Rohit Seth Vs ITO (ITAT Kolkata)
Kolkata ITAT: “Computer-Aided Scrutiny” Alone Not Enough – Notice Must Specify Scope; ITAT Kolkata Quashes Assessment: Non-Specific Scrutiny Notice Under 143(2) Held Invalid; Assessment Collapses as 143(2) Notice Fails to Mention Scrutiny Type
In this appeal before the ITAT Kolkata, the Assessee challenged the validity of assessment proceedings on the ground that the notice issued u/s 143(2) dated 24.09.2018 was defective.
Assessee contended that as per CBDT Instruction No. F. No. 225/157/2017/ITA-II dated 23.06.2017, notices u/s 143(2) must be issued in one of the prescribed formats clearly indicating whether the scrutiny is limited, complete, or compulsory manual scrutiny. However, the notice served in this case merely mentioned “computer-aided scrutiny selection” without specifying the category. Assessee argued that this omission rendered the notice invalid, relying on the Tribunal’s decision in Tapas Kumar Das v. ITO (ITA No. 1660/KOL/2024, order dated 11.03.2025), where a similar notice was quashed.
Department contended that the omission was immaterial since the notice was computer-generated.
Tribunal, after hearing both sides, observed that:
- The notice issued was not in conformity with the mandatory CBDT instruction,
- CBDT circulars/instructions issued u/s 119 are binding on the Department, as held by the Supreme Court in UCO Bank v. CIT.
- Similar views were taken by the Kolkata Bench in Shib Nath Ghosh v. ITO (ITA No.1812/KOL/2024, order dated 29.11.2024).
- Following these precedents, Tribunal held that the notice was invalid, & consequently, the assessment framed on its basis was void ab initio.
- Notice u/s 143(2) not issued in the prescribed format- Invalid
- Assessment based on such notice- Quashed as void ab initio
- Appeal allowed in favour of Assessee
FULL TEXT OF THE ORDER OF ITAT KOLKATA
