The Special Bench was constituted to resolve conflicting decisions of various Benches of the Tribunal on whether notices issued under section 143(2) after 23.06.2017, but not in the format prescribed by the CBDT Instruction dated 23.06.2017, rendered the consequent assessment proceedings invalid.
Core Issue. The principal issue before the Special Bench was whether a notice issued under section 143(2) on or after 23.06.2017, which did not conform to the format prescribed by the CBDT Instruction dated 23.06.2017 by failing to specify the nature of scrutiny, constituted a jurisdictional defect rendering the assessment void, or whether such defect was merely procedural and curable under section 292B of the Income-tax
Facts. The assessee, a partnership firm engaged in the business of trading in cigarettes and food items, filed its return of income declaring a loss, which was processed under section 143(1). The case was selected for scrutiny through the Computer Assisted Scrutiny Selection (CASS), and a notice under section 143(2) was issued within the prescribed limitation period and duly served electronically. Thereafter, notices under section 142(1) were issued, the assessee furnished the requisite details, and the assessment was completed under section 143(3). Before the Tribunal, the assessee raised an additional legal ground contending that the notice under section 143(2) was invalid because it was not issued in the format prescribed by the CBDT Instruction dated 23.06.2017, as it failed to specify whether the scrutiny was Limited Scrutiny, Complete Scrutiny or Manual Scrutiny. Owing to conflicting decisions of different Benches of the Tribunal on this issue, the matter was referred to the Special Bench.
Submissions of the Parties
The assessee submitted that the CBDT Instruction dated 23.06.2017, issued under section 119, mandatorily prescribed standardized formats for notices under section 143(2), requiring the Assessing Officer to specify the category of scrutiny. It was argued that compliance with the prescribed format constituted a jurisdictional requirement since the scrutiny category determined the permissible scope of enquiry and protected the assessee against arbitrary expansion of assessment proceedings. According to the assessee, non-compliance with the prescribed format rendered the notice fundamentally invalid, and such a defect could not be cured under section 292B because the provision applies only to technical or procedural defects and not to defects affecting jurisdiction. The assessee further contended that participation in assessment proceedings or operation of section 292BB could not validate an invalid notice.
The Revenue, on the other hand, argued that neither the Act nor the Rules prescribed any statutory format for notices under section 143(2), and the CBDT Instruction was merely an internal administrative guideline intended to standardize departmental procedures. It was submitted that the statutory requirement stood satisfied once a notice informing the assessee that the return had been selected for scrutiny was issued within the prescribed time. Any omission to specify the category of scrutiny constituted, at best, a procedural irregularity protected by section 292B, particularly when the assessee had participated in the proceedings without objection and had failed to establish any prejudice. The Revenue also relied upon the Delhi High Court decision in Bharat Bansal v. NFAC, contending that the scrutiny classification prescribed by the CBDT was essentially an inter-departmental administrative matter. The interveners substantially supported the assessee and contended that a valid notice under section 143(2) was a jurisdictional pre-condition, that the CBDT-prescribed format was mandatory, and that sections 292B and 292BB could not cure a foundational defect in assumption of jurisdiction.
Findings and Determination of the Special Bench
After considering the rival submissions, the Special Bench held that the validity of a notice under section 143(2) must be tested with reference to the statutory provisions of the Income-tax Act and not merely by reference to the format prescribed in administrative instructions. The Tribunal observed that section 143(2) requires only that the Assessing Officer issue a notice within the prescribed period requiring the assessee to produce evidence in support of the return, and neither the Act nor the Rules prescribe any statutory format for such notice. The expressions “Limited Scrutiny”, “Complete Scrutiny” and “Manual Scrutiny” are administrative classifications evolved by the Department for internal management of scrutiny proceedings and do not form part of the statutory requirements of section 143(2). Consequently, omission to mention the category of scrutiny does not affect the assumption of jurisdiction under the Act.
Document – 2026-07-21T134727.428.pdf
The Special Bench further held that although the CBDT Instruction dated 23.06.2017 is binding upon the departmental authorities under section 119 for administrative purposes, it cannot create an additional jurisdictional condition which the legislature has consciously not incorporated into the statute. Executive instructions cannot amend, supplement or override the statutory scheme by importing conditions precedent for assumption of jurisdiction. Therefore, breach of the prescribed format may expose the concerned officer to administrative consequences, but it does not automatically invalidate a notice otherwise issued in accordance with section 143(2).
The Tribunal also explained that section 292B was enacted to prevent valid proceedings from being defeated on account of technical mistakes, defects or omissions. In the present case, the notice effectively informed the assessee that the return had been selected for scrutiny, was issued by the competent authority within the statutory limitation period, and was duly acted upon by the assessee. The assessee participated throughout the assessment proceedings, responded to notices issued under section 142(1), and failed to establish any actual prejudice caused by the omission to mention the scrutiny category. Accordingly, the alleged defect was held to be one of form and procedure rather than substance, fully protected by section 292B, and incapable of vitiating the assessment proceedings. The Special Bench consequently approved the view taken by the Bengaluru Bench in Veeranna Murthy Raghavendra Dikshit and disagreed with the contrary decisions of other Benches which had annulled assessments solely on account of deviation from the CBDT-prescribed format.
Cases Relied Upon
The assessee relied upon Hotel Blue Moon, Laxman Das Khandelwal, Maruti Suzuki India Ltd., UCO Bank v. CIT, Union of India v. Azadi Bachao Andolan, Berger Paints India Ltd., Chandra Kishore Jha, Sukhdev Singh, Spirit Global Construction, Mahesh Kumari Batra (Special Bench), Weilburger Coatings, Manjunatha Cotton & Ginning Factory, Mohd. Farhan A. Shaikh, Srimanta Kumar Shit, Tapas Kumar Das, Sajal Biswas, Hind Ceramics Pvt. Ltd., Anita Garg, and Allied Concepts India Pvt. Ltd. The Revenue relied upon Bharat Bansal v. NFAC (Delhi High Court), UNITAC Energy Solutions India Pvt. Ltd., Rani Kusum, CIT v. Jagat Novel Exhibitors Pvt. Ltd., CIT v. Sudev Industries Ltd., Shirish Madhukar Dalvi, and Veeranna Murthy Raghavendra Dikshit.
Outcome. The Special Bench answered the reference in favour of the Revenue, holding that a notice issued under section 143(2) after 23.06.2017 does not become invalid merely because it is not in the format prescribed by the CBDT Instruction dated 23.06.2017. Non-specification of the category of scrutiny is only a procedural irregularity, curable under section 292B, provided the statutory requirements of section 143(2) are otherwise satisfied. Consequently, the assessment cannot be annulled solely on the ground that the notice did not conform to the prescribed administrative format, and the connected appeals were directed to be placed before the respective Division Benches for disposal on merits.
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