ARVIND KUMAR JAISWAL,KOLKATA vs. I.T.O., WARD - 33(1), KOLKATA

Subsequent assessment proceedings shall also be conducted electronically through the 'E-Proceeding' facility of Income-tax Department. A brief note on 'E-Proceeding' is enclosed for your kind reference. नििासरणकायसवाहीकेदौराि, यटदआवश्यकहोगातोसूचिा 4. / दस्तावेजहेतुववशेर्प्रश्िावली (यों) याअधियाचिा (यााँ) कोबादमेंजारीककयाजाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document shall be issued subsequently. कृपयाध्यािदेंककयटदआपकेपासई-फाइललंगिाताहैतोआपकेललएपैरा 5. 3 लागूहै।आपकेद्वारास्वयंअपिािातािबिालेिेतकनििासरणकायसवाहीआपकेद्वारावखणसत कीगईई-मे is created by you, assessment proceedings shall be carried out either through your specified e-mail account or manually (if e-mail is not available). संलग्िक : यचौिरर Enclosure as above 7. 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 the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases Which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by Issuing circulars binding on the taxing authorities. In order to aid proper determination of the income of money lenders and banks, the Central Board of Direct Taxes issued a circular dated October 6, 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, It need not be included in the assessee's taxable income, provided the Income-tax Officer is satisfied that recovery is practically improbable. Twenty-six years later, on June 20, 1978, in view of the judgment of the Kerala High Court In STATE BANK OF TRAVANCORE v. CIT [1977] 110 ITR 336, the Board by another circular, withdrew with immediate effect the earlier circular. However, by circular dated October 9, 1984, the Board decided that Interest in respect of doubtful debts credited to suspense account by banking companies would be subjected to tax but Interest charged in an account where there has been no recovery for three consecutive accounting years would not be subjected to tax in the fourth year and onwards. The circular also stated that if there is any recovery in the fourth year or later, the actual amount recovered only would be subjected to tax in the respective years. This procedure would apply to assessment year 1979- 80 and onwards.”

Considering the facts of the instant case in the light of the decision of the co-ordinate bench, we are inclined to hold that notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially to that is also invalid and is hereby quashed.” 10.Since the facts of the assessee’s case are similar to one as decided by the co-ordinate Bench, we therefore, respectfully following the same hold that the notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially is also invalid and is hereby quashed. The additional ground raised

8. The Ld. AR also drew our attention to the decision of the Coordinate bench of this Tribunal in the case of Tapas Kr. Das Vs. ITO in dated 11.03.2025, wherein the coordinate Bench of this Tribunal has held in para 6 to 8 as under: 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:- “आमकर अधिनियम 1961 की िारा 143(2) के अिीि िोटिस Notice under section 143(2) of the Income-tax Act, 1961 संवीक्षा (कंप्यूिर आिाररत संवीक्षा चयि Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेससस, Sir/Madam/ M/s, आपको सूधचत ककया जाता है कक नििासरण वर्स 2017-18 के पावती संख्या 269322761301017 के अिुसार आपके द्वारा टदिांक 30/10/2017 को दाखिल की गई आयकर वववरणी को संवीक्षा के ललए चुिा गया है। 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. 2. इस संबंि में, आपको टदिीक 16/11/2018 को 01:00 PM तक साक्ष्य प्रस्तुत करिे अथवा साक्ष्य प्रस्तुत करािे का अवसर प्रदाि ककया जा रहा है जजस पर आप उक्त आयकर वववरणी के समथसि में निभसर हैं/ 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. 3. उपयुसक्त निटदसष्ि प्रमाण / सूचिा को आपको ऑिलाइि माध्यम से इलेक्रॉनिक रूप में Incometaxindiaefiling.gov.in पर अपिे ई-फाईललंग िाता द्वारा प्रस्तुत ककया जािा है। बाद की नििासरण कायसवाही भी आयकर ववभाग की 'ई-कायसवाही' सुवविा द्वारा की जायेगी। 'ई-कायसबाही' पर एक संक्षक्षप्त िोि आपके संदभस के ललए संलग्ि है। 3. The evidence/information specified above has to be furnished online electronically through your E-filing account in incometaxindiaefiling.gov.in. Subsequent assessment proceedings shall also be conducted electronically through the 'E-Proceeding' facility of Income-tax Department. A brief note on 'E-Proceeding' is enclosed for your kind reference. 4. नििासरण कायसवाही के दौराि, यटद आवश्यक होगा तो सूचिा / दस्तावेज हेतु ववशेर् प्रश्िावली (यों) या अधियाचिा (यााँ) को बाद में जारी ककया जाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document shall be issued subsequently. 5. कृपया ध्याि दें कक यटद आपके पास ई-फाइललंग िाता है तो आपके ललए पैरा 3 लागू है। आपके द्वारा स्वयं अपिा िाता ि बिा लेिे तक नििासरण कायसवाही आपके द्वारा वखणसत की गई ई-मे is created by you, assessment proceedings shall be carried out either through your specified e-mail account or manually (if e-mail is not available).

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 the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases Which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by Issuing circulars binding on the taxing authorities. In order to aid proper determination of the income of money lenders and banks, the Central Board of Direct Taxes issued a circular dated October 6, 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, It need not be included in the assessee's taxable income, provided the Income-tax Officer is satisfied that recovery is practically improbable. Twenty-six years later, on June 20, 1978, in view of the judgment of the Kerala High Court In STATE BANK OF TRAVANCORE v. CIT [1977] 110 ITR 336, the Board by another circular, withdrew with immediate effect the earlier circular. However, by circular dated October 9, 1984, the Board decided that Interest in respect of doubtful debts credited to suspense account by banking companies would be subjected to tax but Interest charged in an account where there has been no recovery for three consecutive accounting years would not be subjected to tax in the fourth year and onwards. The circular also stated that if there is any recovery in the fourth year or later, the actual amount recovered only would be subjected to tax in the respective years. This procedure would apply to assessment year 1979-80 and onwards.” 08.Considering the facts of the instant case in the light of the decision of the co-ordinate bench, we are inclined to hold that notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially to that is also invalid and is hereby quashed.”

It was the submission that in view of the decision of the Coordinate Bench of this Tribunal on the identical issue the notice issued u/s. 143(2) is liable to be quashed and the consequential assessment order is also liable to be quashed.

In reply, the ld. Sr. DR vehemently supported the orders of the lower authorities. He has further filed a note in regard to the issue of notice u/s. 143(2) as follows:

It was the submission that the order of the Ld. CIT(A) is liable to be upheld.

We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the notice u/s. 143(2) is admittedly not in the format as provided under the note on e- assessment proceeding. In these circumstances, respectfully following the decisions of the coordinate bench of this tribunal cited supra, the notice issued u/s. 143(2) dated 27.09.2018 in the case of the assessee is held to be invalid and the same stands set aside. As the notice u/s. 14392) has been set aside the consequential assessment is also void and stands quashed.

It was the submission that as the notice u/s.143(2) of the Act is not in the prescribed format, the assessment order on this ground also based on the invalid notice is liable to be quashed.

In reply, ld. Sr. DR vehemently supported the orders of the ld. Assessing Officer and ld.CIT(A).