Pahwa Buildtech Private Limited Vs DCIT (ITAT Delhi)
Delhi ITAT: Reassessment Quashed for Complete Absence of Section 143(2) Notice – Presumption Under Evidence Act Cannot Cure Jurisdictional Defect
The Delhi ITAT quashed the reassessment framed under Sections 147/143(3) holding that issuance of notice under Section 143(2) is a mandatory jurisdictional requirement, and its complete absence renders the assessment invalid. The reassessment had resulted in an addition of ₹35 lakh under Section 68 towards unexplained share application money.
Significantly, in the remand proceedings, the AO himself admitted that no Section 143(2) notice could be found in the ITBA case history, while the original manual assessment records were also unavailable. The CIT(A), nevertheless, sustained the assessment by invoking a presumption under Section 114 of the Indian Evidence Act, 1872 that the notice had been issued.
The ITAT rejected this approach and relied upon the Supreme Court judgment in CIT v. Laxman Das Khandelwal [2019] 417 ITR 325 (SC), reiterating that Section 292BB can cure defects in the service of a notice, but cannot cure the complete absence of issuance of the notice itself.
Since the Department could produce no evidence that a Section 143(2) notice was ever issued, the Tribunal held that its issuance could not merely be presumed. The reassessment was consequently quashed as invalid, and all other jurisdictional and merits grounds were rendered academic.
Cases Discussed
- CIT vs. Laxman Das Khandelwal (Supreme Court),[2019] 417 ITR 325 (SC)
- ACIT vs. Hotel Blue Moon (Supreme Court),321 ITR 362 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal of the assessee is arising out of the order of the Ld. Commissioner of Income Tax (Appeal-30), Delhi in Appeal No. CIT(A), Delhi-7/11130/2019-20 dated 24.03.2026. Assessment was framed by the ITO, Ward 19(3), Delhi for the AY 2012-13 u/s 147/143(3) of the Income Tax Act, 1961 (hereinafter referred as “the Act”) vide his order dated 30.12.2019.
2. The first legal issue in this appeal of the assessee is non-issue of notice u/s. 143(2) of the Act vide ground no. 4 which read as under:-
“4. That against filing of original income tax return and return in response to the notice u/s. 148 of the Act, neither notice u/s. 143(2) of the Income Tax Act nor show cause notice prior proceeding to make additions to the income of assessee company has been issued for the year under consideration. This fact is evident from the details of notices issued during re-assessment proceedings. Further on this issue various judicial decision were filed before the CIT(Appeal). Under such circumstances the reassessment proceedings completed by Ld. Assessing Officer and confirmed by the Hon’ble CIT Appeal vide order dated 24.3.2026 deserved to be quashed and may please be quashed.”
3. The brief facts of the case are that the assessee filed its return of income originally on 21.02.2013, which was processed by the department u/s. 143(1) of the Act. Subsequently, revenue received information that the assessee has obtained loan and advances for purchase of property which was from the persons having no net worth. Therefore, notice u/s. 148 of the Act dated 31.3.2019 was issued and accordingly, assessment was framed u/s. 143(3) read with section 147 of the Act. The AO made the addition (which in dispute) for share application money received from Smt. Shanti Devi Rs. 30 lacs and from Smt. Sunita Nayar Rs. 5 lacs which has not been explained by the assessee in terms of section 68 of the Act.
4. Aggrieved, assessee preferred appeal before the Ld. CIT(A) and raised the ground regarding non-issue of notice u/s. 143(2) of the Act and accordingly, urged before the ld. CIT(A) to quash the assessment, as the same is invalid. The CIT(A) after taking the Remand Report from the AO, confirmed the action of the AO for assuming jurisdiction for framing of assessment in the absence of notice u/s. 143(2) of the Act by presumption u/s. 114 of the Indian Evidence Act, 1872.
5. Aggrieved, assessee is in appeal before the Tribunal.
6. Before us, ld. Counsel for the assessee stated that assessee is contesting from the beginning that there is no notice u/s. 143(2) of the Act. Ld. Counsel for the assessee explained that notice u/s. 148 of the Act was issued by the AO on 31.3.2019 and in compliance to the same assessee filed return of income for the relevant assessment year 2012-13 on 20.11.2019 (a copy fo the acknowledgement thereof is enclosed in Assessee’s paper book-1 at page no. 23). The ld. Counsel for the assessee explained that the AO issued notice u/s. 142(1) and show cause notice on various dates and accordingly assessment was completed by making the addition of Rs. 35 lacs as unexplained share application money. Ld. Counsel for the assessee further stated that no notice u/s. 143(2) was issued by the AO and this fact was admitted by the AO in his remand report submitted before the CIT(A) vide letter issued vide F.No. :DCIT/Cc-32/Misc./2025-26/1188 dated 25.3.2026 wherein, the AO has reproduced the ground raised by the assesee as under:-
6.1 Ground no. 1 – Perversity due to non issue of notice u/s. 143(2) of the Act.
a) That notice u/s. 148 of the Act was uploaded by Ld. AO on e-filing portal on 31.3.2019, however, as evident from page 2-3 of paper book, the said notice was not served on any email of the assessee company.
b) That the notice dated 8.11.2019 was first served on email of assessee company and the assessee company filed return of income u/s. 148 of the Act on 20.11.2019.
c) It is pertinent to mention here that no notice u/s. 143(2) of the Act was ever issued by AO during the course of assessment proceedings and the said fact is evident from list of notices during reassessment proceedings as extracted from e-filing portal and enclosed at page 2-5 of the paper book.
d) Since no notice u/s. 143(2) of the Act was issued by Ld. AO during the assessment proceedings, the reassessment order passed by Ld. AO deserves to be quashed and many please be quashed.
Comments of AO: (i) It is submitted that notice u/s. 148 of the aCt was issued through ITBA Portal on 31.3.2019 vide DIN No. ITBA/AST/S/148/2018-19/1015620862(1). Further, on perusal of the e-filing portal, it is noticed that the said notice is available at assessee’s portal. Thus, ground raised by assessee regarding non-receipt of such notice is devoid of any merits.
Further, it is to mention that on perusal of the assessment record (case history) on ITBA portal no notice u/s. 143(2) notice was found. However, since this original case records (manual file) are not available with this office as assessment record was passed by then JAO i.e. ITO, Ward-19(3). Further, this office has sent multiple email to the JAO for requisition of original case records, no reply/case record has been received till date. Therefore, no comments are warranted against the issuance of 143(2) notice by the undersigned.”
7. From the above, ld. Counsel for the assessee stated that AO admitted that there is no notice u/s. 143(2) of the Act which is emanating from the assessment records. Consequently, the reassessment is bad in law as there is no jurisdiction to frame the jurisdiction u/s. 143(2) of the Act. For this assessee placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal reported in [2019] 417 ITR 325 (SC) wherein, the Hon’ble Supreme Court referred the decision of the Hon’ble Supreme Court in the case of ACIT vs. Hotel Blue Moon 321 ITR 362 (SC) wherein, the Hon’ble Supreme Court has considered the issue including the applicability of provision of section 292BB of the Act by holding as under:-
“7. A closer look at Section 292BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer.
On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under section 143(2) of the Act being perquisite, in the absence of such notice, the entire proceedings would be invalid.
8. The law on the point as regards applicability of the requirement of notice under section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon’s case (supra). The issue that however, needs to be considered is the impact of Section 292BB of the Act.
9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on the part of the assessee. It is however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department intended to cure complete absence of notice itself.
10. Since the facts on record are clear that no notice under Section 143(2) of the Act was ever issued by the Department, the findings rendered by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter.”
8. When these facts were confronted to the Ld. Sr. DR he could not controvert the above facts, but she agued that Ld. CIT(A) rightly applied the provisions of section 114 of the Indian Evidence Act, 1872 wherein, it is presumed that notice u/s. 143(2) was issued and the assessee is participating in the proceedings.
9. We have heard the rival contentions and gone through the facts. We noted that admittedly this issue is covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal (Supra) that in case there is no notice u/s. 143(2), no assessment can be framed u/s. 143(3) of the Act. AO in his remand report dated 25.3.2026 clearly admitted that as per case records of ITBA portal no notice u/s. 143(3) is available. Further, it has been admitted by the AO from the records that manual file is not available with the jurisdictional AO wherein, the assessment order was passed by the ITO, Ward 19(3) and email was sent to requisitioned the original case records, but no reply has been received till date. It means that no notice u/s. 143(2) of the Act has been issued and accordingly, the assessment framed is without notice u/s. 142(3) is invalid and quashed as such.
10. As regards the other issues of jurisdictional as well as on merits, since we have already adjudicated the issue of jurisdiction in favour of the assessee, we hold the other pleadings have become academic and accordingly dismissed as such.
11. In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 07.08.2026.
