BHARAT KANTILAL CHANGEDE,PUNE vs. ITO WARD 6(3), PUNE

The Ld. Counsel for the assessee at the outset submitted that the Assessing Officer issued a notice u/s 148 of the Act on 25.03.2019, copy of which is placed at page 1 of the paper book. He submitted that the assessee in response to the same filed his return of income on 11.12.2019, copy of which is placed at page 2 of the paper book. He submitted that after the return was filed no notice u/s 143(2) of the Act was issued by the Assessing Officer.

Referring to the decisions of Hon’ble Delhi High Court in the case of PCIT vs. Staunch Marketing (P.) Ltd. reported in (2017) 81 taxmann.com 482 (Del), PCIT vs. Shri Jai Shiv Shankar Traders (P.) Ltd. reported in (2015) 64 taxmann.com 220 (Del), PCIT vs. Draft Infrabuild (P.) Ltd. reported in (2023) 166 taxmann.com 4 (Del) and the decision of Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad reported in (2023) 156 taxmann.com 19 (Patna), he submitted that the Hon’ble High Courts have held that even where the return was filed belatedly if the Assessing Officer considers such return while framing the assessment, notice u/s 143(2) of the Act is mandatory.

Referring to the decisions in the following cases, he submitted that similar view has been taken holding that once the return is filed in response to the notice u/s 148 of the Act, issue of notice u/s 143(2) of the Act is mandatory: i) Raja Bashumiya Maniyar vs. ITO vide order dated 27.05.2025 for assessment year 2010-11

He also relied on the following decisions: i) ACIT vs. Hotel Blue Moon reported in (2010) 188 Taxman 113 (SC) ii) CIT vs. Laxman Das Khandelwal reported in (2019) 108 taxmann.com 183 (SC)

He submitted that since the Assessing Officer in the instant case has admittedly not issued any notice u/s 143(2) of the Act after the assessee filed his return of income in response to the notice u/s 148 of the Act, such assessment proceedings are liable to be quashed for non-issue of notice u/s 143(2) of the Act. He submitted that the provisions of section 292BB of the Act cannot come to the rescue of the department. He accordingly submitted that on this preliminary ground the order of the Ld. CIT(A) / NFAC is liable to be set aside and the grounds raised by the assessee should be allowed.

The Ld. DR on the other hand referring to the decision of Hon’ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd. vide order dated 22.07.2011 submitted that when the assessee filed its return of income in response to the notice u/s 148 of the Act, non issue of notice u/s 143(2) of the Act thereafter will not invalidate the assessment proceedings.

The Ld. Counsel for the assessee in his rejoinder submitted that the decision relied on by the Ld. DR is dated 11.07.2011 and the assessment years involved in that case were 1999-2000 to 2003-04. However, the Hon’ble Delhi High Court in the subsequent decisions has held that the failure to issue notice u/s 143(2) of the Act after filing of the return in response to the notice u/s 148 of the Act is fatal to the order of re-assessment proceedings. He submitted that in any case when two views are possible, the view which is in favour of the assessee has to be accepted.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case issued notice u/s 148 of the Act on 25.03.2019. We find the assessee in the instant case filed his return of income on 11.12.2019 which is after the statutory period of 30 days given by the Assessing Officer. It is also an admitted fact that the assessment order was passed on 20.12.2019 and no notice u/s 143(2) of the Act has been issued and served on the assessee before completion of the assessment. Under these circumstances, we have to see as to whether non-issue of notice u/s 143(2) of the Act renders the assessment proceedings invalid when the assessee filed the return in response to the notice issued u/s 148 of the Act belatedly.

We find an identical issue had come up before the Hon’ble Delhi High Court in the case of PCIT vs. Draft Infrabuild (P.) Ltd. (supra). We find the Hon’ble High Court, following its earlier order in the case of PCIT vs. Shri Jai Shiv Shankar Traders (P.) Ltd. (supra) and various other decisions, has held that the failure by the Assessing Officer to issue a notice to the assessee u/s 143(2) of the Act after the assessee files his return of income in response to the notice u/s 148 of the Act is fatal to the order of re-assessment proceedings. The relevant observations of Hon’ble High Court read as under:

We find Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad (supra) has held that where notice was issued by the Assessing Officer under Section 148 requiring the assessee to file a return within thirty days but return was filed after eight and a half months, since return was filed by the assessee in response to said notice though delayed, there should have been a notice issued under section 143(2) as requirement to issue notice could not be dispensed with. The relevant observations of Hon’ble High Court read as under: “4. The only question of law arising in the facts and circumstances of the case is whether notice should have been issued under section 143(2) of the Income-tax Act?

Admittedly, the notice was issued by the Assessing Officer under section 148 of the Act on 14-7-2008 requiring the assessee to file a return within thirty days. A return was filed much later on 31-3-2009, after eight and a half months.

On identical facts, in M.A. No. 239 of 2011 titled as Chand Bihari Agrawal v. Commissioner of Income Tax, Central, Patna decided on 25-7-2023, this Court considered the issue and held against the revenue.

The various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that when the assessee files return in response to the notice u/s 148 of the Act, though, belatedly, non-issue of notice u/s 143(2) of the Act makes the re-assessment proceeding a nullity.

So far as the decision relied on by the Ld. DR is concerned, no doubt, the Hon’ble Delhi High Court on an earlier occasion has taken a view that non-issue of notice u/s 143(2) of the Act does not make the re-assessment proceedings invalid where the assessee files the return in response to the notice u/s 148 of the Act. However, it is to be noted that subsequent to this decision, the Hon’ble High Court recently in three other decisions has held that when the assessee files return in response to the notice u/s 148 of the Act, though, belatedly, the issue of notice u/s 143(2) of the Act is a mandatory requirement and non-issue of the same makes the re-assessment proceedings invalid. In any case, it is the settled position of law that when two views are possible on an issue, the view which is favourable to the assessee has to be adopted. Since the Assessing Officer in the instant case has admittedly not issued any notice u/s 143(2) of the Act after the assessee filed the return in response to the notice u/s 148 of the Act, though, belatedly, therefore, respectfully following the decisions cited (supra), we hold that the order passed by the Assessing Officer without following the mandatory requirement of issue of notice u/s 143(2) of the Act makes such re-assessment order a nullity. Since the assessee succeeds on this legal ground, the grounds challenging the addition on merit are not being adjudicated.

In the result, the appeal filed by the assessee is allowed.