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Facts
The assessee's case was reopened under Section 147 based on information from her husband's affidavit, revealing significant loans advanced by her. The Assessing Officer made additions under Section 68 and as income from other sources. The CIT(A) dismissed the assessee's appeal ex parte.
Held
The Tribunal held that the assessment proceedings under Section 147 were vitiated due to the Assessing Officer's failure to issue a mandatory notice under Section 143(2), even though the assessee requested her original return be treated as a response to the Section 148 notice. This omission was deemed a fatal and incurable procedural irregularity.
Key Issues
The key legal issue was whether the assessment proceedings under Section 147 were valid despite the non-issuance of a notice under Section 143(2) after the assessee's return was treated as a response to the Section 148 notice.
Sections Cited
Section 147, Section 148, Section 143(2), Section 144, Section 139, Section 68, Section 250, Section 10(1), Section 271(1)(c), Section 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI S. RIFAUR RAHMAN & SHRI SUNIL KUMAR SINGH
ORDER PER : SUNIL KUMAR SINGH, JUDICIAL MEMBER:
This appeal has been preferred by assessee against the impugned order dated 21.08.2025 passed in Appeal No. NFAC/2015-16/10136512 by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2016-17, wherein the ld. CIT(Appeals) has dismissed assessee’s first appeal ex parte.
Brief facts state that the assessee filed her return of income for A.Y. 2016-17 on 14.01.2017, declaring total income at Rs.14,52,315/- as per ITR verification form. Assessee’s case was reopened u/s. 147 of the Act by issuance of notice u/s. 148 of the Act dated 30.03.2021 on the basis of information provided by assessee’s husband Shri Rajveer Singh in the affidavit filed before Election Commission of India during Election, 2019.
According to the assessment order, the details of status of ITRs and taxable income declared in the affidavit by assessee’s husband were compared with the records available in ITBA/ITD, which were found matched with each other. However, revenue noted that the assessee, Smt.
Prem Lata Verma, wife of Shri Rajveer Sinch had given loan of Rs.9,25,00,000/- to M/s. Raj Prem Associates Pvt. Ltd., Aligarh and Rs.75,48,083/- to M/s. Adarsh Services Station, Ghaziabad. Revenue proceeded for the verification of the source of payment for the loan advanced by the assessee and her husband, Shri Rajveer Singh and verification of investment in purchase of immovable properties by assessee’s daughter Ms. Shweta Singh and son Shri Saurabh Singh was also taken up by revenue. Various notices/summons were issued to the assessee. Assessee’s representative Mr. Abhishek Gupta filed reply stating that the assessee is director of the firm M/s. Raj Prem Associates (P) Ltd. and submitted audited balance sheet and ledger account of the assessee for the period 01.04.2014 to 05.03.2018, showing distribution of payments/unsecured loans on various dates in favour of M/s. Prem Raj 2 | P a g e Associates Pvt. Ltd. The Assessing Officer was not satisfied with assessee’s explanation due to high volume credit entries. Further, assessee, vide her electronically filed response dated 17.03.2022 in response to show cause notice issued u/s. 144 dated 12.03.2022, informed the Assessing Officer as under : “……………... Without prejudice regarding notices issued u/s. 148 quashed by verdict of several high courts (the aforesaid reply is being uploaded subject to the verdicts of several high courts in this regard). Kindly treat the return filed by the assessee for the Assessment Year 2016-17 (related to F.Y. 2015-16) return filed on 31.03.2018 u/s. 139 of the Act may kindly be treated as return filed u/s. 148 in response to the above mentioned notice.”
After considering the material available on record, Assessing Officer completed the assessment and added Rs.4,00,00,000/- as cash credit u/s. 68 of the Act and Rs.15,00,000/- as income from other sources, assessing total income at Rs.4,29,42,320/-.
4. Assessee filed first appeal before learned CIT(Appeals). Assessee remained un-responded before the first appellate authority against various notices issued u/s. 250 of the Act. Learned CIT(Appeals) dismissed assessee’s first appeal ex parte and confirmed the assessment order.
Assessee has filed this appeal on the following grounds :
“1. Ground No. 1: On the facts and circumstances of the case, the orders passed by the Ld. CIT(A) and the Ld. AO are erroneous both in law and on facts.
2. Ground No. 2: That the Ld. CIT(A) has erred in law as well as on facts by upholding the addition of Rs. 4,00,00,000/- under section 68 of the Act, by treating the loan advanced to M/s Raj Prem Associates (P.) Ltd. during the year under consideration as unexplained cash credits.
3. Ground No. 3: That the Ld. CIT(A) has erred in law as well as on facts by upholding the addition of Rs. 15,00,000/- on account of agricultural income, without giving cognizance to the fact that the said amount qualifies as an exempt income u/s 10(1) of the Act, and was duly reported in the return of the income.
Ground No. 4: That the Ld. CIT(A) has erred in law and on facts by not granting a reasonable opportunity of being heard to the assessee.
5. Ground No. 5: That the Ld. AO has erred in law as well as on facts by levying the penalty u/s 271(1)(c) of the Act and by charging the interest u/s 234B of the Act. Ground No. 6: That the appellant reserves the right to add, modify, alter, amend or delete any of the grounds.” ADDITIONAL GROUND: "7. That the assessment order concluded 147 r.w.s 144 of the Act is bad in the eyes of law as well as on facts due to the non-issuance of statutory notice u/s 143(2) of the Act despite the fact that it was duly intimated that the original return filed may be treated as return in response to notice u/s 148 of the Act."
Perused the records. Heard learned representative for assessee and learned CIT/DR for revenue.
At the very outset, learned representative for assessee has pressed to admit and decide the additional legal ground No. 7 raised vide separate application dated 16.12.2025. The additional ground is admitted.
The sum and substance of assessee’s grievance raised through additional ground No. 7 is as to whether the entire assessment proceedings
4 | P a g e completed u/s. 147 of the Act are bad in law for want of issuance of notice u/s. 143(2) of the Act, specifically when the assessee filed the return of income u/s. 139 of the Act for the year under consideration ?
It is an undisputed fact that the assessment proceedings u/s. 147/144 of the Act were completed on 29.02.2022 without issuing statutory notice u/s. 143(2) of the Act. We note that the assessee had filed a paper book containing 27 pages and has enclosed the acknowledgement of ITR dated 14.01.2017(ROI date mentioned as 31.03.2018 in assessee’s submissions, which is part of the assessment order). We further note that the assessee, vide her response dated 17.03.2022 had requested the Assessing Officer to treat the return filed by assessee u/s. 139 of the Act for A.Y. 2016-17 as the return filed in response to notice u/s. 148 of the Act.
For easy understanding, section 143(2) reads as under :
“………………. (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return. ……………………….”
Perusal of afore-quoted section 143(2) goes to show that the Assessing Officer was mandatorily required to serve statutory notice u/s. 143(2) upon the assessee, if he considered it necessary or expedient to ensure that the assessee had not understated the income or had not computed excessive loss or had not under-paid the tax in any manner.
Learned AR for assessee has referred order dated 24.11.2025 passed by the coordinate Bench of ITAT, Bangalore in Intact Developers Pvt. Ltd. vs. DCIT, Central Circle 1(2), Bangalore (ITA No. 823, 824 & 825/Bang/2025 for A.Yrs. 2015-16, 2016-17 and 2017-18), wherein the Tribunal has based its order on the dictum of Hon’ble Supreme Court propounded in ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) and held that where the return of income has been filed in response to notice u/s. 148, the non-issuance of the notice by the Assessing Officer u/s. 143(2) of the Act is fatal and accordingly, the subsequent assessment proceedings u/s. 147 stand vitiated and the order so passed by the Assessing Officer u/s. 144 r.w.s. 147 are null and void.
Hon’ble Supreme Court in Hotel Blue Moon (supra), vide para 15 of its order held as under :
“………………… An analysis of this sub section indicates that, after the return 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 6 | P a g e 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…………………………….”
In view of law laid down by Hon’ble Supreme Court in Hotel Blue Moon (supra) and followed by this Tribunal in Intact Developers (supra), in the instant case, Assessing Officer has omitted to issue notice u/s. 143(2) of the Act, which cannot be a procedural irregularity and the same is not curable. Therefore, the requirement of issuing notice u/s. 143(2) cannot be dispensed with. We, accordingly, hold that the non-issuance of notice by the Assessing Officer u/s. 143(2) of the Act, specifically when the assessee filed return u/s. 139 and pleaded before the Assessing Officer that the same be treated as the return filed in response to notice u/s. 148 of the Act, is fatal. Subsequent assessment proceedings u/s. 147 of the Act stand vitiated and the order so passed by learned Assessing Officer u/s. 144 read with section 147 is null and void. Ld. CIT(Appeals) has also committed
7 | P a g e illegality by confirming the unsustainable assessment order. Aforesaid point is determined in favour of the assessee and against the revenue. Appeal is liable to be allowed accordingly.
We deem it appropriate to observe that we have not made any observation in respect of the merits of the case. Since the assessment order under consideration has been quashed on purely a legal ground raised by assessee, the other grounds related to merits are rendered academic and are not being adjudicated.
In the result, assessee’s appeal is allowed.
Order pronounced in the open court on 15.01.2026.