Rishi Anand Vs ITO (ITAT Kolkata)
Assessment Quashed for Non-issuance of 143(2) Notice on Return Filed u/s 148 ITAT Kolkata
Background
Assessee did not file return of income u/s 139(1). Later, a notice u/s 148 was issued on 26.03.2022 after passing order u/s 148A(d), stating that income had escaped assessment. In response, Assessee filed a return on 13.03.2023, declaring income of ₹19.17 lakh.
AO, however, treated this return as non-est since it was filed beyond the prescribed time limit. Despite this, AO proceeded to assess the income at ₹97.08 lakh, taking the returned income figure as basis & making further additions. The CIT(A) upheld the AO’s view, holding that since the return was invalid, there was no need to issue a notice u/s 143(2).
Arguments
Assessee:
- Even if the return was belated, once the AO considered it for computation of total income, it became the basis of assessment.
- Hence, notice u/s 143(2) was mandatory, & absence thereof renders assessment void.
Revenue:
- Since return was filed late, it was invalid, & no 143(2) notice was required.
Tribunal’s Observations /Decision
- AO himself relied on the figures in the return filed on 13.03.2023 for computation of assessed income.
- If the return is treated as non-est, the AO could not have used it as basis for assessment.
- By adopting the return figures, the AO effectively accepted it as a valid return.
- Therefore, issuance of notice u/s 143(2) was mandatory before making additions.
- Reliance placed on Delhi High Court ruling in PCIT vs Dart Infrabuild Pvt. Ltd. (ITA No.10/2022, order dated 17.11.2023), which held that once a return is considered in assessment proceedings, a notice u/s 143(2) becomes compulsory, even if the return was belated.
- The assessment order framed without issuing mandatory notice u/s 143(2) is invalid.
- ITAT quashed the assessment & allowed the assessee’s appeal in full.
Notice u/s 143(2) is mandatory if return filed in response to notice u/s 148 is used as basis of assessment, even if belated. AO cannot treat a return as non-est for technical delay but simultaneously rely on it for computation. Following Dart Infrabuild Pvt. Ltd. (Delhi HC), ITAT reinforced that procedural lapses vitiate assessment.
