Income Tax Appellate Tribunal - Indore
Jitendra Arya,Indore vs Ito 1(3), Indore, Indore on 25 March, 2026
आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER
AND
SHRI PARESH M. JOSHI, JUDICIAL MEMBER
ITA No.386/Ind/2025
Assessment Year:2011-12
Jitendra Arya, ITO 1(3),
4, Bank Colony S/O Shri Indore
Ashok Arya, बनाम/
Annapurna Main Road, Vs.
Indore
(Assessee/Appellant) (Revenue/Respondent)
PAN: AEEPA4922K
Assessee by Shri Manish Dafria, AR
Revenue by Shri Ashish Porwal, Sr. DR
Date of Hearing 26.02.2026
Date of Pronouncement 25.03.2026
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 22.02.2025 passed by learned Commissioner of Income-Tax (Appeals)-National Faceless Appeal Centre, Delhi ["CIT(A)"] which in turn arises out of assessment-order dated 10.12.2018 passed by learned ITO-1(3), Indore ["AO"] u/s 147/148 r.w.s.
143(3) of Income-tax Act, 1961 ["the Act"] for Assessment-Year ["AY"] 2011- 12, the assessee has filed this appeal.
Page 1 of 27Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12
2. The background facts leading to present appeal are such that the assessee-individual filed his return of income of AY 2011-12 u/s 139 declaring a total income of Rs. 2,72,610/- which was assessed.
Subsequently, on the basis of information available in AIR revealing that the assessee had deposited cash in his SB A/c amounting to Rs. 46,91,537/-
during the previous year 2010-11 relevant to AY 2011-12, the AO issued notice u/s 148 dated 23.03.2018 to re-open case for assessment u/s 147.
In reply, the assessee filed return on 03.12.2018 declaring a higher total income of Rs. 4,49,720/- as compared to the originally assessed income of Rs. 2,72,610/-. The AO completed re-opened assessment vide order dated 10.12.2018 u/s 147/148 r.w.s. 143(3) after accepting the returned income of Rs. 4,49,720/- declared by assessee (+) after making a further addition of Rs. 46,91,537/- on account of unexplained cash deposits in bank a/c.
Aggrieved, the assessee carried matter in first-appeal but did not get any success. Now, the assessee has come in next appeal before us.
3. The grounds raised by assessee are as under:
"1. On the facts and circumstances of the case and applicable law, Ld. AO erred in passing the assessment order under section 143(3) without issuing a notice u/s 143(2) to the assessec.
2. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not considering assessee's contention that Ld. AO erred in passing the assessment order under section 147/148 read with 143(3) when proposal for re-opening case of assessee was submitted by ITO-4(5), Indore to Pr. CIT(2), Indore who granted approval but assessment was completed by ITO (1)3, Indore which is without jurisdiction and bad in law.
3. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not considering assessee's contention that the assessment order Page 2 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 passed by Ld. AO u/s. 147/148 read with 143(3) is contrary to the material on records and provisions of the Act, unjust and bad in law.
4. On the facts and circumstances of the case and applicable law, Ld. CIT(A) erred in not accepting the contention of the assessee that cash deposit of Rs. 46,91,537 represents business turnover of Rs. 47,76,572, which turnover was already disclosed in return filed in response to notice issued under section 148 and on the basis of which business income of Rs. 3,82,126 was offered in the said return.
5. On the facts and circumstances of the case and applicable law, Ld. CIT(A) failed to observe that Ld. AO had contradicted himself where even though he treated income from business as per ITR Rs. 3,82,126 as taxable income of the assessee but still refused to accept that assessee is carrying on a business and thereby not accepted the cash deposits in bank account as turnover of the business.
6. The Appellant craves leave to amend, alter, add or delete all or any of the above grounds of appeal."
4. However, during hearing before us, Ld. AR for assessee submitted that the assessee is not pressing Ground No. 2. Accordingly, Ground No. 2 is dismissed as non-pressed.
5. Now, we take up Ground No. 1 wherein the assessee claims that the assessment-order passed by AO u/s 143(3) without issuing a notice u/s 143(2) is not valid.
6. In so far as this ground is concerned, the AO has mentioned in Para 4 of assessment-order thus: "Notice u/s 143(2) was issued." But, however, Ld. AR contended very forcefully that no notice u/s 143(2) was in fact issued by AO and the AO has made a factually incorrect finding in assessment-
order. When this point was confronted to Ld. DR for revenue, he sought time to file a report from AO. The hearing was thereafter adjourned from time to time. Ultimately, the Ld. DR filed AO's report dated 12.02.2026 accepting Page 3 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 that no notice u/s 143(2) was issued. The report of AO is scanned and re-
produced below for an immediate reference:
Thus, it is clearly accepted by AO that no notice u/s 143(2) was issued to assessee.
7. Therefore, in this factual backdrop that no notice u/s 143(2) was issued, the issue for our adjudication is whether the impugned assessment-
Page 4 of 27Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 order dated 10.12.2018 passed by AO u/s 147/148 r.w.s. 143(3) is not valid as being claimed by assessee?
8. Ld. Representatives of both sides have made their respective contentions. We have considered the same carefully.
9. Ld. AR for assessee has relied upon certain decisions of judicial forums, we narrate below the most relevant decisions:
(a) PCIT Vs. Shri Jai Shiv Shankar Traders Pvt. Ltd. (2015) 64 taxmann.com 220 (Delhi HC):
"12. The narration of facts as noted above by the court makes it clear that no notice under section 143(2) of the Act was issued to the assessee after December 16,2010, the date on which the assessee informed the Assessing Officer that the return originally filed should be treated as the return filed pursuant to the notice under section 148 of the Act.
13. In DIT v. Society for Worldwide Interbank Financial Telecommunications [2010] 323 ITR 249 (Delhi), this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinised by the AO.
14. The interplay of Sections 143(2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad High Court. In CIT v. Rajeev Sharma [2011] 336 ITR 678/[2010] 192 Taxman 197 (All.) it was held that a plain reading of Section 148 of the Act reveals that within the statutory period specified therein, it shall be incumbent to send a notice under Section 143(2) of the Act. It was observed:
"the provisions contained in sub-Section (2) of Section 143 is mandatory and the legislature in their wisdom by using the word 'reason to believe' had cast a duty on the Assessing Officer to apply mind to the material on record and after being satisfied with regard to escaped liability, shall serve notice specifying particulars of such claim. In view of the above, after receipt of return in response to notice under Section 148, it shall be mandatory for the AO to serve a notice under sub-Section (2) of Section 143 assigning reason therein. In absence of any notice issued under sub-Section (2) of Section 143 after receipt of fresh return Page 5 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 submitted by the Assessee in response to notice under Section, the entire procedure adopted for escaped assessment, shall not be valid."
15. In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105/[2015] 228 Taxman 48 (All.) (Mag.) it was held as under:
"10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from 1 April 2008. Section 292BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to Section 292BB of the Act, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under Section 143 (3) of the Act, it is necessary to issue a notice under Section 143(2) of the Act and in the absence of a notice under Section 143(2) of the Act, the assumption of jurisdiction itself would be invalid."
16. In the same decision in Salarpur Cold Storage (P.) Ltd. (supra), the Allahabad High Court noticed that the decision of the Supreme Court in Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with."
17. The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO [2012] 25 taxmann.com 341/210 Taxman 78 (Mad.) (Mag.). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142(1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. It was observed that:
Page 6 of 27Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 "Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act."
18. As already noticed, the decision of this Court in Vision Inc. (supra) proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143(2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of "service" of notice was concerned and not with regard to failure to "issue" notice. In other words, the failure of the AO, in re- assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act.
19. The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment.
20. Consequently, there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal is dismissed."
(b) PCIT Vs. M/s Dart Infrabuild (P) Ltd. (2024) 166 taxmann.com 4 (Delhi HC):
15.1 The respondent/assessee became aware of the Section 148 notice being issued after it received the notice dated 12.06.2015 under Section 142(1) of the Act. The fact that the respondent/assessee had filed an ROI on 04.12.2015 is not disputed. The fact that this ROI, as noticed above, was taken into account is also not in dispute. Therefore, in our opinion, before framing an assessment order, the AO ought to have issued a notice under Section 143(2) of the Act. The submission advanced on behalf of the appellant/revenue that, while it could consider the invalid return while Page 7 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 framing the assessment order, it was not obliged to issue a notice under Section 143(2) of the Act because it was not filed within the timeframe given in the Section 148 notice is untenable in law, since the ROI, which was belated, was considered by the AO while carrying out the assessment.
15.2 The absence of notice, under Section 143(2), impregnates the proceedings with a jurisdictional defect and, hence, renders it invalid in the eyes of the law. This position is no longer res integra, as demonstrated by the observations made in Principal Commissioner of Income-tax v. Shri Jai Shiv Shankar Traders (P.) Ltd. [2015] 64 taxmann.com 220/383 ITR 448 (Delhi):
XXX (already re-produced in preceding para, hence not being re-produced again)
17. Thus, for the foregoing reasons, which are (i) that notice under Section 148 of the Act was improperly served, and (ii) that notice under Section 143(2) should have been issued before framing of assessment order under Section 147/144 of the Act, we are not inclined to interfere with the impugned order passed by the Tribunal."
(c) ACIT Khandwa Vs. M/s Sukhamani Cotton Industries and M/s Manjeet Cotton Pvt. Ltd., ITA No. 222 & 223/Ind/2017 alongwith C.O. No. 16 & 04/Ind/2018, order dated 21.12.2018 (ITAT, Indore):
"3. We will first take up the cross objections for A.Y. 2011-12 raised by both assessees challenging the validity of the assessment proceedings completed u/s 143(3) r.w.s. 147 of the Act alleging that notice u/s 143(2) of the Act was not served upon the assessee during reassessment proceedings. As both the parties have accepted that the facts relating to this common issue raised in cross-objections are similar we will take the facts of Sukhmani Cotton Industries for adjudication purpose.
4. The facts in brief are that e-return of income was filed on 24.09.2011 declaring income of Rs.46,83,090/-. Case was picked up for scrutiny through CASS and assessment u/s 143(3) of the Act was framed on 22.03.2013 assessing income at Rs. 50,00,000/-. Subsequently, the case was reopened by issuance of notice u/s 148 of the Act dated 23.03.2015 on the basis of information received from DCIT investigation Mumbai for the alleged bogus purchases. Immediately, after issuance of notice u/s 148 of the Act and recording reasons the assessment proceedings u/s 143(3) r.w.s 148 of the Act were initiated and subsequently completed after making various additions.
As the notice u/s 143(2) of the Act was not issued before commencing reassessment proceedings u/s 147 of the Act, the assessee has filed cross Page 8 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 objection before us pleading that non-issuance of notice u/s 143(2) of the Act in the reassessment proceedings initiated u/s 148 of the Act is mandatory else the reassessment proceedings are void ab initio and not valid.
XXX
13. We, therefore, respectfully following the judgment of Hon'ble Delhi High Court in the case of Shree Jai Shiv Shankar Traders Pvt. Ltd. (supra) as well as decision of Coordinate Bench of Delhi in the case of Dimension Promoters Pvt. Ltd. (supra) and in the given facts and circumstances of the case, are of the considered opinion that even though notice u/s 148 of the Act has been issued but the notice u/s 143(2) of the Act has not been issued in the case of both the assessees namely M/s. Sukhmani Cotton Industries Pvt. Ltd. & M/s. Manjeet Cotton Pvt. Ltd., a fatal error has been committed by Ld. Assessing Officer and thus the reassessment order passed u/s 147 r.w.s 143(3) of the Act is invalid bad in law and void ab initio and thus liable to be quashed. We accordingly, allow the common ground no.2 raised by both the assessee in the Cross Objections challenging the validity of reopening of assessment u/s 147 of the Act for non-issuance of notice u/s 143(2) of the Act.
14. As we have already quashed reassessment proceedings framed in the case of both the assessees vide order dated 30.10.2015 for non-issuance of statutory notice u/s 143(2) of the Act by allowing common grounds no.2 raised in the cross objections, the addition made in both the impugned order stands deleted and therefore, the remaining grounds raised by the assessee in the cross objections as well as raised by the Revenue becomes infructuous and therefore, are liable to be dismissed."
(d) PCIT Vs. Kamla Devi Sharma, DB Income-tax Appeal No. 197/2018 (Rajasthan High Court):
"1. By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has allowed the appeal of the assessee.
2. Counsel for the appellant has framed following substantial questions of law:-
(i) Whether on the facts and circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} for the reason of non-issuance of notice u/s 143(2) before finalizing reassessment whereas the assessee did not file her return of income within the period of 30 days stipulated by notice issued u/s 148?
(ii) Whether on the facts and in circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} for the reason of non-issuance of notice Page 9 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 u/s 143(2) wherein the assessee filed her return of income on 22.4.2014 which is 10 months 17 days beyond 5.7.2013 i.e. after expiry of 30 days' time from service of notice on 6.6.2013 stipulated in the notice issued u/s 148?
(iii) Whether on the facts and in circumstances of the case the AO was under statutory obligation to issue notice u/s 143(2) before completing the assessment u/s 144 wherein the assessee filed her return of income 10 months 17 days beyond the 30 days' time allowed by notice issued u/s 148 which expired on 5.7.2013 as the notice was served upon on 6.6.2013?
(iv) Whether on the facts and circumstances of the case the ITAT was right in quashing the reassessment proceeding u/s 147/144 {mistakenly mentioned 143(3)} relying upon the decision of Delhi High Court in the case of PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd. 383 ITR 448 whereas the facts of the case are distinguishable that the return of income in the present case was not filled within the time allowed in the notice u/s 148 and the case was completed u/s 144?
(v) Whether on the facts and circumstances of the case mentioning of completion of order "u/s 147/143(3) instead of '144' in the order is not a mistake curable u/s 292BB when the case was completed u/s 144?
3. The facts of the case are that the assessee is an individual. The assessee had purchased the land on 30.4.2008 for a consideration of Rs.1,01,20,000/- and paid in cash. Notice u/s 148 of the Income Tax Act, 1961 (in short the Act) was issued on 31.5.2013. Notice was served on 6.6.2013 through notice server. Return of income was filed on 22.4.2014. Notice u/s 142(1) of the Act was issued alongwith questionnaire on 30.4.2014. The assessment was made on 5.3.2015 at Rs.1,01,20,000/-, that is the amount paid for purchase of the agricultural land, treated as unexplained investment. The ld. CIT(A) has confirmed the action of the Assessing Officer.
4. While considering the matter, the tribunal has observed as under:-
"5. A written submission was also made by the ld AR of the assessee on the issue of non-issue of notice U/s 143(2) of the Act prior to finalization of the assessment u/s 143(3) of the Act. The submissions of the ld AR on this issue is reproduced hereunder:
In these grounds of appeal, assessee has challenged the action of Ld. C1T(A) in confirming the action of ld. AO in completing assessment without issuing notice u/s 143(2), which is sine qua non once assessee furnished return of income. Since all these grounds of appeal are inter related, thus have been dealt with together for the sake of convenience. Brief facts as stated above are that the case of assessee was reopened by issue of the notice u/s 148 of the Act and thereafter the assessment was completed without issue of notice u/s 143(2) though the assessee had filed the return Page 10 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 of income in response to such notice u/s 148. The chronology of the events are as under:
-on 31.05.2013 notice u/s 148 was issued and served upon assessee on 06.06.2013;
-on 03.04.2014, notice u/s 142(1) was issued fixing date of hearing on 16.04.2014;
-on 22.04.2014, Return of Income was filed by assessee;
-on 30.04.2014, further Query letter u/s 142(1) as well as show cause notice u/s 271(1)(b) was issued;
-notices u/s 142(1) were issued on 17.11.2014 and 06.02.2015 and the proceedings were attended by the A/R of the assessee from time to time
-Assessment order was passed u/s 143(3)/ 147 of the Act by Ld. AO vide order dated 05.03.2015.
From the perusal of the summary of chronological events it is clearly evident that notice u/s 143(2) was never issued by ld.AO before completion of the assessment and this fact has categorically been admitted by ld.AO in remand report submitted before the ld. CIT(A) (APB 15-18).
With this background of chronological events, kind attention of Hon'ble bench is invited to the provisions of section 148 of the Act, which reads as under:
148. [(1)] Before making the assessment, reassessment or re-computation under section (4 of 13) [ITA-197/2018]
147. the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, [* * *] as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :] Provided further that in a case--
( a ) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b ) subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub- section (2) of section 143, but before the expiry of the time limit for making the Page 11 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 assessment, reassessment or recomputation as specified in subsection (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice.] On perusal of above, it is evident that section 148 specifically provides that all the provisions of Act shall be applicable in respect of return of income u/s 148 as if the same was return furnished u/s 139. Going further, first and second provisos to section 148, provides the time limit for issuance of notice u/s 143(2) on the basis of date of filing return of income. Thus, it is not discretionary rather mandatory for an assessing officer to issue notice u/s 143(2) once the return of income is filed by assessee. The only relaxation in the case of re assessment is that notice u/s 143(2) can be issued at any time before the expiry of time limit for completing assessment/ re assessment and the same would be deemed as valid notice. However, as stated above, no notice u/s 143(2) was ever issued in the case of the assessee even though the return of income was filed by the assessee. Thus the completion of the re- assessment proceedings and completion of the assessment is without any valid jurisdiction and therefore the order passed is void ab initio. This contention was also raised (5 of 13) [ITA-197/2018] before ld.CIT(A) who sought remand report from ld. AO in this regard. The ld. AO in remand report dated 12/02/2016 at page 2 in last para observed that: (APB -17) "During the assessment proceedings in this case for the assessment year under consideration, the assessee or her authorized representative did not oppose that the notice u/s 143(2) of the income Tax Act, 1961 was not issued after filing return of income in response to the notice u/s 148 of the Income Tax Act, 1961. Therefore, under the provisions of Income Tax Act, 1961, the notice u/s 148 can't be issued.........
Ld. CIT(A) confirmed the validity of assessment order so passed without issue of notice u/s 143(2) by observing that assessee had attended the hearing on several occasions and no objection was raised during the proceedings before the ld. AO, thus non issuance of notice u/s 143(2) of the Act would not make assessment order invalid. Ld. CIT(A) further held that such mistake of ld. AO of non issue of notice u/s 143(2) is curable u/s 292BB of the Act.
At this juncture, provisions of section 292BB of the Act are reproduced herewith for the sake of convenience:
292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was--
(a ) not served upon him; or (b ) not served upon him in time; or Page 12 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12
(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.] In this regard, it is submitted that section 292BB provides that a notice shall be deemed to be served in a situation that assessee has cooperated/ attended / participated in assessment/ re assessment proceedings and no objection regarding non receipt of notice was filed during assessment stage. It is worth noticing here that section nowhere provides that "a notice required to be issued, shall be (6 of 13) [ITA- 197/2018] deemed to be issued". Thus, it is evident that deeming provisions of section 292BB are with respect to notices issued but not served/ not served in time / not served in proper manner. It does not cure the defect so far as notice has not been issued at all.
In this regard, it is further submitted that there are catena of judicial pronouncements, which hold that Omission to issue notice u/s 143(2), is not a procedural irregularity and the same is not curable. Further, ld. AO in the remand report dated 12/02/2016 (APB 15-18) has stated that return of income has been filed belatedly thus he not required to issue such notice mandatorily. Your honours would appreciate that it has nowhere been provided in the Act that AO shall be absolved with the requirement of issuing notice u/s 143(2) in the event of late filing of return. In fact, proviso to section 148 provides that notice u/s 143(2) can be issued at any time before completion of assessment. Thus, so far as return of income has been filed, AO ought to have issued notice u/s 143(2), which has not been done in the instant case.
In this regard, reliance is placed on: Assistant Commissioner of Income Tax v. Hotel Blue Moon 321 ITR 362 (SC) (Case laws Paper book pages 93-99) Search and Seizure -- Undisclosed Income Detected - Block Assessment -- Issue of Notice u/s 143(2) within prescribed time - Mandatory - Income Tax Act, 1961, ss. 132, 143(2), 158BA, 158BC, 158BH - CBDT Circular No. 717 Dated 14.08.1995. Though in the above case, assessment was completed by ld.AO u/s 153A, without issuing notice u/s 143(2), the same is applicable to assessments completed under Act, irrespective of the fact under which section assessment is to be completed as legislature has provided for issuance of such notice before completion of assessment under whatever section it may be. CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All) "10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from April 1, 2008. Section 292BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be (7 of Page 13 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12
13) [ITA-197/2018] served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or
(ii) not served upon him in time ; or (iii) served upon him in an improper manner. In other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to section 292BB of the Act, however, carves out an exception to the effect that the section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292BB of the Act cannot obviate the requirement of complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under section 143(3) of the Act, it is necessary to issue a notice under section 143(2) of the Act and in the absence of a notice under section 143(2) of the Act, the assumption of jurisdiction itself would be invalid.
In the same decision in CIT v. Salarpur Cold Storage (P.) Ltd. (supra), the Allahabad High Court noticed that the decision of the Supreme Court in Asst. CIT v. Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with".
[2017] 390 ITR 167 (Ker) Travancore Diagnostics (P) Ltd. Vs. ACIT (Case laws Paper book pages 58-61) Reassessment- Notice- Validity- Reassessment can be made within time for regular assessment- Reassessment under section 147 read with section 143(3)- Condition precedent- Notice u/s 143(2) Omission to issue notice under section 143(2)- Deject not curable - Section 292BB not applicable- Reassessment not valid- Income Tax Act, 1961, ss. 143,147,292BB 336 ITR 678 - CIT V/s Rajeev Sharma (Allahabad) (Case laws Paper book pages 62-
68) Reassessment - Procedure - Return in response to Notice u/s 148 - Assessing Officer (8 of 13) [ITA-197/2018] must apply his mind and issue Notice u/s 143(2) - Procedure must be followed strictly
-- Income Tax Act, 1961, ss. 143, 148. It is further submitted that even if the return of income was filed after the issue of notice u/s 142(1), the Hon'ble Delhi court in the case of PCIT-08 vs. Shri Jai Shiv Shankar traders Pvt. Ltd. reported in 383 ITR 448 - (Delhi) (Case laws Paper book pages 29-31) has held that the issue of notice u/s Page 14 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 143(2) is not a procedural requirement and is mandatory and completion of assessment without issue of notice u/s 143(2) is fatal to the assessment.
In this case, notice u/s 148 was issued on 30.03.2010, in response to which no return of income was filed. On 01.10.2010, Ld.AO issued notice u/s 143(2), which was duly served. Subsequently notices u/s 142(1) were also issued on certain occasions. Authorized representative of assessee, on 16.12.2010 presented and stated that return of income filed u/s 139 may be treated as furnished in response to notice u/s 148. Assessment was completed vide order dated 31.12.2010, in that situation also, the Hon'ble Court held that AO ought to have issued notice after 16.12.2010, in absence of which assessment was held invalid. In our case also, the return was filed after the issue of notice u/s 142(1), thus is squarely covered by the decision of Hon'ble Delhi high court, as stated above.
Further reliance is placed on the following:
323 ITR 249 - DIT V/s Society for Worldwide Inter Bank Financial Telecommunications (Delhi) (Case laws Paper book pages 49-50) Assessment -
Enquiry - Notice - Only upon Examination of Return - Notice u/s 143(2) served upon assessee before filing of Return -
Not valid - Assessment completed on basis of Notice invalid - Income Tax Act, 1961, s. 143(2) 90 DTR 289 - Saptha Giri Finance & Investments V/s ITO (Madras) Reassessment -- Validity - Absence of notice u/s 143(2) - In completing the assessment u/s 148, compliance of the procedure laid down under ss. 142 and 143(2) is mandatory
- Once the admitted fact that beyond notice u/s 142(1), there was no notice issued u/s 143(2) and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to s. 148, there was total failure on the part of the Revenue from complying with the procedure (9 of 13) [ITA-197/2018] laid down u/s 143(2) which is mandatory -- In the absence of notice u/s 143(2), reassessment could not be held to be validly made.
The facts of that case were that a notice under section 148 of the Act was issued to the assessee seeking to reopen the assessment for the assessment year 2000-01. However, the assessee did not file a return and therefore a notice was issued to it under section 142(1) of the Act. Pursuant thereto, the assessee appeared before the Assessing Officer and stated that the original return filed should be treated as a return filed in response to the notice under section 148 of the Act. The High Court observed that if thereafter, the Assessing Officer found that there were problems with the return which Page 15 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 required explanation by the assessee then the Assessing Officer ought to have followed up with a notice under section 143(2) of the Act. It was observed that:
"Merely because the matter was discussed with the assessee and the signature is affixed, it does not mean the rest of the procedure of notice under section 143(3) of the Act was complied with or that on placing the objection the assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued under section 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued under section 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the Assessing Officer has the duty of issuing the notice under section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued under section 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued under section 143(2) of the Act."
Recently Jaipur bench of ITAT in the case of Cameron (Singapore) Pte Ltd Vs. ADIT in ITA No. 2/JP/14 vide orders dt. 27/7/2017 held that where notice u/s 143(2) is not served upon the assessee within the stipulated time period, the consequent order passed cannot be sustained. In that case though the notice u/s 143(2) was issued but the same was not served upon the assessee within the (10 of 13) [ITA-197/2018] stipulated time period however, in our case the notice u/s 143(2) was never served upon the assessee.
The Hon'ble ITAT Delhi bench in the case of DR. S.B. KALIDHAR Vs. ITO in ITA No. 1082/Del/2016 dated 27.11.2017 has given a finding in favour of the assessee, by placing reliance on the decision of the Hon'ble ITAT, SMC-2, Delhi Bench dated 16.10.2015 passed in ITA Nos. 4171- 4175/Del/2015 ((AY 2003-04) in the case of Ms. Meenakshi Aggarwal vs. ITO & Ors(Case laws paper book pages 7-9) in which reliance was placed on the decision of the Hon'ble ITAT, 'C' Bench, Bangalore dated 10.10.2014 in the case of Shri GN Mohan Raju vs. ITO passed in ITA No. 242 & 243(Bang)2013, wherein it was held as under:
"7. This brings us to the crux of the issue i.e. whether notices under section 143(2) is mandatory in a reopened procedure and whether notices issued prior to the reopening would satisfy the requirement specified U/s 143(2) of the Act. That issue of a notice u/s 143(2) of the Act, is mandatory even in a re- assessment proceeding initiated u/s 148 of the Act has been clearly laid down by the Hon'ble Delhi High Court in the case of M/s Alpine Electronics Asia PTE Ltd., (supra). Hon'ble Delhi High Court had reached this conclusion after considering the decision of the Hon'ble Page 16 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 Apex Court in the case of Hotel Blue Moon (supra). At para-24 of the judgment their Lordship has held that Section 143(2) was applicable to a proceedings u/s 147/148 also, since proviso to section 148 of the Act, granted certain specific liberties to the revenue, with regard to extension of time for serving such notices. No doubt, Hon'ble Madras High Court in the case of Areva T and D India Ltd., (supra) had held that issue of notice u/s 143(2) was procedural in nature. However, Co-ordinate Bench in the case of M/s Amit Software Technologies Pvt. Ltd., (supra) after considering the decision of the Hon'ble Madras High Court as well as Delhi High Court had held that Section 143(2)of the Act, was a mandatory requirement and not a procedural one.
Once notice u/s 148 of the Act, issued to the assessee required it to file a return within 30 days from the date of service of such notice. There is no provision in the Act, which would allow an AO to treat the return which was already subject to a processing u/s 143(1) of (11 of 13) [ITA-197/2018] the IT Act, as a return filed pursuant to a notice subsequently issued u/s 148 of the Act. However, once an assessee itself declare before the AO that his earlier return could be treated as filed pursuant to notice u/s 148 of the IT Act, three results can follow. Assessing Officer can either say no, this will not be accepted, you have to file a fresh return or he can say that 30 days time period being over I will not take cognizance of your request or he has to accept the request of the assessee and treat the earlier returns as one filed pursuant to the notice u/s 148 of the IT Act. In the former two scenarios, AO has to follow the procedure set out for a best of judgment assessment and cannot make an assessment under section 143(3). On the other hand, if the AO chose to accept assessee's request, he can indeed make an assessment under section 143(3). In the case before us, assessments were completed under section 143(3) read with section 147. Or in other words AO accepted the request of the assessee. This in turn makes it obligatory to issue notice u/s 143(2) after the request by the assessee to treat his earlier return as filed in pursuance to notices u/s 148 of the IT Act was received. This request, in the given case, has been made only on 05- 10-2010. Any issue of notice prior to that date cannot be treated as a notice on a return jiled by the assessee pursuant to a notice u/s 148 of the Act. Or in other words, there was no valid issue of notice u/s 143(2) of the IT Act, and the assessments were done without following the mandatory requirement u/s 143(2) of the IT Act. This in our opinion, render the subsequent proceedings all invalid"
In view of above judicial pronouncements, it is submitted that so far as assessee furnished return of income u/s 148, Ld.AO was duty bound to issue notice u/s 143(2) of the Act. And the non-issuance of notice u/s 143(2) was not a procedural error which could have been corrected in the wake of deeming provisions of sec 292BB of the Act. Thus, in the case of assessee, since no notice was issued u/s 143(2), it is prayed that assessment completed u/s 143(3)/ 147 deserves to be Quashed.
Page 17 of 27Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12
6. On the other hand, the ld DR has relied on the orders of the authorities below and pleaded that the order of the ld. CIT(A) may be sustained.
7. The Bench have heard both the sides on this issue and perused the material available on the record. The Hon'ble Delhi High Court in the case of Pr.CIT Vs Jai Shiv Shankar Traders Pvt. Ltd. 383 ITR 0448 (Delhi), in the similar circumstances, has held as under:
"No notice under Section 143(2) of the Act was issued to the Assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148 of the Act. (Para 12) The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO (2013) 90 DTR 289 (Mad). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01.However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. (Para 17) As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of "service" of notice was concerned and not with regard to failure to "issue" notice. In other words, the failure of the AO, in re- assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re- assessment order, cannot be condoned by referring to Section 292BB of the Act. (Para 18) The resultant position was that as far as the present case was concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, was fatal to the order of re- assessment. (Para 19) Consequently, there (13 of 13) [ITA-197/2018] Page 18 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 was no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal was dismissed." (Para 20) Thus, the facts of the assessee's case are similar to the facts of the case involved in the decision of the Hon'ble Delhi High Court wherein it has been categorically held that the issue of notice U/s 143(2) in reassessment proceedings, prior to finalizing re-assessment order, cannot be condoned by referring to Section 292BB and is fatal to the order of re- assessment. Respectfully following the same, we hereby set aside the order of the to 4 of the assessee's appeal.
8. Since we have quashed the reassessment proceedings, therefore, there is no need to adjudicate the issues raised in Grounds No. 5 to 9 of the appeal".
5. In our considered opinion, the tribunal is bound by the decision of Delhi High Court in the case of Pr. CIT vs. Jai Shiv Shankar Traders Pvt. Ltd. reported in 383 ITR 448 (Delhi) and has rightly followed the same, which is not challenged.
6. In that view of the matter, we are in complete agreement with the view taken by the tribunal. Hence, no substantial question of law arises.
7. The appeal stands dismissed."
(e) Shri Ramakant Sharma Vs. ITO, ITA No. 264/JP/2017, order dated 07.12.2020 (ITAT, Jaipur):
"14. In the present case, the assessee had filed return, though, after stipulated period of 30 days but before finalization of assessment and in case the A.O. had found that there were problems with the return which required explanation by the assessee, then the A.O. ought to have followed up with a notice U/s 143(2) of the Act. However, no notice U/s 143(2) of the Act was issued which is mandatory requirement in reopen procedure and in our view issuance of notice U/s 143(2) is mandatory in reassessment proceedings initiated U/s 148 of the Act which has also been clearly laid down by the Hon'ble Delhi High Court in the case of 25 ITA 264/JP/2017_ Ramakant Sharma Vs ITO Alpine Electronics Asia PTE Ltd. (supra). The Hon'ble Delhi High Court had also reached to the conclusion after considering the decision of the Hon'ble Apex Court in the case of Hotel Blue Moon (supra). Wherein at para 24 of the judgment, their Lordship has held that Section 143(2) was applicable to a proceedings U/s 147/148 of the Act also. Since, in the present case, no notice U/s 143(2) of the Act was issued or served, therefore, in our view, it relates all the subsequent proceedings as invalid.Page 19 of 27
Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 In view of the above facts and circumstances, we set aside the orders of the authorities below and quash the reassessment proceedings initiated U/s 147 of the Act and allow grounds No. 3 and 4 of the appeal.
14. Since, we have quashed the reassessment proceedings initiated in the case of assessee, therefore, there is no need to adjudicate the other issues raised in grounds No. 1,2 and 5 to 13 of the said appeal."
10. Per contra, Ld. DR for revenue relied upon following decisions:
(a) Mr. Riyaz Ahmed Vs. The Income-tax Officer, ITA No. 1130/Bang/2023, order dated 15.04.2024 (ITAT, Banglore):
"2.5 The Ld.AO thus completed the assessment u/s. 144 of the act without issuing notice u/s. 143(2) of the act by treating the belated return of income filed by assessee as invalid. The Ld. AO thus was of the opinion that there was no requirement under law to issue notice u/s. 143(2) under such facts and circumstances.
XXX 3.6 Coming to the present facts of the case, the assessee had not filed any return u/s. 139(1)/(4)/(5) of the act. The assessment was reopened u/s. 148 and the notice was issued on 26.03.2021 giving 30 days time to the assessee to file the return of income. Undoubtedly and admittedly the assessee did not file the return of income within specified period mentioned in the notice u/s 148, but filed the return of income on 10.03.2022 which is way beyond the period of limitation with a delay of over 11 months. The Ld.AO thus treated the return of income filed by the assessee with such delay and that too at the fag end of completion of assessment proceedings to be non-est. Therefore the Ld. AO proceeded to complete the assessment u/s. 147 r.w.s. 144 of the act, without issuing notice u/s. 143(2) of the act. On these facts, it is required to be determined whether a notice u/s. 143(2) of the act is to be issued or not.
3.7 The records are very clear that assessee has failed to furnish the original return of income u/s. 139 of the act, and also did not comply with the requirement of filing the return of income in response to the notice u/s. 148 of the act within the given time period. The assessee filed the return of income on 10.03.2022 which is belatedly by more than 11 months, and therefore, the return cannot be considered as a return in response to notice u/s. 148 of the act. The Ld.AO therefore rightly treated the return of income to be non-est. 3.8 It's not the case of the assessee that subsequent to notices issued under section 148 of the Act, the assessee sought for extension of time to file the return of income or that the learned Assessing Officer granted time. Assessee is expected to file the return of income within such period, as may be specified in the notice under section 148 of the Act or the assessee is expected to seek Page 20 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 the extension of such time on the basis of an application made in this regard. Neither of the things are done by the assessee. It's not the option of the assessee to file the return of income pursuant to the notice under section 148 of the Act whenever he pleases. For want of compliance with the letter of law, there is no proper filing of return of income. We agree with the submissions of the learned DR that what the learned Assessing Officer accepted was to consider the written submissions of the assessee in the letter dated 12/12/2019 on the merits of the case, but it does not amount to the extension of time for filing the return of income pursuant to the notice under section 148 of the Act.
3.9 Coming to the judicial precedence relied by the Ld. AR of Hon'ble Delhi High Court in case of PCIT vs. Shri Shiv Shankar Traders (supra), we observe that, the assessee therein filed the return in response to notice u/s. 148 of the act within the period of limitation. Therefore in that case, the return was available with the assessing officer. The decisions relied by the Ld. AR does not support the case of the assessee as they are factually different.
3.10 The ratio laid down by Hon'ble Supreme Court in case of Hotel Blue Moon (supra), it is the situation, where the assessing officer rejected to accept the return of income filed by the assessee thereby, repudiating the return of income filed. Under such circumstances, Hon'ble Court held that the assessing officer still have to issue notice u/s. 143(2) of the act, within the prescribed time period. This ratio also does not support the facts of the present assessee as the assessee in present case filed the return of income belatedly in response to the notice u/s. 148 of the act after 11 months. The Ld.AO thus treated such return to be non-est. In fact, the assessee filed such return belatedly just before the expiry of time period for completing the reassessment proceedings. In such situation, it is not possible that the assessee can contest the validity of the reassessment without issuance of notice u/s. 143(2). There is no requirement under the law that if the return is filed in response to the notice u/s. 148 just before the passing of the assessment order or whenever the assessee feels appropriate, the assessing officer should issue notice u/s. 143(2). The onus of filing of return of income in response to notice u/s. 148 of the act is upon the assessee to be fulfilled within the period of limitation. It, therefore, goes without saying that non-issuance of notice under section 143(2) of the Act vitiates the proceedings if the assessee filed the return of income, such a return as filed was not acceptable to the learned Assessing Officer and the assessment has to be made at variance with the return filed by the assessee. If no return of income is filed by the assessee, such allegation does not arise. We agree with the observations of both the authorities that there is no return of income filed pursuant to the notice issued under section 148 of the Act. We therefore do not find any force in the arguments advanced by the Ld. AR in support of ground nos. 2, 3 and 6 by assessee. Accordingly, ground nos. 2, 3 and 6 raised by assessee stands dismissed."
(b) Gonuguntia Nirmala Devi Vs. ACIT, ITA No. 412/Hyd/2022, order dated 17/08/2023 (ITAT, Hyderabad):
Page 21 of 27Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 "8. We have gone through the record in the light of the submissions made on either side. We shall look at the allegation as to filing of return of income in the light of the facts available on record. It could be seen from the assessment order that notice under section 148 of the Act was issued on 28/03/2019 and the same was served on the assessee, but there was no response from the assessee. Likewise, when the case was posted for hearing on 24/06/2019, notice dated 12/04/2019 calling for the details was issued, it was served on the assessee on 13/06/2019, but again there was no response from the assessee. Notice granting another opportunity was issued on 24/10/2019 fixing the date of hearing on 06/11/2019 and served on the assessee on 25/10/2019. Still there was no response from the assessee. Lastly, there are appearing for the assessee before the learned Assessing Officer after 29/11/2019.
9. Subsequent to this 29/11/2019 during the course of hearing when certain issues were put before the assessee, then the assessee claimed to have uploaded the return of income on 11/12/2019, and by letter dated 12/12/2019 the assessee requested to treat such return of income that was filed online on 11/12/2019 as the return submitted in response to notice under section 148 of the Act. Further from paragraph No. 3.3, it could be noticed that to the letters dated 05/12/2019 and 12/12/2019 the assessee made certain submissions touching the merits of the case, apart from mentioning in the letter dated 12/12/2019 about the fact of the assessee filing online the return of income on 11/12/2019 and to treat it as the return filed in response to the notice under section 148 of the Act.
10. It's not the case of the assessee that subsequent to several notices issued under section 148 of the Act, the assessee sought for extension of time to file the return of income or that the learned Assessing Officer granted time.
Assessee is expected to file the return of income within such period, as may be specified in the notice under section 148 of the Act or the assessee is expected to seek the extension of such time on the basis of an application made in this regard. Neither of the things are done by the assessee. It's not the option of the assessee to file the return of income pursuant to the notice under section 148 of the Act whenever she pleases. For want of compliance with the letter of law, there is no proper filing of return of income. We agree with the submissions of the learned DR that what the learned Assessing Officer accepted was to consider the written submissions of the assessee in the letter dated 12/12/2019 on the merits of the case, but it does not amount to the extension of time for filing the return of income pursuant to the notice under section 148 of the Act.
11. We agree with the observations of both the authorities that there is no return of income filed pursuant to the notice issued under section 148 of the Act. In the case of Hotel Blue Moon(supra) the Hon'ble Apex Court held that section 143(2) of the Act itself becomes necessary when it becomes necessary to check the return. In the case of Oberoi Hotels (P.) Ltd (supra) the Hon'ble Calcutta High Court held that the dictum of the Hon'ble Supreme Court in the case of Hotel Blue Moon(supra) is that a notice under section 143(2) of the Act is mandatory if the return as filed, is not accepted and an assessment order is Page 22 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 to be made at variance with the return filed by the assessee. It, therefore, goes without saying that non-issuance of notice under section 143(2) of the Act vitiates the proceedings if the assessee filed the return of income, such a return as filed was not acceptable to the learned Assessing Officer and the assessment has to be made at variance with the return filed by the assessee. If no return of income is filed by the assessee, such allegation does not arise.
12. We have gone through the various decisions relied upon by the assessee and in all the cases invariably within the time stipulated in the notice issued under section 148 of the Act, either the assessee or the authorized representative either filed the return of income or submitted that the original return of income may be treated as the return of income filed pursuant to the notice under section 148 of the Act. Here in this case no return of income was filed within the time, and no return of income was filed till the commencement of hearing. It was only when the proceedings are going on, that too without obtaining the permission of the learned Assessing Officer the return was filed online and on the next day the learned Assessing Officer was informed of such online filing.
13. For these reasons, we brush aside the contention of the assessee that for want of issuance of notice under section 143(2) of the Act, the assessment is bad under law."
(c) Padinjarekara Agencies (P) Ltd. Vs. CIT (2017) 85 taxmann.com 129 (Kerala HC):
"12. From the above, it is obvious that the procedure under Section 143(2) is intended to ensure that an adverse order is passed against the assessee only after affording the assessee a proper opportunity. Therefore, the question to be considered is whether the assessee in this case had such an opportunity. It is in this context, the notices that were issued to the assessee assumes importance. Reading of the reasons recorded and communicated to the assessee, Annexure E notice posting the case, and Annexure I notice, show that the assessee was put on notice the inadmissibility of the reduction from the total income made by it and the assessee by its Annexure C objections, F reply and the reply filed by it to Annexure I notice had justified the deduction made by it. Further before Annexure K assessment order was passed, the assessee was afforded an opportunity of hearing also. Evidently, therefore, the assessee had ample notice of the case it had to answer and the assessee availed of those opportunities by answering the case against it. In such a situation, we are not prepared to think that there was absence of notice under Section 143(2) or that any prejudice was caused to the assessee in defending the case against it. We are not, therefore, prepared to think that the assessment order is invalid on the ground contended by the assessee."
11. In re-joinder, Ld. AR distinguished the decisions cited by Ld. AR. He submitted that in the cases of Mr. Riyaz Ahmed and Gonuguntia Nirmala Page 23 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 Devi (supra) cited by Ld. DR, the assessee did not file return to AO in time and the AO did not accept assessee's return or treated same as non-est whereas in present case of assessee, the AO has accepted the return filed by assessee in response to notice u/s 148 and made assessment u/s 143(3).
Further, in the assessment so made, the AO has assessed total income of assessee starting from the figure/income of Rs. 4,49,720/- declared by assessee in return. Therefore, the AO has given acceptance to assessee's return. Despite this, the AO has made an addition of Rs. 46,91,537/-
without giving notice u/s 143(2) to assessee which makes the AO's order invalid. In so far as the decision of Padinjarekara Agencies (supra) cited by Ld. DR is concerned, it is submitted, with due respect, that the said decision does not consider that the notice u/s 143(2) is a jurisdictional notice and cannot be equated with other notices, say notices u/s 142(1) which are in the nature of questionnaire to call details/documents from assessee. The Hon'ble Supreme Court has already held in CIT Vs. Laxman Das Khandelwal (2019) 108 taxmann.com 183 (SC) that the issuance of notice u/s 143(2) is a mandatory/jurisdictional requirement and any lapse in issuing such notice cannot be saved by section 292BB also.
12. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The undisputed and admitted factual position emerging from the record is that although the assessment has been framed by the Ld. AO u/s 143(3), no notice u/s 143(2) of the Act was ever Page 24 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 issued to the assessee. This fact now stands conclusively established in view of categorical Report of Ld. AO dated 12.02.2026 placed on record by Ld. DR wherein it has been admitted that no such notice was issued.
13. Now coming to the controversy before us, it is a settled legal position that issuance of notice u/s 143(2) is a mandatory requirement and a condition precedent for framing an assessment u/s 143(3), including in re-
assessment proceeding u/s 147. The provision of section 148 itself prescribes that once a return is filed in response thereto, such return shall be treated as if it were a return filed u/s 139 and all provisons of the Act would apply. That means, the issuance of notice u/s 143(2) must necessarily be complied with. This legal proposition is no longer res integra.
The Hon'ble Delhi High Court in the case of PCIT Vs. Jai Shiv Shankar Traders Pvt. Ltd. (supra) has categorically held that failure to issue notice u/s 143(2) after filing of return in response to notice u/s 148 by assessee, is fatal to the re-assessment proceedings. Similar view has been taken in PCIT Vs. Dart Infrabuild (P) Ltd. (supra) wherein it has been held that absence of notice u/s 143(2) is a jurisdictional defect rendering the assessment invalid. To the same effect are other decisions of ITAT Indore, Hon'ble Rajasthan High Court and ITAT Jaipur relied by Ld. AR as narrated in earlier para.
14. Further, the Hon'ble Supreme Court has clearly held in CIT Vs. Laxman Das Khandelwal (supra) that the issuance of notice u/s 143(2) is a mandatory requirement and not a procedural formality, and also held that Page 25 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 the section 292BB cannot cure the defect of non-issuance of such notice.
Thus, non-issuance of notice strikes at the very root of jurisdiction assumed by the AO.
15. In present case, it is not in dispute that the assessee has filed return of income in response to notice u/s 148 and the Ld. AO has also accepted such return and proceeded to frame assessment u/s 143(3) by making addition over and above the income declared by assessee in such return.
Therefore, once the AO chose to proceed u/s 143(3), it was incumbent upon him to issue notice u/s 143(2). In fact, the AO himself was aware of such a legal requirement, that is why he mentioned, although factually incorrect, in Para 4 of assessment-order "Notice u/s 143(2) was issued".
16. We have also considered the decisions relied upon by the Ld. DR.
However, we find that the same are distinguishable on facts. In those cases, either the return filed by assessee was rejected or treated as non-est by the AO. In contrast, in the present case, the AO has accepted the return filed by assessee, taken due cognizance of the income declared by assessee in such return and included such income as part of total income assessed in the assessment-order framed u/s 143(3). Therefore, the ratio of those decisions does not apply to the facts of present case.
17. In view of the foregoing discussion and respectfully following the judicial precedents cited by Ld. AR, we agree and hold that the non-issuance Page 26 of 27 Jitendra Arya ITA No. 386/Ind/2025 - AY 2011-12 of notice u/s 143(2) in present case is a jurisdictional defect which renders the reassessment order passed u/s 147 r.w.s. 143(3) as invalid.
Accordingly, we allow Ground No. 1 raised by assessee and the addition made by AO in assessment-order is hereby deleted. Consequently, the Ground No. 3 to 6 become infructuous and do not require any adjudication from us.
18. Resultantly, this appeal is allowed.
Order pronounced in open court on 25/03/2026
Sd/- Sd/-
(PARESH M. JOSHI) (B.M. BIYANI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore
िदनांक /Dated : 25/03/2026
Patel/Sr. PS
Copies to: (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
E COPYAssistant Registrar
Income Tax Appellate Tribunal
Indore Bench, Indore
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