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Judgment
PER ANUBHAV SHARMA, JM:
This appeal preferred by the assessee against the order dated 07.10.2025 of Ld. National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No : ITBA/NFAC/S/250/2025-26/1081528362(1) arising out of the assessment order dated 17.03.2022 u/s 147 read with section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Ward-36(1) for AY: 2016-17.
On hearing both sides we find that primarily the ld. counsel has prayed for disposal of ground No. 3 which goes to the route of assumption of jurisdiction has allegedly while completing the assessment notice u/s 143(2) of the Act has not been served. The assessee is a hindu undivided family and the return was filed showing long term capital gain through trading shares of M/s Yamini Investment Company Ltd. which department has categorized as a penny stock and the case of assessee was reopened and the addition was made which was challenged before the Ld. CIT(A) wherein assessee had taken up a specified ground No.3(b) that there was no proper, legal and validate notice u/s 143(2) of the Act and this aspect has been considered by the ld. First Appellate Authority NFAC and adjudicated with following finding:
“The submissions have been carefully examined with reference to the assessment records, remand report, and material available on record. The Assessing Officer initiated reassessment on the basis of credible information received from the Investigation Wing, Kolkata, identifying M/s Yamini Investment Co. Ltd. as a penny-stock scrip used for generating artificial long-term capital gains. The reasons recorded duly referred to such information, and the approval u/s 151 was obtained from the competent authority prior to issue of notice. The notice u/s 148 was issued on 31.03.2021, well within the six-year limitation under the unamended section 149(1)(b), and hence the reassessment was not time-barred. The alleged procedural irregularities such as non-supply of sanction copy, non-disposal of objections, or technical defects in uploading notices do not vitiate the proceedings when substantive satisfaction and due approval are evident on record. The Hon'ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO (236 ITR 34) and the Hon'ble Delhi High Court in CIT v. Jagat Novel Exhibitors (P) Ltd. have held that minor technical defects not going to the root of jurisdiction cannot invalidate an otherwise lawful reassessment.
As regards the contention under section 151A, it is observed that although the NFAC notification conferring faceless jurisdiction was issued on 29.03.2022, the substantive jurisdiction to reopen under section 147 was exercised by the Assessing Officer well before that date, based on valid approval and credible material. The faceless procedural framework is administrative in nature and does not affect the legality of jurisdiction already vested u/s 147. Accordingly, the reassessment is held to have been validly initiated and completed in accordance with law. The grounds challenging jurisdictional validity, including the additional ground (Ground No. 11), are therefore found devoid of merit and are hereby dismissed.”
Ld. Counsel has taken across a remand report furnished by the Assessing Officer copy of which is available at page 10-16 of the paper book and specially with regard to this issue of notice being not served Assessing Officer has observed as follows:
“there might be a technical error in uploading the notice but the same has not been pointed out by the assessee immediately on receipt of the notice but it is only at this stage that assessee is contradicting the same. It may also be mentioned that Notice u/s 142(1) of the IT Act has been issued on the same date i.e. 18.11.2021 and the narration mentioned in the work list which is visible to the assessee which says " Notice generated u/s 143(2) as per Income Tax Act though as per assessee it is Notice u/s 148 of the IT Act (copy attached)”
Ld. Counsel has also pointed out that the assessee filed an application under the Right to Information Act before the Ld. AO seeking a copy of the alleged notice u/s 143(2). In response, vide order u/s 7(1) of the RTI Act (PB-9), the Ld. AO categorically stated as under:
“In this regard, it is to inform you that the Notice u/s 143(2) for A.Y. 2016-17 was initiated on 30.03.2021 as per order sheet but the content of notice is not available in the system. Therefore, copy of notice cannot be provided. The certified copy of order sheet is enclosed" (emphasis supplied).”
This reply is highly significant and goes to the root of jurisdiction. The Ld. AO has expressly admitted that the content of the alleged notice u/s 143(2) is not available in its system and, therefore, a copy cannot be furnished. In other words, the very notice on which jurisdiction is claimed does not exist in retrievable form in official records. We find substance in the contention that initiation noted in an order sheet, without availability of the notice itself, does not amount to valid issuance. A jurisdictional notice must exist in substance, not merely as a clerical entry. If the contents of the notice are unavailable, it cannot be verified whether it was validly generated, or legally issued.
It further comes up that the date 30.03.2021, which the AO claims as the date of initiation of notice u/s 143(2), in fact pertains to notice u/s 148 of the Act, which was issued on 30.03.2021. This fact was duly mentioned by the assessee before the Ld. CIT(A) and it finds mention in the remand report (PB-12), wherein it is stated that the work-list narration reflects "Notice generated u/s 143(2)" though, according to the assessee, it pertains to notice u/s 148. Thus, the departmental record itself reflects confusion and inconsistency regarding the nature of the notice allegedly generated. Such internal ambiguity, coupled with the admitted non-availability of the notice content, clearly demonstrates that the Revenue is unable to establish valid issuance and service of notice u/s 143(2) of the Act. In these circumstances, the foundational jurisdictional requirement remains unproven, and the assessment framed pursuant thereto is liable to be held void ab initio.
Hon'ble Supreme Court in the case of CIT vs. Hotel Blue Moon 321 ITR 362, has held that no assessment can be made without issuing notice u/s 143(2) and 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. Reliance can be further placed on the following judgments:
Hon’ble Tribunal Delhi Bench in the case of Roshan Lal Verma Vs. DCIT, Central Circle-II, Faridabad, ITA No. 1934/Del/2015 dated 23.06.2022
Hon’ble Delhi High Court in the case of CIT Vs. Bhan Textiles (P) Ltd. (2006) 287 ITR 370 (Delhi)
Hon’ble Delhi High Court in the case of CIT Vs. Vardhman Estate (P) Ltd. (2006) 287 ITR 368 (Delhi)
In view of above facts, the ground no. 3 is sustained and the appeal is allowed. The impugned assessment order is quashed.