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Facts
The assessee filed its return of income for AY 2018-19, which was selected for scrutiny. The Assessing Officer (AO) framed an assessment order, which was confirmed by the CIT(A). The assessee appealed against the CIT(A)'s order.
Held
The Tribunal held that the notice issued under section 143(2) of the Act was not in the prescribed format as per the CBDT circular. Therefore, the notice was invalid, and all subsequent proceedings, including the assessment order, were also invalid and void ab initio.
Key Issues
Whether the notice issued under section 143(2) of the Income Tax Act, 1961, was valid in light of the CBDT circular.
Sections Cited
143(2), 143(3), 139(1), 142(1), 119
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” 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 17.03.2025 for the AY 2018-19.
At the outset, we note that the appeal of the assessee is barred by limitation by 214 days. At the time of hearing the counsel of the assessee explained the reason for delay in filing the appeal. The Ld. D.R did not raise any objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reason, hence, we condone the delay and adjudicate the appeal.
The facts in brief are that the assessee engaged in the business of selling, distributing and marketing of all the financial products such as selling of mutual fund units, distribution of IPO and other public issue papers to various clients. The assessee filed its the return of income u/s 139(1) of the Act on 19.09.2018, declaring total income of ₹1,72,800/-, which was selected for complete scrutiny through Computer Assisted Scrutiny Selection (CASS). Thereafter, the notice u/s 143(2) & 142(1) of the Act were issued on 28.09.2019 & 06.01.2020 respectively, along with the questionnaire which were duly served upon the assessee. The AO was framed u/s 143(3) of the Act vide order dated 16.04.2021, by determining the total income at ₹9,11,080/-. In the appellate proceedings also the ld. CIT (A) confirmed the order of the ld. AO by dismissing the appeal of the assessee.
After hearing the rival contentions and perusing the materials available on record, I find that particularly the notice was issued u/s 143(2) of the Act on 28.09.2019, a copy of which is available at page no. 56 of the Paper Book of the assessee. I 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:-
“आयकर अधिनियम 1961 की िारा 1433 143 (ख) मा पनि िारा 143 (2) के अिीि िोटिस Notice under section 14312) read with Section 143 (3A) and 143 (3B) of the Income- tax Act, 1961 संवीक्षा जाांच (कंप्यूटर आधाररत संवीक्षा चयन) Scrutiny (Computer Alded-Scrutiny Selection)
आपके द्वारा नििाारण वर्ा 2018-19 के लिए टदिाांक 19/09/2018 की पावती सां. 296962981190918 के तहत आयकर प्रववरगी दाखखि करिे के लिए आपको िन्यवाद । Thank you for filing your return of income for Assessment Year 2018-19 vide Ack, no.296962981190918 on 19/09/2018. 2. प्रववरखणका को तैयार करिे में आपके ध्याि एवां पररश्रम को स्वीकार करते हुए, कुछ मुद्दो पर और स्पष्िीकरण की आवश्यकता है, जजिके कारण आपकी आय प्रववरखणका को सांवीक्षा (जाांच) के लिए चुिा गया है, ये मुद्दे िारांभ में निम्िािुसार है: 2. While acknowledging the care and diligence you may have taken in preparing the return, there are certain issues which need further clarification, for which your return of Income has been selected for scrutiny and such issues initially are as under:
S. No. Issues i. Verification of Transactions 3. उपरोक्त तथ्यों के आिार पर आप ई-फाइलिांग वेबसाइि (www.incometaxindiaefiling.gov.in) में अपिे खाते के माध्यम से 'ई-कायावाही' सुप्रविा में इिेक्रॉनिक रूप से उपरोक्त मुद्दों पर अपिी सुप्रविािुसार अपिी आयकर ररििा के समर्ाि के लिए ककसी भी ऐसे साक्ष्य को, जजस पर नििााररती उस प्रवबरणी के समर्ाि में निभार करता है, िोटिस िाप्त होिे की तारीख से 15 (पांद्रह) टदिों में राईनिके
In our opinion, the notice issued u/s 143(2) of the Act which is not in the prescribed format as provided under the Act is an invalid notice and accordingly, all the subsequent proceedings thereto would be invalid and void ab initio. The case of the assessee find support from the decision of Shib Nath Ghosh Vs. ITO in for A.Y. 2018-19 vide order dated 29.11.2024, wherein the co-ordinate Bench has held as under:-
“10. After hearing both the sides and the materials available on record, we find that the notice issued u/s 143(2) dated 9th August, 2017 was not in any of the formats as provided in the CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017. We have examined the notice, copy of which is available at page no.1 of the Paper Book and find that the same is not as per the format of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 as stated above. In our opinion, the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon'ble Apex Court in case of UCO Bank (supra) held that “6. I have considered the rival submissions. As it is noticed that the Assessing Officer who has passed the assessment has not issued notice u/s.143(2) of the Act. Such notice has been issued by an authority who has no jurisdiction over the assessee on this ground notice u/s.143(2) of the Act is quashed and I do so.
It is also noticed that the notice issued u/s.143(2) of the Act is not in line with the Circular issued by the CBDT in respect of e-notice. This being so, respectfully following the decision of the coordinate bench of the Tribunal in the case of M/s Durga Automotives Pvt. Ltd., referred to supra, the notice is found to be invalid and consequently the same stands quashed. Since there is no valid notice issued u/s.143(2) of the Act to the assessee before completion of the assessment u/s.143(3) of the Act, the consequential assessment order passed by the Assessing Officer also stands quashed.”
Considering the facts of the instant case in the light of the decision of the co-ordinate bench, I am inclined to hold that notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequent to that is also invalid and is hereby quashed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17.02.2026.
Sd/- (RAJESH KUMAR) (ACCOUNTANT MEMBER) Kolkata, Dated: 17.02.2026 Sudip Sarkar, Sr.PS