Sanghi Textiles Private Limited Vs ITO (ITAT Hyderabad)
Reassessment Quashed for Want of Jurisdiction: Notice Under Section 143(2) Is Mandatory After Return Filed Under Section 148
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) quashed the reassessment order passed under section 147 read with section 144B, holding that the failure to issue a mandatory notice under section 143(2) after the assessee filed its return in response to notice under section 148 rendered the entire assessment void ab initio.
The Tribunal held that a return of income filed pursuant to section 148, even if filed belatedly, does not lose its character as a valid return and must be treated as a return filed under section 139, in view of the express language of section 148 (“so far as may be, apply accordingly”). Consequently, once such a return is filed, the issuance of notice under section 143(2) becomes a jurisdictional prerequisite for framing a valid assessment.
Rejecting the Revenue’s contention that no 143(2) notice was required in reassessment proceedings, the ITAT relied on a long line of High Court and Supreme Court precedents, including Hotel Blue Moon, Laxman Das Khandelwal, Rajeev Sharma, M. Chellappan, and several recent High Court rulings, holding that non-issuance of notice under section 143(2) is not a curable procedural defect but a fatal jurisdictional lapse. The Tribunal applied the principle laid down in Vegetable Products Ltd. that where two views are possible, the one favourable to the assessee must prevail.
Since the Assessing Officer had proceeded to make multiple additions—by estimating profits, treating deposits as unexplained, disallowing expenses, and denying carry-forward of losses—without first assuming valid jurisdiction, the entire assessment was held to be unsustainable in law. Having quashed the reassessment on this foundational issue, the Tribunal did not adjudicate the additions on merits, leaving them open.
Accordingly, the assessee’s appeal was allowed in full, and the reassessment order was set aside for lack of valid jurisdiction
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
