Nisha Kapistalamchetlur Vs ITO (ITAT Hyderabad)
The Hyderabad ITAT quashed the reassessment for AY 2013-14 & 2014-15 on a fundamental jurisdictional defect. The assessee had filed a return (though belatedly) in response to notice issued under Section 148, but the AO treated the return as non-est and proceeded to complete assessment without issuing notice under Section 143(2).
The Tribunal held that a return filed in response to Section 148-even if delayed-remains a valid return in the eyes of law if filed during the pendency of proceedings. Once such return is filed, the AO is mandatorily required to issue notice under Section 143(2) before framing assessment.
It was emphasized that Section 148 deems such return as one filed under Section 139, thereby attracting all procedural requirements including Section 143(2). Failure to issue such notice is not a procedural lapse but a jurisdictional defect, rendering the reassessment void.
Relying on multiple High Court rulings and consistent Tribunal view, the ITAT concluded that the AO’s action in bypassing Section 143(2) vitiated the entire assessment.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The present appeals filed by the assessee are directed against the respective orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 17/09/2025, which in turn arises from the orders passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 31/03/2022 & 30/03/2022 for the Assessment Year (AY) 2013-14 & 2014-15 respectively. As common issues are involved in the captioned appeals, the same are being taken up and disposed of vide a consolidated order. We shall first take up the appeal filed by the assessee in ITA No.1935/Hyd/2025 for AY 2013-14, wherein the impugned order of the CIT(A) has been assailed on the following grounds of appeal:
1. The Order of the learned Commissioner of Income Tax (A), NFAC is not correct either on facts or in law and in both.
2. The Learned CIT(A), NFAC erred in upholding the action of the Assessing Officer in treating the return filed on 13.12.2021 as non-est though it was a valid return filed in response to notice under Section 148 and in the absence of a valid notice under Section 143(2) the assessment order is null and void.
3. a) The notice under section 148 for A.Y. 2013-14, though digitally signed on 31.03.2021, was actually issued through the ITBA portal only on 01.04.2021, and having been issued after 31.03.2021 under the old law instead of the amended provisions of section 148 read with section 148A, the notice issued U/s 148 dated 31.03.2021 is invalid and renders the reassessment proceedings void ab initio.
b) Since the notice was served after 01.04.2021 it is deemed to fall under the amended regime which mandates compliance with Section 148A and sanction under the new Section 151 and in the absence of such compliance the notice is invalid and the reassessment proceedings are void.
4. The reassessment notices for A.Y. 2013-14 under section 148, though dated 31.03.2021, was issued only on 01.04.2021 ie., beyond three years, without proper sanction under section 151 (ii) of the amended law, as approval was taken from the PCIT, Tirupati instead of the competent authority (PCCIT/CCIT), and hence the entire proceedings are void ab initio.
5. The Learned CITIA), NFAC was not justified in upholding the addition towards long-term capital gain ignoring the principle of consistency as the same transaction in the case of the assessee’s sister Smt K Anusha (PAN: CHCPK3383F) was accepted by the Department in a speaking order passed U/s 147 r.w.a 144B on identical facts and this fact was duly brought to the notice of the CITIA) but was not considered rendering the order arbitrary and unsustainable..
6. The learned CIT(A), NFAC was not justified in confirming the addition of Rs. 20,16,567 towards alleged long term capital gain treating the property as belonging to the individual ignoring that it was ancestral in nature belonging to the HUF headed by the appellant’s father and supported by the Ryotwari Patta and Inam Deputy Tahsildar’s order evidencing joint family ownership.
7. The learned CITIA), NFAC failed to appreciate that the sale transaction was executed through a GPA holder without knowledge or consent of the family and no sale consideration was ever received by the appellant and hence no capital gain could be said to have accrued or arisen.
8. The learned CIT(A), NFAC failed to consider the documentary evidences placed on record such as ACB freezing orders Sub-Registrar endorsements and cancellation deeds which clearly established that the property transactions were under legal dispute and no taxable event had occurred in the hands of the appellant
9. The appellant craves leave to add, amend, modify, rescind, supplement or alter any or more grounds of appeal stated herein above either before or at the time of hearing of this appeal.”
2. Shri K A Sai Prasad, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the grounds of appeal Nos. 2, 3, 4 & 5 herein above are additional grounds. The Ld. AR submitted that as the assessee, based on the aforesaid additional grounds, is seeking our indulgence for adjudicating certain legal issues based on the facts borne on record, therefore, the same be admitted.
