Surat ITAT Quashes ₹5.20 Crore Reassessment for Missing Section 143(2) Notice

Grim Tech Projects India Private Limited Vs ACIT (ITAT Surat)

Belated Return Acted Upon in Reassessment Requires Section 143(2) Notice: Surat ITAT Quashes Assessment

Case Details

In Grim Tech Projects India Private Limited v. ACIT, Circle-1(1)(2), Surat, the Surat Bench of the Income Tax Appellate Tribunal held that the Assessing Officer could not dispense with a mandatory notice under section 143(2) merely because the return responding to a section 148 notice was filed beyond the period specified.

The decision in ITA No. 968/SRT/2025, concerning Assessment Year 2012-13, was pronounced on 7 October 2026 by Ms. Suchitra Kamble, Judicial Member, and Shri B.M. Biyani, Accountant Member.

The Tribunal quashed the reassessment containing a ₹5.20 crore addition under section 68, finding that the Assessing Officer had acted upon the belated return without issuing section 143(2) notice.

Background: Reopening and Belated Return

The assessee-company filed its original return on 30 September 2012, declaring total income of ₹3,21,20,150. The return was processed under section 143(1).

Subsequently, the Assessing Officer reopened the case by issuing a notice under section 148 dated 31 March 2019, requiring a return within 30 days.

The assessee filed its return in response on 21 October 2019, again declaring income of ₹3,21,20,150. The Assessing Officer issued notices under section 142(1), a show-cause notice and summons under section 131.

Ultimately, an assessment under section 144 read with section 147 was completed on 30 December 2019, adding ₹5,20,00,000 under section 68 and determining total income at ₹8,41,20,150.

Before the CIT(A), the assessee challenged both the legality of the proceedings and the addition. The CIT(A), however, remanded the matter for fresh adjudication because the assessment had been framed under section 144. The assessee challenged that appellate order before the Tribunal.

Assessee’s Jurisdictional Objection

The principal objection considered by the Tribunal was that no notice under section 143(2) had been issued after the return responding to section 148.

The assessee acknowledged that its return was belated. Indeed, the Assessing Officer had stated in paragraph 4 of the assessment order that the return was invalid because it was filed after the date specified in the notice.

However, paragraph 14 of the same order expressly began the computation with “Total income as per Return of Income filed on 21.10.2019” and then added ₹5.20 crore.

The assessee argued that the Assessing Officer had therefore accepted and acted upon that return. Having adopted it as the foundation of the computation, he could not dispense with the statutory scrutiny notice.

Alternatively, it contended that delay alone did not render the return non-existent in law.

Revenue’s Defence

The Revenue maintained that the belated return was invalid and that the Assessing Officer could consequently complete a best judgment assessment without issuing section 143(2) notice.

It argued that the reference to the return dated 21 October 2019 was merely a typographical error. Since the original and subsequent returns declared identical income, the computation should be understood as referring to the original return.

The Revenue also relied on CIT v. Shankar Lall Goenka, [2025] 174 taxmann.com 31 (Gauhati).

Tribunal: Assessment Order Must Be Read as It Stands

The Tribunal rejected the proposed typographical-error explanation. It held that the assessment order had to be examined as written, and its specific reference to the subsequent return, coupled with adoption of the income declared therein, could not be brushed aside merely on the Revenue’s submission.

Once the Assessing Officer acted upon the return filed in response to section 148, delay beyond the notice period did not dispense with section 143(2).

The Tribunal also accepted the principle emerging from the assessee’s cited decisions that a delayed return responding to section 148 does not cease to be a return merely because of that delay.

It relied extensively on Nisha Kapistalamchetlur v. ITO, ITA Nos. 1935 and 1936/Hyd/2025, dated 30 March 2026, which discussed Sanghi Textiles Private Limited v. ITO and several High Court decisions concerning the mandatory scrutiny notice.

The assessee had also cited PCIT v. Dart Infrabuild, Shaily Juneja v. ACIT, and the Bangalore Tribunal’s decision in Intact Developers Pvt. Ltd. v. DCIT.

Revenue’s Precedent Distinguished

The Tribunal distinguished Shankar Lall Goenka because a section 143(2) notice had admittedly been issued there before the case was transferred from the ITO to the DCIT. That dispute concerned pecuniary jurisdiction and absence of a fresh notice after transfer.

The present case involved complete non-issuance of section 143(2) notice after the reassessment return, making the controversy materially different.

Decision and Author’s Comments

The assessment dated 30 December 2019 was quashed, and the appeal allowed. The remaining grounds, including the DIN objection and merits of the section 68 addition, became academic.

The decision is particularly useful where an assessment order simultaneously calls a return invalid and uses that very return to compute income. The Tribunal treated the actual course adopted by the Assessing Officer as decisive.

Its scope should nevertheless remain tied to the historical reassessment provisions and facts examined. It does not hold that every best judgment assessment requires section 143(2), irrespective of whether a return was filed.

Finally, the ₹5.20 crore addition fell with the assessment’s jurisdictional foundation. The Tribunal did not certify the underlying credits as genuine; substantive examination became unnecessary once the assessment itself was quashed.

Cases Discussed

Nisha Kapistalamchetlur v. ITO (ITAT Hyderabad; ITA Nos. 1935 and 1936/Hyd/2025; 30/03/2026): A belated return in response to section 148 could not be disregarded merely because of delay, and the assessment was quashed for non-issuance of section 143(2) notice.

Sanghi Textiles Private Limited v. ITO (ITAT Hyderabad; ITA No. 1311/Hyd/2025; 07/01/2026): A delayed return filed pursuant to section 148 remained a return for assessment purposes, requiring compliance with section 143(2).

CIT v. Shankar Lall Goenka (Gauhati High Court; [2025] 174 taxmann.com 31): Distinguished because an initial notice under section 143(2) had been issued and the controversy concerned the assessing authority’s jurisdiction after transfer.

PCIT v. Dart Infrabuild (P.) Ltd. (Delhi High Court; (2024) 166 taxmann.com 4): Cited in support of the mandatory scrutiny-notice requirement in reassessment proceedings.

Shaily Juneja v. ACIT (Delhi High Court; (2024) 167 taxmann.com 90): Failure to issue the mandatory notice under section 143(2) was treated as a jurisdictional defect.

FULL TEXT OF THE ORDER OF ITAT SURAT

Feeling aggrieved by order of first appeal dated 15.07.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”], which in turn arises out of order of re-assessment dated 30.12.2019 passed by learned ACIT, Circle 1(1)(2), Surat [“AO”] u/s 144 r.w.s. 147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal.

2. The background facts leading to present appeal are such that the assessee-company filed original return of AY 2012-13 on 30.09.2012 u/s 139 declaring a total income of Rs. 3,21,20,150/- which was assessed u/s 143(1). Subsequently, taking into account certain information available with Income-tax Department, the Ld. AO re-opened assessee’s case u/s 147 through a notice dated 31.03.2019 u/s 148. In response to this notice, the assessee re-filed return on 21.10.2019 declaring against a total income of Rs. 3,21,20,150/-. The Ld. AO also issued notices u/s 142(1), show-cause notice, summon u/s 131, etc.; the details of such notices issued and the compliances to same made/not made by assessee are noted by Ld. AO in Para 4 of assessment-order. Ultimately, the Ld. AO completed assessment u/s 144 r.w.s. 147 by assessment-order dated 30.12.2019 after making an addition of Rs. 5,20,00,000/- u/s 68 and thereby determining total income at Rs. 8,41,20,150/-. Aggrieved, the assessee carried matter in first-appeal and raised grievances challenging the legality of proceedings as well as the merits of the addition. The assessee made submissions to Ld. CIT(A). The Ld. CIT(A), however, remanded matter to the file of Ld. AO for adjudication afresh since the assessment-order passed by Ld. AO was u/s 144. Still aggrieved, the assessee has come in next appeal before us.

3. The assessee has raised following grounds:

“1. That the order dated 15.07.2025 passed by the Ld. CIT(A) is bad in law and on the facts.

2. That, in the facts and circumstances of the case and in law, the Ld. CIT(A) misdirected itself by remanding the matter to the Assessing Officer without first adjudicating the legal grounds raised by the Appellant challenging the legality and validity of the assessment proceedings.

3. That in the facts and circumstances of the case and in law, the entire proceedings u/s 147/148 and the consequent assessment u/s 144 of the Act are invalid and void ab initio because no mandatory notice u/s 143(2) was issued to the Appellant before making the assessment.

4. That, in the facts and circumstances of the case and in law, the assessment order passed without mentioning the document identification number (DIN) therein is legally invalid and liable to be quashed.

5. That, in the facts and circumstances of the case and in law, the findings of the Ld. CIT(A) are perverse as no additional evidence was filed by the Appellant, which warrants setting aside the matter back to the Ld. AO.

6. That, in the facts and circumstances of the case and in law, Ld. CIT(A) erred in not appreciating that the Ld. AO wrongly treated the return filed by the Appellant as invalid and thereby, passed an assessment order u/s 144 of the Act.

7. That, in the facts and circumstances of the case, the Ld. CIT(A) misdirected in law by not appreciating that the addition of Rs. 5,20,00,000/- u/s 68 of the Act is based on assumptions and conjectures, as the Appellant had furnished details to show the genuineness and credibility of all entities/parties.”

4. By means of Ground No. 3, the assessee is challenging the legality of assessment completed by Ld. AO u/s 144 on the premise that no mandatory notice u/s 143(2) was issued to assessee before making such assessment.

5. Ld. AR for assessee submitted that in response to the notice dated 31.03.2019 issued by Ld. AO u/s 148 for re-opening assessee’s case, the assessee filed return of income on 21.10.2019. Thereafter, the Ld. AO passed the impugned assessment-order dated 30.12.2019 u/s 144 r.w.s. 147 without issuing a statutory notice u/s 143(2). Therefore, the assessment-order passed by Ld. AO without issuing mandatory notice u/s 143(2) falls short of jurisdiction; the same is illegal and must be quashed.

6. While arguing, Ld. AR admitted that in the aforesaid notice dated 31.03.2019 u/s 148, the Ld. AO required assessee to file return within 30 days whereas the assessee filed return belatedly on 21.10.2019. Therefore, the Ld. AO has mentioned in Para 4 of assessment-order: “In response to the notice u/s 148 of the Act, the assessee filed Return of Income after due date mentioned in the notice u/s 148 of the Act (ITR filed on 21.10.2019). Therefore, the ITR filed is invalid”. But, however, the fact is that the Ld. AO has himself accepted and acted upon the return belatedly filed by assessee on 21.10.2019. To demonstrate this fact, Ld. AR referred the Para 14 of assessment-order; the same is re-produced below for an immediate reference:

“14. With the above discussion of the facts and after carefully scrutinizing the details filed, the total income of the assessee company is computed as under:

Therefore, Ld. AR submitted, when the Ld. AO has accepted and acted upon the return filed by assessee, it was obligatory on the part of Ld. AO to issue notice u/s 143(2) for making assessment u/s 143(3) or 144 of the Act.

7. Without prejudice to above, Ld. AR submitted, even in case of belated filing of return, the same cannot be treated as an invalid return and the Ld. AO cannot dispense with the requirement of issuing mandatory notice u/s 143(2) if he wanted to make assessment u/s 143(3) or 144. In support of his claim, the Ld. AR relied upon following decisions:

(i) ITAT, Hyderabad in Nisha Kapistalamchetlur Vs. Income-tax Officer, ITA No. 1935 & 1936/Hyd/2025, order dated 30.03.2026

(ii) Hon’ble Delhi High Court in Principal Commissioner of Income-tax Vs. Dart Infrabuild (P) Ltd. (2024) 166 taxmann.com 4 (Delhi)

(iii) Hon’ble Delhi High Court in Shaily Juneja Vs. Assistant Commissioner of Income-tax (2024) 167 taxmann.com 90 (Delhi)

(iv) ITAT, Bangalore in Intact Developers Pvt. Ltd. Vs. DCIT, ITA No. 823, 824 & 825/Bang/2025, order dated 24.11.2025

8. With above submissions, Ld. AR requested to quash the assessment-order passed by Ld. AO.

9. Per contra, Ld. DR for revenue raised following contentions:

(i) That, the assessee filed return belatedly after expiry of the time specified by Ld. AO in the notice u/s 148, therefore the return filed by assessee was certainly invalid. Hence, the Ld. AO was justified in framing assessment u/s 144 without issuing notice u/s 143(2).

(ii) That, in Para 4 of assessment-order, the Ld. AO has given his categorical finding that the return was not filed within the time-allowed in the notice and therefore invalid. The Ld. AO’s observation is very clear and unambiguous.

(iii) That, in Para 14 of assessment-order, the Ld. AO has started computation of total income by taking the figure of returned income at Rs. 3,21,20,150/- and the figure of returned income in the original return filed u/s 139 was also same. Therefore, the mention of “Total Income as per Return of Income filed on 21.10.2019” is a typo error only, the Ld. AO’s noting should be taken with reference to the return filed on 30.09.2012 u/s 139.

(iv) Reliance is placed upon the judgement of Hon’ble Gauhati High Court in Commissioner of Income-tax Vs. Shankar Lall Goenka (2025) 174 taxmann.com 31 (Gauhati).

10. We have considered rival submissions of both sides and carefully perused the material available on record. The short issue for our adjudication is whether, in the facts of present case, the Ld. AO was justified in completing assessment u/s 144 r.w.s. 147 without issuing notice u/s 143(2)? The undisputed facts are (i) the Ld. AO issued notice u/s 148 dated 31.03.2019 requiring the assessee to furnish return of income within 30 days, (ii) the assessee filed return of income on 21.10.2019, i.e. beyond the period specified in the notice u/s 148, and (iii) no notice u/s 143(2) was issued by the Ld. AO before completing assessment u/s 144.

11. At first, we note that the Ld. AO has observed in Para 4 of the assessment-order that since the return was filed after the due date mentioned in the notice u/s 148, “Therefore, the ITR filed is invalid”. However, while making the computation of total income in Para 14, the Ld. AO has specifically recorded the returned income as “Total income as per Return of Income filed on 21.10.2019” at Rs. 3,21,20,150/- and thereafter made addition of Rs. 5,20,00,000/- u/s 68. Thus, the assessment-order itself contains a specific reference to the return filed on 21.10.2019 and the returned income declared therein. The contention of Ld. DR that the reference to the return dated 21.10.2019 in Para 14 is merely a typographical error and that the Ld. AO actually intended to refer to the original return filed on 30.09.2012, cannot be accepted merely on the basis of such submission. The assessment-order has to be examined as it stands, and the specific reference made by the Ld. AO to the return filed on 21.10.2019 coupled with adoption of the income declared therein as the starting point for computation, cannot be brushed aside as a mere typographical mistake. Once the Ld. AO proceeded to act upon the return filed in response to notice u/s 148 and determined the assessed income by making addition to the income declared therein, the statutory requirement of notice u/s 143(2) could not have been dispensed with merely because the return was filed beyond the period specified in the notice u/s 148.
12. Apart from above, we have also considered the decisions relied upon by Ld. AR. The ratio emerging from those decisions supports the proposition that a return of income filed in response to notice u/s 148, though beyond the period specified in such notice, does not cease to be a return of income and cannot be treated as non-est merely on account of delay. Further, where such return is acted upon for the purpose of framing assessment, issuance of notice u/s 143(2) is mandatory. We re-produce below the relevant paras of the order of ITAT, Hyderabad in Nisha Kapistalamchetlur Vs. Income-tax Officer, ITA No. 1935 & 1936/Hyd/2025, order dated 30.03.2026 which deals other decisions of different appellant forums including those quoted by Ld. AR:

“5. Ostensibly, the assessee, in response to the notice under section 148 of the Act, dated 31/03/2021, had filed her return of income on 13/12/2021, declaring an income of Rs. 96,000/-. The AO, observing that the assessee had failed to file her return of income in compliance to the notice issued under section 148 of the Act, dated 31/03/2021, i.e., within the prescribed period therein provided, thus held the same as non-est and declined to take cognizance of the same except for considering the information therein provided for the purpose of making best judgment assessment. Accordingly, the AO, based on his aforesaid conviction, specifically observed that the issuance of notice under section 143(2) of the Act was being dispensed with.

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14. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.

15. As observed herein above, the controversy involved in the present appeal is double facet, viz., (i) that as to whether or not a return of income filed in response to the notice issued by the AO under section 148 of the Act, dated 31/03/2021 after the lapse of the prescribed time period is to be construed as a return of income filed by the assessee?: and (ii) that as to whether or not pursuant to the return of income filed by an assessee in response to notice under section 148 of the Act the issuance of notice under section 143(2) of the Act by the AO is mandatory?. We find that both the aforesaid issues had been deliberated upon at length by the Tribunal, i.e., ITAT, Hyderabad “B” Bench, Hyderabad in the case of Sanghi Textiles Private Limited vs. ITO, ITA No1311/Hyd/2025, dated 07/01/2026, wherein it was held as under:

“19. Apropos the first issue, ie, as to whether or not the return of income filed by an assessee beyond the prescribed time period allowed vide the notice under section 148 of the Act is to be construed as a return of income, we find that the said issue had been answered by the Hon’ble High Court of Kerala in the case of Chirakkal Service Co-operative Bank Ltd. v. CIT (2016) 384 ITR 490 (Kerala). The indulgence of the Hon’ble High Court was, inter alia, sought for adjudicating the following substantial question of law.

“Whether the return filed by the assessee beyond the period stipulated u/s 139(1)/139(4) or Section 142(1)/148 can be held as non-est in the eyes of law and has invalidated for the purpose of deciding exemption u/s 80P of the Income Tax Act, 1961?”

The Hon’ble High Court answered the aforesaid issue, and, held, that the “return of income” filed by the assessee beyond the period stipulated under Section 139(1) or Section 139(4) or Section 142(1) or Section 148 can also be accepted and acted upon provided further proceedings in relation to such assessment are pending in the statutory hierarchy of adjudication in terms of the provisions of the Income-tax Act. As in the present case before us, the “return of income” filed by the assessee company in compliance to the notice issued under Section 148 of the Act, dated 27.03.2021 was filed on 21.10.2021, i.e. during the pendency of the assessment proceedings which had thereafter culminated vide order passed under Section 147 r.w.s 144B of the Act, dated 30/03/2022, therefore, we are of the firm conviction that there was no justification for the A.O. to have held the said “return of income” as invalid and non-est in the eyes of law. Also, support is drawn from the judgment of the Hon’ble High Court of Patna in the case of CIT Vs. Nagendra Prasad, (2023) 156 Taxmann.com 191 (Patna). The Hon’ble High Court, had observed that where the notice was issued by the A.O. u/s 148 requiring the assessee to file his return of income within thirty days but the said return was filed after eight and a half months, since the return was filed by assessee in response to the said notice, though delayed, there should have been a notice issued under Section 143(2) as the requirement to issue notice could not be dispensed with. Accordingly, based on our aforesaid observations, we are of the view that the “return of income” filed by the assessee company on 21.10.2021 i.e.. in response to the notice u/s. 148 of the Act dated 27.03.2021, though delayed, did not cease to be a “return of income” in the eyes of the law.

20. We shall now deal with the core issue involved in the present appeal, i.e., whether the AO, in response to the return of income filed by the assessee company for the subject year, i.e., AY 2014-15, on 21/10/2021, in compliance to the notice issued under section 148 of the Act, before proceeding with and framing the impugned assessment was statutorily obligated to issue a notice under Section 143(2) of the Act. We find that section 143(2) of the Act contemplates that where the return of income has been furnished under section 139 of the Act, or in response to a notice under sub-section (1) of section 142, the AO or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence, which the assessee may rely in support of the return of income. Although, at the first blush it appeared that issuance of the notice under section 143(2) of the Act is restricted only in a case where the return of income is filed by the assessee under section 139 of the Act, or in response to a notice under subsection (1) of section 142, and, thus, cannot be stretched to a case where the return of income is filed in response to a notice under section 148 of the Act, but we stand corrected on our aforesaid view. We say so, for the reason that section 148 of the Act (as was available on the statute at the relevant point of time) contemplated that the provisions of the Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 of the Act. Accordingly, a return of income filed in response to notice under section 148 of the Act is to be treated as a return of income required to be furnished under section 139 of the Act. We thus, are of the view that as the return of income filed in response to the notice under section 148 of the Act is to be construed as a return of income filed under section 139 of the Act with all the provisions of the Act to be applied in the similar manner as it would apply to a return of income filed under section 139 of the Act, therefore, the AO to ensure that the assessee had not under stated the income disclosed by him in the return of income filed in response to notice under section 148 of the Act remains under a statutory obligation to issue a notice under section 143(2) of the Act, i.e., in a similar manner as if he would have done in response to a return of income furnished under section 139 or under section 142(1) of the Act.

21. Although the Ld. CIT-DR had tried to impress upon us that for framing of assessment under section 148 of the Act, there is no obligation cast upon the AO to issue a notice under section 143(2) of the Act, but we are unable to concur with the same. We say so, for two reasons, viz., (i) as observed by us herein above, the return of income filed by the assessee in response to notice under section 148 of the Act is to be construed as if it is a return of income filed under section 139 of the Act; and (ii) that section 148 of the Act though provides for a notice to be issued to the assessee calling upon him to file his return of income, but the machinery for framing of the assessment is not provided in the said section and for the said limited purpose the return of income so filed by the assessee is to be construed as a return of income filed under section 139 of the Act, and, thus, for framing of the assessment pursuant to the return of income filed by the assessee in response to the notice under section 148 of the Act notice under section 143(2) of the Act is mandatorily required to be issued.

22. We find that the Ld. CIT-DR had relied upon the judgment of the Hon’ble High Court of Madras in the case of B. Kubendran vs. DCIT (supra) and had emphasized upon the fact that though the same was rendered on the issue as to whether or not a notice under section 143(2) of the Act was mandatory in the context of an assessment under section 153A/153C of the Act, but the same is to be similarly applied with all the force on the same terms for framing of an assessment pursuant to the return of income filed by an assessee in response to the notice issued under section 148 of the Act. The Ld. CIT-DR, to drive home his contention, had vehemently emphasized that section 153A(1)(a) of the Act contemplates that the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. The Ld. AR submitted that the same language has been employed by the legislature in section 148 of the Act. Elaborating further on his contention, the Ld. AR had tried to impress upon us that the view taken by the Hon’ble High Court of Madras in the case of B. Kubendran vs. DCIT (supra), wherein it was held that for framing an assessment under section 153A, the issuance of notice under section 143(2) of the Act is not mandatory will equally apply with the same force for framing of an assessment on a return of income filed by an assessee in response to notice issued under section 148 of the Act.

23. We have given thoughtful consideration to the aforesaid contentions of the Ld. CIT-DR, which at the threshold of hearing appeared to be very appealing, but, are unable to persuade ourselves to subscribe to the same. We say so, for the reason that as observed by us at length herein above, section 148 of the Act can though facilitate calling upon the assessee to file his return of income in response thereto, but does not take within its fold the machinery and the procedure for framing of the assessment for which the legislature in all is wisdom had specifically provided that the return of income filed in response to notice under section 148 of the Act is to be treated as a return of income under section 139 of the Act, which, thus, would entail issuance of a notice under section 143(2) of the Act for framing of the assessment in the hands of the assessee.

24. Our aforesaid view that a notice under section 143(2) is mandatorily required to be issue where the assessee has filed a return of income in response to notice under section 148 of the Act is supported by the judgment of the Hon’ble High Court Allahabad in the case of Commissioner of Income Tax (CIT) v. Rajeev Sharma (2011) 336 ITR 678 (All). It was observed that, where the return of income is filed by the assessee in response to notice under section 148 of the Act, the AO, before proceeding to decide the controversy with regard to the escaped assessment, is mandatorily required to issue notice under section 143(2) of the Act. Also, a similar view had been taken by the Hon’ble High Court of Madras in the case of CIT v. M. Chellappan (2006) 281 ITR 444 (Madras). The Hon’ble High Court had observed that where the assessee had filed a return of income in response to notice under section 148 of the Act, but no notice under section 143(2) was issued after filing of the said return of income, then, the same is a violation of the mandatory provisions of law, and therefore, the re-assessment order passed under section 147 of the Act was a nullity and was to be quashed. Also, we find that the Hon’ble High Court of Rajasthan in the case of PCIT vs. Kamala Devi Sharma, ITA No. 197/2018, dated 10/07/2018, had observed that the issue of notice under section 143(2) of the Act in reassessment proceedings, prior to finalizing reassessment order cannot be condoned by referring to section 292BB of the Act and was fatal to the order of the reassessment. Also, we find that the Hon’ble High Court of Madras in the case of Amec Foster Wheeler Iberia SLU-India Project Office vs DCIT (2023) 148 taxmann.com 124 (Madras) has held that where the AO did not issue notice under section 143(2) of the Act upon the assessee, then initiation of reassessment proceedings, order rejecting the assessee’s objection against assumption of jurisdiction for reopening and also reference to the Transfer Pricing Officer (TPO) were to be quashed. We further find that the Hon’ble High Court of Punjab & Haryana in the case of CIT vs. Nagendra Prasad (2013) 156 Taxmann.com 19 (Punjab & Haryana) had observed that where the notice was issued by AO under section 148 of the Act requiring the assessee to file a return within 30 days, but the said return was filed after 8½ months, since return of income was filed by the assessee in response to the notice under section 148 of the Act, though delayed, there should have been a notice issued under section 143(2) as the requirement to issue notice cannot be dispensed with. Further, the Hon’ble High Court of Delhi in the case of PCIT v. S.G. Portfolio Pvt. Ltd. (2023) 454 ITR 61 (Delhi) had, inter alia, held that where the assessee company had sed the return income in response to notice under section 148 of the Act, the AO was required to issue notice under section 143(2) of the Act for framing the assessment. Also, the Hon’ble High Court of Madras in the case of Sapthagiri Finance & Investments vs. ITO (2012) 25 taxmann.com 341 (Madras) had, inter alia, held that where the AO found that there was a problem in the return of income filed by the assessee under section 148 of the Act, which required an explanation, then he ought to have followed up by issuing notice under section 143(2) of the Act. Also, we find that the Hon’ble High Court of Delhi in the case of PCIT v. Dart Infrabuild Pvt. Ltd. (2024) 460 ITR 532 (Delhi)(HC) had observed that the issuance of notice under section 143(2) of the Act is mandatory for framing of an assessment. Also, the Hon’ble High Court of Allahabad in the case of CIT vs. Salarpur Cold Storage, [2015] 228 Taxman 48 (Allahabad) after relying upon the judgment of the Hon’ble Supreme Court in the case of ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC), held that the requirement of issuance of a notice under section 143(2) is mandatory and cannot be brought within the meaning of a procedural irregularity. Apart from that, we find that the “Special Bench” of the ITAT, Delhi in the case of Raj Kumar Chawla vs. ITO (2005) 1 SOT 934 (Delhi) (SB), had held that return of income filed pursuant to notice under section 148 of the Act must assume and treated to be a return of income filed under section 139 of the Act and the assessment must thereafter be made under section 143 or 144 of the Act after complying with the mandatory provisions. Also, it was observed that pursuant to the return of income filed by the assessee in response to notice under section 148 of the Act, it is incumbent upon the assessing authority to issue notice under section 143(2) of the Act within the prescribed time period.

25. Considering the aforesaid host of judicial pronouncements, wherein it has been held that pursuant to a return of income filed by the assessee in response to notice issued under section 148 of the Act, it is incumbent on the part of the AO to issue notice under section 143(2) of the Act for framing the assessment, we respectfully follow the same.

26. Before parting, we may herein observe that though the Ld. CIT-DR in order to buttress his claim that for framing of an assessment pursuant to the return of income filed by an assessee in response to notice under section 148 of the Act, no obligation is cast upon the AO to issue a notice under section 143(2) of the Act, had relied upon two judicial pronouncements, viz., (i) B. Kubendran vs. DCIT (2021) 126 taxmann.com 107 (Madras); and (ii) Ashok Chadda vs. ITO (2011) 37 ITR 399 (Delhi), but considering the fact that there are judgments of the non-jurisdictional High Courts taking a view to the contrary, i.e., the issue of notice under section 143(2) of the Act is mandatory for framing of an assessment based on the return of income filed by the assessee in response to notice issued under section 148 of the Act, we being guided by the judgment of the Hon’ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), wherein it is held that If two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted, respectfully follow the latter view.

27. We, thus, in terms of our afforesaid observations are of the considered view that pursuant to the notice issued by the AO under section 148 of the Act, datted 27/03/2021, though the assessee company had filed its return of income in response thereto on 21/10/2021 declaring NIL Income, but as the AO without issuing any notice under section 143(2) of the Act had proceeded with and framed the impugned assessment vide his order under section 147 r.ws 148 of the Act, dated 30/03/2022, therefore, the had grossly erred in law and facts of the case in assuming jurisdiction and framing the impugned assessment, which, thus cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction on his part.

28. As we have quashed the assessment for want of a valid assumption of jurisdiction by the AO, we refrain from adverting to and adjudicating the other grounds based on which the impugned assessment order has been assailed before us, which, thus, are left open.

29. Resultantly, the appeal filed by the assessee company is allowed in terms of our aforesaid observations”

16. In our view, as the facts and the issue involved in the present appeal remains the same as those involved in the aforesaid order of the Tribunal in ITA No. 1311/hyd/2025, dated 07/01/2026, or in fact stands on a better footing, as the AO in the present case while framing the assessment had at Page-2/Para-2 of his order specifically observed that the issuance of notice under section 143(2) of the Act was being dispensed with as the assessee had failed to file the return of income in compliance to the notice issued under section 148 of the Act, dated 31/03/2021, therefore, we respectfully follow the same. Accordingly. based on our aforesaid observations, we concur with the AR that the AO had grossly erred in law and facts of the case in assuming jurisdiction and framing the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 31/03/2021 without considering the return of income filed by the assessee on 13/12/2021, and issuing a notice under section 143(2) of the Act.

17. We thus, in terms of our aforesaid observations, quash the assessment framed by the AO for want of a valid assumption of jurisdiction. As we have quashed the assessment in terms of our aforesaid observations, we refrain from adverting to and adjudicating the other issues based on which the impugned addition made by the AO has been assailed before us, which, thus, are left open.”

18. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.”

13. We have also considered the reliance placed by Ld. DR on the decision of the Hon’ble Gauhati High Court in Commissioner of Income-tax Vs. Shankar Lall Goenka (supra). However, the controversy before the Hon’ble High Court in that case was materially different. There, the assessee had filed a return u/s 139 and notice u/s 143(2) had admittedly been issued by the ITO; subsequently, the case was transferred to the DCIT on account of the pecuniary jurisdiction prescribed by the CBDT Instruction, and the DCIT did not issue a fresh notice u/s 143(2). Thus, the said decision was concerned with a challenge relating to the pecuniary jurisdiction of the assessing authority and does not deal with the controversy involved in the present case regarding the mandatory requirement of issuance of notice u/s 143(2) after a return is filed in response to notice u/s 148. Therefore, the said decision does not assist the Revenue on the issue under consideration.

14. In view of above discussions, we hold that the assessment framed by the Ld. AO u/s 144 r.w.s. 147 without issuing notice u/s 143(2), in the peculiar facts and circumstances of the present case, cannot be sustained in law. Consequently, the assessment-order dated 30.12.2019 is liable to be quashed on this jurisdictional ground itself. Ground No. 3 raised by the assessee is accordingly allowed.

15. Since we have quashed the assessment-order itself on the aforesaid jurisdictional ground, the remaining grounds raised by assessee have become academic in nature and do not require adjudication at this stage.

16. Resultantly, the assessee’s appeal is allowed.

Order pronounced in open court on 07/10/2026