.2013. The case was reopened under Section 147 by issuing a notice under Section 148 on 20.03.2020. The assessee filed a return in response on 23.03.2021, which was within the extended time due to the COVID-19 pandemic. The Assessing Officer (AO) framed the assessment under Section 147 read with Section 144 without issuing a notice under Section 143(2) of the Act.
Held
The Tribunal held that issuing a notice under Section 143(2) of the Act is mandatory when the Assessing Officer does not propose to accept the return as filed by the assessee, even in reassessment proceedings. The failure to issue such a notice renders the assessment invalid and a nullity in the eyes of the law.
Key Issues
Whether the assessment framed by the Assessing Officer is valid when a notice under Section 143(2) of the Income Tax Act was not issued after the assessee filed a return in response to a notice under Section 148.
Sections Cited
143(2), 147, 148, 144, 14A, Rule 8D, 158 BC(b)
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Income Tax Appellate Tribunal, “B” BENCH,KOLKATA
Date of concluding the hearing : 28.01.2026 Date of pronouncing the order : 17.02.2026 O R D E R Per Rajesh Kumar, AM
The present appeal filed by the assessee arises from order dated 16.09.2025passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter referred to as “the Ld.CIT(A)].
At the time of hearing, the only issue raised by the assessee during the course of hearing is against the order of Ld.CIT(A) upholding the Goal Oriented Trade Link Pvt. Ltd. assessment order which has been passed without issuing notice u/s 143(2) of the Act by wrongly observing that the assessee has not filed the return of income in response to notice u/s 148 of the Act within 30 days from the date of service of notice u/s 148 of the Act upon the assessee.
The facts in brief are that the assessee filed return of income on 30.09.2013 disclosing total loss of Rs. 2,13,114/-. Later on, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 20.03.2020 after the AO received information from the office of ADIT (Inv.) Unit-5, Kolkata that the assessee company was a beneficiary of Rs. 3,41,00,000/- from 4 Private Limited Companies which was nothing but only accommodation entries. The AO called upon the assessee to furnish the return of income within 30 days but the furnished the return of income in compliance 23.03.2021which was not within the time allowed in the notice of 30 days. However, the same was filed within the extended time as per The Taxation and Other Laws (Relaxation of Certain Provision) Ordnance, 2020. The notice u/s 143(2) of the Act was not issued by the AO and the assessment was framed u/s 147 r.w.s. 144 vide order dated 30.09.2021 by making addition of Rs. 4,80,50,000/- on account of unexplained money and Rs. 69,968/- u/s 14A read with Rule 8D of the IT Rules.
In the appellate proceedings, the assessee challenged the validity of the assessment framed by the AO sans issuing notice u/s 143(2) of the Act. However, the Ld. CIT(A) dismissed the appeal of the assessee on the ground that the assessee has not filed the return of income in response to notice u/s 148 of the Act within the stipulated period of 30 days allowed in the notice. The Ld. CIT(A) noted that the notice u/s 148 of the Act was issued on 28.03.2020 whereas the assessee has filed the return of income on 23.03.2021 which is admittedly beyond 30 days and therefore, there is no requirement of issuing notice u/s 143(2) as the said return was invalid. There is requirement of issuing notice u/s 143(2) of the Act only
After hearing the rival contention and perusing the material available on record, we find that the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s u/s 148 of the Act on 28.03.2020. We note that the Covid-19 Pandemic has already set in and the Govt. of India extended due date by bringing out ordnance namely The Taxation and Other Laws (Relaxation of Certain Provision) Ordnance, 2020 dated 31.03.2020 extending the time limit which falls after 20.03.2020 to 29.06.2020 was extended up to 30.06.2020. Again the time limit was extended which falls during the period 20.03.2020 to 31.12.2020 was extended till 31.03.2021 by The Taxation and Other Laws (Relaxation and Amendment of Certain Provision) Act, 2020(TOLA) dated 29.09.2020. The assessee filed return of income was filed in response to notice issued u/s 148 of the Act which in our considered opinion is well within the time as extended by the TOLA. Therefore, notice u/s 143(2) has to be issued mandatorily by the AO but was not issued. Thus the failure of the AO to issue notice u/s 143(2) of the Act would render the assessment framed by the AO as invalid and nullity in the eyes of law. The case of the assessee is squarely covered by the following decisions: -
a). In the case of Assistant Commissioner of Income-tax vs. Hotel Blue Moon [2010] 188 Taxman 113 (SC)/[2010] 321 ITR 362 (SC)/[2010] 229 CTR 219 (SC)[02-02-2010], wherein it has held as under:-
“15. We may now revert back to Section 158 BC(b) which is the material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub- section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return
Goal Oriented Trade Link Pvt. Ltd. is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3) only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment ex- parte under Section 144. Clause (b) of Section 158 BC by referring to Section 143(2) and (3) would appear to imply that the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of subsections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158 BC(b) it has done so specifically. Thus, when Section 158 BC(b) specifically refers to applicability of the proviso thereto cannot be exclude. We may also notice here itself that the clarification given by CBDT in its circular No.717 dated 14 August, 1995, has a binding effect on the department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166 (SC). In this Goal Oriented Trade Link Pvt. Ltd. case, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., [(1989) 4 SCC 344], wherein this Court while dealing with the scope and import of the expression "as far as practicable" has stated "without anything more the expression `as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied." b). Similarly, in case of Principal Commissioner of Income-tax vs. Oberoi Hotels (P.) Ltd. [2018] 96 taxmann.com 104 (Calcutta)/[2018] 409 ITR 132 (Calcutta)[22-06-2018], wherein it has held as under:-
7. Section 148 of the Act permits the issuance of a notice in certain circumstances when it is discovered that income has escaped assessment and sub-section (1) thereof mandates a return to be filed upon an assessee being served a notice under such provision, whereupon the provisions of this Act, shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139."
8. Section 143 of the Act pertains to assessment and in its opening words refers to a return being made under Section 139 of the Act or in response to a notice under Section 142 (1) of the Act. At the time relevant for the assessment that was undertaken by the Assessing Officer after a notice under Section 148 of the Act had been issued, Section 143(2) in its then form had two clauses and a proviso after Clause (ii) that precluded a notice under Clause (ii) being served beyond a particular period. Further, Section 153 (2) of the Act directs an order of assessment, reassessment or recomputation to be made under Section 147 of the Act within a particular period. The relevant periods, both in terms of the proviso to Section 143(2) of the Act and in terms of Section 153 thereof, have expired. As noticed by the Supreme Court in Hotel Blue Moon (supra) and is quoted above, the time is of some significance and notices can no longer be issued after the expiry of the period mandated therefor nor can proceedings be continued after the time limit set therefor by the statute.
In the light of the above discussion, particularly taking into consideration the law laid down by the Supreme Court in Hotel Blue Moon (supra), it is inescapable that the issuance of a notice under Section 143(2) of the Act is Goal Oriented Trade Link Pvt. Ltd. mandatory if the Assessing Officer seeks not to accept any part of the return as furnished by the assessee or make an assessment order contrary thereto and, even in course of reassessment proceedings, such notice cannot be dispensed with.
One of the arguments put forth on behalf of the Revenue is that in course of reassessment proceedings once a notice is issued under Section 148 of the Act, the assessee is made aware of what part of the income or on what count the assessee's income is perceived to have escaped attention. It is submitted that in such a scenario, the requirement of a notice under Section 143(2) may be somewhat diluted, if not unnecessary. Apart from the fact that such argument cannot be countenanced in the light of the dictum in Hotel Blue Moon (supra), it is evident that an assessment under Section 143(3) of the Act is consequent upon a hearing and the production of evidence on such points on which the Assessing Officer may harbour doubts and are indicated in his notice under Section 143(2) of the Act. Section 143(3) of the Act contemplates an assessment undertaken by the Assessing Officer upon material being produced by the assessee on grounds which are indicated by the Assessing Officer in his notice under Section 143(2) of the Act in respect whereof the Assessing Officer may have misgivings or may disagree with the return filed by the assessee. Implicit in the wording of Section 143(3) of the Act is the indispensability of a notice under Section 143(2) thereof. c). In case of PR. Commissioner of Income-tax vs. Shri Jai Shiv Shankar Traders (P.) Ltd. [2015] 64 taxmann.com 220 (Delhi)/[2016] 383 ITR 448 (Delhi)/[2016] 282 CTR 435 (Delhi)[14-10-2015] “12. The narration of facts as noted above by the Court makes it clear that no notice under Section 143(2) of the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act.
In DIT v. Society for Worldwide Interbank Financial Telecommunications [2010] 323 ITR 249 (Delhi), this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinised by the AO.
The interplay of Sections 143 (2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad High Court. In CIT v. Rajeev Sharma [2011] 336 ITR 678/[2010] 192 Taxman 197 (All.) it was held that a plain reading of Section 148 of the Act reveals that within the statutory period Goal Oriented Trade Link Pvt. Ltd. specified therein, it shall be incumbent to send a notice under Section 143(2) of the Act. It was observed: "the provisions contained in sub-Section (2) of Section 143 is mandatory and the legislature in their wisdom by using the word 'reason to believe' had cast a duty on the Assessing Officer to apply mind to the material on record and after being satisfied with regard to escaped liability, shall serve notice specifying particulars of such claim. In view of the above, after receipt of return in response to notice under Section 148, it shall be mandatory for the AO to serve a notice under sub-Section (2) of Section 143 assigning reason therein. In absence of any notice issued under sub- Section (2) of Section 143 after receipt of fresh return submitted by the Assessee in response to notice under Section, the entire procedure adopted for escaped assessment, shall not be valid."
In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105/[2015] 228 Taxman 48 (All.) (Mag.) it was held as under: "10. Section 292 BB of the Act was inserted by the Finance Act, 2008 with effect from 1 April 2008. Section 292 BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to Section 292 BB of the Act, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under Section 143 (3) of the Act, it is necessary to issue a notice under Section 143 (2) of the Act and in the absence of a notice under Section 143 (2) of the Act, the assumption of jurisdiction itself would be invalid."
In the same decision in Salarpur Cold Storage (P.) Ltd. (supra), the Allahabad High Court noticed that the decision of the Supreme Court in Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with.
The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO [2012] 25 taxmann.com 341/210 Taxman 78 (Mad.) (Mag.). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. It was observed that: Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act."
As already noticed, the decision of this Court in Vision Inc. (supra) proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143 (2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of "service" of notice was concerned and not with regard to failure to "issue" notice. In other words, the failure of the AO, in re- assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act.
The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment.
Consequently, there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal is dismissed.”
Similarly, the case of the assessee is also squarely covered by the decision of the co-ordinate bench in case of Manaksia Limited Vs. DCIT, AY 2010-11, order dated 21.07.2025, wherein the coordinate Bench by following the decisions in the case of ACIT Vs Hotel Bluemoon (supra), PCIT Vs. Oberoi Hotels (P.) Ltd. (supra) and PCIT Vs. Shri Shiv Shankar Traders Pvt. Ltd. (supra) has held that the assessment framed without issuing notice u/s 143(2) of the Act is invalid and has to be quashed.
Consequently, respectfully following the above decisions we are inclined to quash the assessment framed by the AO sans notice u/s 143(2) of the Act as the same is invalid and nullity in the eyes of law.
In the result, the appeal of the assessee is allowed.
Order pronounced on 17.02.2026