AI Structured Summary
Not yet generated for this judgment
Judgment
PER C.N. PRASAD, JM,
This appeal is filed by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 22.01.2025 for the A.Y.2018-19.
The assessee in ground No. 5 of grounds of appeal has challenged the order of the ld. CIT(A) in upholding the action of the AO in passing assessment order without issuing and serving mandatory notice u/s.143(2) of the Act.
The Ld. Counsel for the assessee at the outset inviting our attention to the order passed u/s.7(1) of Right to Information Act, 2005 dated 18.08.2025 by the ITO, Ward- 36(1), submitted that the ITO had stated in the said order that no notice u/s.143(2) has been issued for the A.Y.2018-19 for the reason that the return filed by the assessee was treated as invalid and the provisions of section 143(2) apply only in cases where a valid return is filed. The Ld. Counsel further invited our attention to the department’s notification and the questionnaire explaining how to verify e-return and submitted that for question No.13 the department had clarified that e-verification of return is not mandatory. It was also clarified that e-verification is one method of verifying the return filed and the assessee can choose either of the two methods to verify the return i.e. e-verification online or sending physical copy duly signed ITR-V to CPC, Bangalore. The Ld. Counsel for the assessee submitted that in response to notice u/s.142(1) dated 16.06.2023 wherein the AO stated that return filed on 30.04.2022 is invalid as the same is not e-verified, the assessee replied through letter dated 18.07.2023 which is placed at pages -190 to 214, that the assessee tried e-verify return but the income tax portal stated that the ITR is invalid till the condonation request approved. The assessee informed that it had sent a manual copy of ITR alongwith letter requesting for condonation.
The Ld. Counsel for the assessee referring to page -8 para 4.1 and 4.3 of the assessment order submitted that the AO had infact taken cognizance of return filed by the assessee and acted upon the return filed by the assessee wherein the assessee had declared income of Rs.20,66,480/-. Therefore, the Ld. Counsel for the assessee submitted that since the AO taken cognizance of return filed by the assessee and acted upon it by taking the income returned as starting point for computation of income. It cannot be said that the return filed is defective and invalid return and therefore, no notice u/s.143(2) is required to be issued.
The Ld. Counsel for the assessee furnished the following submissions :-
1.No notice u/s 143(2) of the Act is issued and served upon the assessee:
- Notice u/s 148 of the Act was issued on 07.04.2022 (PB Pg-179)
- Assessee filed return of income on 30.04.2022 in response to section 148 notice. (PB Pg.180)
- Notice u/s 142(1) of the Act dated 16.06.2023 stating that the return of income filed on 30.04.2022 is invalid as the same is not e-verified. As such requested to e-verify the same. (PB Pg. 181-184)
- Reply dated 18.07.2023 filed stating that the manual signed copy of the ITR has been sent to the Ld. ITO and Ld, CPC and also enclosed the copy of the letters and signed ITR. (PB Pg. 190-214). This is done as per the Income Tax Department's own guidelines.
- In the assessment order, in pg. 3 para 2.1.1 Ld. AO states that the ITR filed is defective/invalid. Thereafter, at pg. 6 Ld. AO quotes the reply dated 18.07.2023 filed by the assesse related to manually signed ITR sent to CPC. At pg. 8 para 4.1 and also at pg. 9 para 4.3, the Ld. AO takes into consideration the said return of income filed in response to 148 notice. At last, the Ld. AO at pg. 12 para 11.1, assess the income of the assessee after making addition to the return of the oncome filed by the assessee.
- Despite the above stated facts, the Ld. AO did not issue any notice u/s 143(2) of the Act to the assesse. As such, the entire assessment proceedings are vitiated and as such the assessment order passes is liable to be set aside. Reliance is paid upon the following case laws:
a)Shaily Juneja vs. Assistant Commissioner of Income-Tax in (High Court of Delhi) (CLC Pg. 1-6)
b)Income Tax Officer vs. Ashish Gupta in ITA no. 560/Del/2024 (ITAT, Delhi) dated 30.06.2025 (CLC Pg. No. 7-10)
c)CIT vs. Laxman Das Khandelwal in 417 ITR 325 (SC)
That even if the original return u/s 139 of the Act is not filed or is invalid then also the notice u/s 143(2) has to be issued if return is filed in response to section 148 notice. Even an ex-parte assessment order cannot be passed without section 143(2) notice. Reliance is placed upon PCIT vs. Staunch Marketing (P) Ltd. in ITA No. 935/ 2015 dated 28.04.2017 (High Court of Delhi).
Further, the RTI order dated 21.08.2025 (filed separately) from the Ld. AO is received by the Assessee wherein it has been mentioned that no notice u/s 143(2) of the Act is issued as the ITR-V was received after the due date i.e. on 20.07.2023. It is submitted that the same is irrelevant consideration for the non-issuance of the Section 143(2) notice. This issue is also no longer res-integra and it has been held that even if the return is filed belatedly then also the said jurisdictional notice has to be mandatorily issued. Reliance is placed upon the following judgments:
a)PCIT vs. M/s Dart Infrabuild (P) Ltd. in ITA No. 10/2022 dated 17.11.2023 (High Court of Delhi) (filed separately)
b)Mukesh Khurana vs. DCIT in ITA No.3902/Del/2024 dated 21.03.2025 (ITAT, Delhi) (CLC-II Pg. No. 1-22)
c)Anil Agarwal (HUF) vs. Ito in ITA No.2594/D/2024 dated 30.07.2025 (ITAT, Delhi) (CLC-II Pg. No.23-40)
d)Haresh J. Rathod vs. ITO in ITA No.115/RJT/2025 dated 21.05.2025 (ITAT, Rajkot) (CLC-II pg. No.31-46)
e)CIT vs. Nagendra Prasad in 156 taxmann.com 29 (High Court of Patna ) (CLC –II Pg. 47-48)
f)PCIT vs. Devendranath G. Chaturvedi in 83 taxmnan.com 141 (High court of Gujarat) (CLF –II Pg. NO.49-52)
On the other hand the Ld. Counsel for the assessee placed strong reliance on the orders of the authorities below.
Heard rival submissions and perused the orders of the authorities below. In the case in hand it is not disputed that the assessee filed return of income and the return was kept pending for verification and it was not validated, the assessee has sent manual return to the CPC for validation as per the guidelines issued by the Department. The guidelines suggest that the return can be verified by the assessee either through online or by sending of physical copy to the CPC. The assessee did exercise both the options. We also further observed that the return filed by the assessee was acted upon by the AO by computing the income taking the income returned by the assessee as started point and therefore, it cannot be said that the return filed by the assessee is invalid. As per the reply given by the ITO to the application filed by the assessee under RTI, no notice u/s. 143(2) has been issued for A.Y.2018-19. In our considered view once the return is treated as accepted and acted upon it cannot be treated as invalid return.
In the case of Anil Agarwal HUF vs. ITO in ITA No. 2594/Del/2024 dated 30.07.2025 the coordinate Bench of the Delhi Tribunal had considered a situation where the AO treated the return filed belatedly by the assessee in response to notice u/s.148 of the Act as invalid and the AO was of the view that no notice under section 143(2) is required to be issued before completion of assessment. On these facts the Tribunal held as under :-
“8.Heard rival contentions, perused the orders of the authorities below and the case laws relied on by the assessee. In this case, the assessee filed return on 28.10.2021 in response to notice issued u/s 148 of the Act dated 30.03.2021. The Assessing Officer completed the assessment on 30.03.2022 u/s 144 r.w.s. 147 of the Act determining the income of the assessee at Rs.84,32,240/-. While computing the income the Assessing Officer started with the income declared by the assessee in the return of income of Rs.69,040/- declared by the assessee in the return in response to notice issued u/s 148 of the Act, whereby the Assessing Officer acted upon the return filed by the assessee. The Assessing Officer before completion of assessment u/s 144B r.w.s. 147 of the Act appears to have not issued any mandatory notice u/s 143(2) of the Act. The Revenue also could not show that the Assessing Officer had issued any notice u/s 143(2) of the Act for the assessment year under consideration. Therefore, the question now to be adjudicated this appeal is whether the assessment framed u/s 14B r.w.s. 147 of the Act is a valid assessment in the absence of issue of notice u/s 143(2) of the Act.
9.The Hon’ble Jurisdictional High Court in the case of PCIT vs. Staunch Marketing Pvt. Ltd. (supra) considered almost an identical situation examined “whether the Tribunal fell into error in holding that the assessment for the concerned year was not effective because of lack of notice u/s 143(2) of the Income Tax Act in the given facts of the case” the Hon’ble Jurisdictional High Court decline to answer the question on an appeal filed by the Revenue. The Hon’ble High Court further affirming the order of the Tribunal held as under:
“14.In any event, factually the Assessee filed a return pursuant to notice issued u/s 148 of the Act, notwithstanding that it may not have filed a return in the first place u/s 139 of the Act for the assessment year in question. Once a return is filed notice u/s 143(2) of the Act to the assessee is mandatory prior to framing an assessment. The question of framing an assessment ex parte without even issuing a notice u/s 143(2) of the Act did not arise. The mandatory nature of that requirement is settled not only by the decision of the Supreme Court in the case of ACIT Vs. Hotel Blue Moon (supra) but also by a decision of this court in Commissioner of Income Tax-08 vs. Jai Shiv Shankar Traders Pvt. Ltd. (2016) 388 ITR 448 Del.
15.For all the aforementioned reasons, the question framed does not arise in the present appeal and is declined to be answered. In any event, the court does not find any substantial question of law arise from the impugned order. The appeal is, accordingly, dismissed.”
10.In all the case laws relied on by the Ld. Counsel for the assessee which are referred to above, it was held that assessment/reassessment finalized without issue of notice u/s 143(2) of the Act is not a valid assessment/reassessment. Thus, respectfully following the above decisions, we hold that the assessment framed by the AO u/s 144B r.w.s. 147 of the Act for the AY 2016-17 without issue of notice u/s 143(2) is bad in law and void ab initio and consequently the same is hereby quashed.”
Ratio of the decision squarely apply to the facts of the assessee’s case.
We further observe that the Hon’ble Patna High court in the case of CIT Vs. Nagendra Prasad (156 taxmann.com 19) held that when the notice was issued to the AO u/s.148 requiring assessee to file return within 30 days but return of income was filed after 8-1/2 months, since return was filed by the assessee in response to notice u/s.148 of the Act though delayed, there should have been a notice u/s.143(2) as the requirement to issue notice could not be dispensed with.
Thus, respectfully following the said decisions we hold that the assessment framed without issue of mandatory notice u/s.143(2) is null and void and consequently the assessment is hereby quashed. Ground Nos. 5 of assessee’s appeal is allowed.
Since the assessment is quashed on legal issue, all other legal grounds and the grounds on merits need not be adjudicated at this stage since they become only academic in nature and hence they are left open.
In the result, the appeal of the assessee is partly allowed as indicated above.