Vinod Mongia Vs ITO (ITAT Delhi)
Conclusion: Reassessment order passed under Section 147/143(3) was quashed on the ground that no notice under Section 143(2) was issued after the assessee filed the return in response to notice under Section 148, rendering the assessment void ab initio. Even if the tax department had strong information suggesting tax evasion, a failure to follow the mandatory procedural steps required by the Act will invalidate the entire assessment.
Held: AO initiated reassessment proceedings against the assessee by issuing a notice under Section 148, based on information about large foreign currency deposits. In response to this notice, assessee duly filed a return of income on May 22, 2019. AO completely failed to issue mandatory notice under Section 143(2) on September 30, 2020. Despite this failure, AO went ahead with the assessment and passed a final reassessment order on December 29, 2019, making a significant addition to assessee’s income under Section 68. It was held that the issuance of a notice under Section 143(2) was a mandatory and jurisdictional requirement for making an assessment, and this rule applied equally to reassessment proceedings. It was not a mere procedural formality that could be waived. The complete absence of this notice was a fundamental violation of the mandatory provisions of the law, which was a fatal flaw in the proceedings. Therefore, the reassessment order passed under Section 147 was declared a nullity in the eyes of the law and was quashed.
