Reassessment void for failure to issue mandatory s.143(2) notice after s.148 return; s.292BB cannot cure

The ITAT Delhi (AT) held that the reassessment order was invalid and void as the AO failed to issue mandatory notice under s.143(2) after the assessee filed a return in response to notice under s.148. Relying on binding HC precedent, the Tribunal ruled that this omission is a jurisdictional defect, not a curable irregularity under s.292BB. Consequently, the reassessment proceedings were held to be vitiated in law and treated as a nullity, leading to dismissal of the Revenue's appeal.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the reassessment order framed under Sections 144/147/148 of the Act is invalid and without jurisdiction for failure to issue notice under Section 143(2) of the Act after the assessee filed a return of income in response to notice under Section 148.

1.2 Whether Section 292BB of the Act or the alleged belated filing of return in response to notice under Section 148 can cure or dispense with the mandatory requirement of issuance of notice under Section 143(2) in reassessment proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Validity of reassessment for non-issuance of notice under Section 143(2); applicability of Section 292BB and effect of belated return

Legal framework (as discussed by the Tribunal)

2.1 The Tribunal referred extensively to the decision of the jurisdictional High Court in "PCIT v. Dart Infrabuild (P.) Ltd." which in turn considered the interplay of Sections 143(2), 147, 148 and 292BB of the Act, and various precedents including "Jai Shiv Shankar Traders (P.) Ltd.", "Rajeev Sharma", "Salarpur Cold Storage (P.) Ltd.", "Hotel Blue Moon" and "Sapthagiri Finance & Investments".

2.2 As per the extracted legal position, after a return of income is filed in response to notice under Section 148, it is mandatory for the Assessing Officer to issue a notice under Section 143(2); failure to do so is a jurisdictional defect which vitiates the reassessment and is not curable under Section 292BB. Section 292BB concerns defects in "service" of notice, not in "issuance" of a mandatory jurisdictional notice.

Interpretation and reasoning

2.3 The Tribunal noted, as an admitted and verifiable factual position, that:

(a) A notice under Section 148 was issued on 31.03.2018 for the relevant assessment year.

(b) The assessee e-filed a return of income on 23.05.2018 in response to such notice, supported by the acknowledgement placed on record.

(c) In the assessment order, the tabulated details in paragraph 2 mention notices under Sections 148 and 142(1) only; there is no mention of any notice under Section 143(2).

(d) The screenshot of the e-proceedings portal similarly shows only notices under Sections 148 and 142(1), and not under Section 143(2).

2.4 On these facts, the Tribunal rejected the Revenue's contention that the assessee's failure to file the return within 30 days from the date of notice under Section 148 entitled the Assessing Officer to complete reassessment without issuing a notice under Section 143(2). The Tribunal observed, following the jurisdictional High Court in Dart Infrabuild, that once the return filed (even if belated) is taken into account for framing the reassessment, the Assessing Officer is obliged in law to issue a notice under Section 143(2).

2.5 Relying on the detailed extracts from Dart Infrabuild, the Tribunal reiterated that:

(a) The absence of notice under Section 143(2) "impregnates the proceedings with a jurisdictional defect and, hence, renders it invalid in the eyes of the law".

(b) After the assessee files a return in response to Section 148, issuance of notice under Section 143(2) is "mandatory"; in the absence of such notice, "the entire procedure adopted for escaped assessment shall not be valid".

(c) Section 292BB cannot be invoked to condone failure to "issue" a jurisdictional notice; it is confined to objections relating to "service" of a notice, its timing or manner of service, and does not obviate the requirement to satisfy jurisdictional conditions.

2.6 The Tribunal, applying the binding jurisdictional High Court judgment, concluded that the Assessing Officer committed a "fatal lapse" in not issuing a notice under Section 143(2) despite the availability on record of the return filed by the assessee in consequence of the notice under Section 148, and that such omission is an "incurable defect".

Conclusions

2.7 The reassessment order framed under Sections 144/147/148 without issuance of a mandatory notice under Section 143(2), after a return was filed in response to the notice under Section 148, is vitiated in law and is a nullity.

2.8 Neither the alleged belated filing of the return in response to Section 148, nor Section 292BB, cures or dispenses with the statutory requirement of issuing a notice under Section 143(2) in reassessment proceedings.

2.9 The reassessment order, being void for want of jurisdiction, is quashed at the threshold; consequently, the Tribunal found it unnecessary to examine the other legal grounds, factual discrepancies, or the merits of the additions deleted by the first appellate authority.

2.10 With the reassessment order annulled, the Revenue's appeal challenging the deletion of additions stands dismissed.

---