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Facts
The assessee's appeal was delayed by 27 days, which was condoned. The original return for AY 2017-18 was filed on 25.10.2017. The assessment was reopened under Section 147 based on information of a cash deposit. The assessee contended that a valid return was filed in response to the Section 148 notice, which was e-verified.
Held
The Tribunal held that the non-issuance of a notice under Section 143(2) of the Act is fatal to the assessment proceedings. The Tribunal noted the divergent stand of the lower authorities regarding the validity of the return filed by the assessee.
Key Issues
Whether the assessment completed under Section 144 based on reassessment initiated under Section 147 is vitiated due to the non-issuance of notice under Section 143(2) of the Income Tax Act, 1961.
Sections Cited
147, 144, 148, 142(1), 69A, 115BBE, 143(2)
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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: The appeal in for AY 2017-18, arises out of the 1. order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] dated 19.07.2024 against the order of assessment passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.03.2022 by the Assessing Officer, AO, Delhi-Ward-66(7), Delhi (hereinafter referred to as ‘ld. AO’).
At the outset, the appeal filed by the assessee before us is delayed by 2. 27 days. Considering the reasons adduced in the condonation petition, in the interest of substantial justice, we deem it fit to condone the delay and admit the appeal of the assessee for adjudication.
Though the assessee has raised several grounds both on law and as 3. well as on facts, the crucial issue to be decided is as to whether the ld CIT(A) was justified in confirming the assessment when no notice u/s 143(2) of the Act was issued by the ld AO after the filing of return of income by the assessee. This goes to the root of the matter and hence, we deem it fit to address the same first.
We have heard the rival submissions and perused the material 4. available on record. The return of income for AY 2017-18 was filed by the assessee on 25.10.2017 electronically declaring total income of Rs. 6,74,540/-. This income tax return acknowledgement is enclosed in page 34 of the Paper Book. Based on the information that assessee had deposited some cash of Rs. 1 crore in the bank account, the assessment of the assessee stood reopened by issuance of notice u/s 148 of the Act on 31.03.2021. The ld AO in para 2 of the reassessment order had observed that assessee did not file income tax return in response to notice u/s 148 of the Act. Notice u/s 142(1) of the Act stood issued to the assessee on 15.11.2021, 13.12.2021, 21.12.2021 and 31.01.2022. The assessee vide reply dated 23.01.2022 along with computation of income and ledger of bank book of Bank of India submitted that assessee had indeed filed return of income for AY 2017-18 on 07.10.2021 itself in response to notice u/s 148 of the Act and enclosed a copy of acknowledgement thereon. The assessee stated that he is a proprietor of M/s. Shiva Jewellers involved in wholesale & retail trading of bullion. The assessee denied of any dealings carried out with the entity namely M/s. Jai Lakshmi Products as mentioned in the reasons. The ld AO at page 3 para 3 of the reassessment order observed that on perusal of the return filed it is found that assessee did not file any valid return in compliance to notice u/s 148 as the said return was not e- verified. The assessee had filed evidence before the ld AO that the return filed in response to notice u/s 148 of the Act had been duly e-verified on 22.02.2022 and furnished the evidences in this regard which are enclosed at pages 34-35 of the Paper Book. The ld AO ignoring this fact proceeded to conclude that assessee has not filed valid return of income and accordingly the assessment is completed u/s 144 based on the information available on record and proceeded to make an addition of Rs. 1 crore u/s 69A r.w.s. 115BBE of the Act and completed the assessment on 26.03.2022.
In this entire reassessment order, there is absolutely no whisper or 5. mention about the issuance of notice u/s 143(2) of the Act by the ld AO. The assessee specifically raised the ground before the ld CIT(A) vide ground No. 5 regarding the failure to issue notice u/s 143(2) of the Act. The ld CIT(A) also endorsed the same view taken by the ld AO that assessee had not filed any valid return and hence there was no requirement to issue notice u/s 143(2) of the Act and dismissed the said ground No. 5 raised before him. On merits, the ld CIT(A) upheld the action of the ld AO.
On perusal of the orders of the ld AO and ld CIT(A), it is not in 6. dispute that notice u/s 143(2) of the Act was not issued at all for AY 2017- 18 by the ld AO. We find that the assessee had indeed filed a valid return on 07.10.2021 itself in response to notice u/s 148 of the act and had duly e- verified the same on 22.02.2022. Further, on perusal of page 5 of the reassessment order, we find that the ld AO had started the computation of income from the income as per ITR filed in the sum of Rs. 6,74,540/-. This goes to prove that the ld AO had indeed taken cognizance of the fact that the assessee had filed a valid return. The lower authorities had grossly erred in observing that there was no valid return filed by the assessee for the purpose of issuance of notice u/s 143(2) of the Act whereas for the purpose of computation of income, the assessee had filed a valid return. This divergent stand taken by the lower authorities cannot be appreciated. Non issuance of notice u/s 143(2) of the Act would become fatal to the entire assessment proceedings. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of CIT v. Laxman Das Khandelwal reported in 108 taxmann.com 183 (SC). Respectfully following the same, we have no hesitation to quash the entire reassessment proceedings framed herein for AY 2017-18. Since, the entire reassessment is quashed, the adjudication of other legal and factual grounds raised by the assessee became academic in nature and they are left open.
In the result, the appeal of the assessee is allowed. 7.
Order pronounced in the open court on 10/12/2025.