2025 (9) TMI 1739 - AT - Income Tax

Validity of delayed return filed in response to notice and issuance of notice before framing assessment; assessment void if absent.

Delayed filing of a return submitted in response to a notice under notice provisions remains a valid 'return of income'; consequently the assessing ... Validity of delayed return filed in response to notice under Section 142(1) - Mandation to issue notice u/s 143(2) - Unexplained money u/s 69A - cash deposits were sourced from the cash collections - HELD THAT:- We find that the issue involved in the present appeal, i.e., as to whether or not the A.O. could have dispensed with the statutory obligation cast upon him to issue notice u/s 143(2) of the Act, for the reason that the assessee had delayed the filing of the return of income in compliance to the notice issued u/s 142(1) is squarely covered by the order of the Tribunal in the case of KVRECPL-INFRATECH (JV) [2025 (8) TMI 1718 - ITAT VISAKHAPATNAM] Accordingly, based on our aforesaid observations, we are of the view that the 'return of income' filed by the assessee on 31.03.2019, i.e., in response to the notice u/s. 142(1) of the Act, dated 15.03.2018, though delayed, did not cease to be a 'return of income' in the eyes of the law. Whether or not the assessment framed by the A.O. passed 143(3) r.w.s. 147 in the absence of a notice u/s. 143(2) of the Act having been issued by him is sustainable in the eyes of law? - Hon'ble High Court of Delhi in the case of Pr. CIT Vs. S.G Portfolio (P) Ltd. [2023 (4) TMI 635 - DELHI HIGH COURT] has, inter alia, held that where the assessee has filed a 'return of income' in response to notice u/s. 148 of the Act, the A.O. was required to issue notice u/s. 143(2) of the Act for framing the assessment. Hon'ble High Court of Madras in the case of Amec Foster Wheeler Iberia SLU-India Project Office [2022 (12) TMI 405 - MADRAS HIGH COURT] has held that where the A.O did not issue notice u/s. 143(2) of the Act upon the assessee, then the initiation of reassessment proceedings; order rejecting the assessee's objection against the assumption of jurisdiction for reopening and also the reference to the TPO were to be quashed. Curable defect u/s 292BB - Apropos the DR's claim that as the assessee in the course of the proceedings before the A.O had not objected to the assumption of the jurisdiction by him, and on the contrary participated in the assessment proceedings, therefore, the non-issuance of the notice u/s 142(1) of the Act will be saved by the provisions of Section 292BB of the Act, we are unable to concur with the same. We say so, for the reason that the deeming provisions of the said statutory provision only cure the infirmities in the manner of service of notice and is not intended to cure the complete absence of notice itself. Our aforesaid view is supported by the judgment of Laxman Das Khandelwal [2019 (8) TMI 660 - SUPREME COURT] as relying on its earlier order in the case of ACIT Vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] has held that the failure to issue a notice under Section 143(2) renders the assessment order void even if the assessee had participated in the proceedings. Issues: (i) Whether the return of income filed by the assessee on 31.03.2019 in response to the notice under Section 142(1) of the Income-tax Act, 1961 (though filed after the period specified in the notice) is a valid return; (ii) Whether the Assessing Officer could, on the premise that the return was invalid, dispense with issuance of notice under Section 143(2) and consequently frame assessment under Section 144 of the Act.Issue (i): Whether the belated return filed on 31.03.2019 in response to notice u/s 142(1) is a valid return.Analysis: The return was filed during the pendency of assessment proceedings. Section 234A contemplates levy of interest for delayed filing but does not render a return filed in response to a statutory notice as invalid. Tribunal and High Court authorities permit acceptance and action on returns filed beyond prescribed periods where proceedings are pending; analogous precedents support that delay affects levy of interest but not the status of the return as a return filed in response to the notice.Conclusion: The belated return filed on 31.03.2019 is a valid return; this conclusion is in favour of the Assessee.Issue (ii): Whether the AO could dispense with issuance of notice u/s 143(2) and frame assessment u/s 144 on the basis that the return was invalid.Analysis: Where a return is filed in response to a notice, the AO is under a statutory obligation to issue notice u/s 143(2) for framing assessment; failure to issue such notice constitutes a jurisdictional defect. Deeming provisions of Section 292BB cure defects in manner of service but do not cure absence of issuance of a statutory notice required for framing assessment. Judicial precedents establish that non-issuance of notice u/s 143(2) renders assessment void.Conclusion: The AO erred in dispensing with issuance of notice u/s 143(2) and in framing the assessment u/s 144; this conclusion is in favour of the Assessee.Final Conclusion: The impugned assessment order suffers from a jurisdictional defect because the Assessing Officer wrongly treated the return as invalid and failed to issue notice u/s 143(2); consequently the assessment is quashed and the appeal is allowed to the extent of invalidating the assessment proceedings.Ratio Decidendi: A return filed in response to a notice under Section 142(1), though filed beyond the period specified in the notice, remains a valid return when filed during the pendency of assessment proceedings, and the Assessing Officer is obliged to issue notice under Section 143(2); non-issuance of that notice renders the assessment a jurisdictionally void proceeding.