Sanjay Kumar Badure Vs ITO (ITAT Hyderabad)
Hyderabad ITAT Quashes Reassessment: No Notice Under Section 143(2), Entire Assessment Held Void
The Hyderabad ITAT quashed the reassessment framed under sections 147/144/144B, holding that the Assessing Officer could not complete the reassessment without issuing a mandatory notice under section 143(2) after the assessee had filed a return in response to the notice under section 148. The assessee had filed a return declaring nil income pursuant to the reopening notice, but the Assessing Officer ignored the return and proceeded to make an addition of ₹54.01 lakh under section 69A towards cash deposits.
The Revenue argued that since the return was filed beyond the time prescribed in the notice under section 148, it was non-est and therefore no notice under section 143(2) was required. Rejecting this contention, the Tribunal held that a return filed in response to a section 148 notice, even if delayed, remains a valid return during the pendency of assessment proceedings and cannot be ignored. Once such a return is filed, the Assessing Officer is statutorily required to issue a notice under section 143(2) before framing the reassessment.
The Tribunal relied on several High Court decisions and its own earlier rulings, reiterating that a return filed pursuant to section 148 is to be treated in the same manner as a return filed under section 139 for the purpose of assessment proceedings. Therefore, failure to issue a notice under section 143(2) strikes at the very root of the Assessing Officer’s jurisdiction and is not a mere procedural irregularity.
Accordingly, the Tribunal held that the reassessment order suffered from lack of valid jurisdiction and quashed the entire assessment. Having annulled the reassessment on this legal ground, it did not examine the merits of the addition relating to cash deposits claimed to be from the assessee’s gunny bag manufacturing business.
Even in reassessment proceedings, once an assessee files a return in response to a section 148 notice, issuance of a section 143(2) notice is mandatory. Failure to do so renders the entire reassessment void ab initio.
FULL TEXT OF THE ORDER OF ITAT HYDERBAD
