Assessment order under section 143(3) quashed for jurisdictional error without valid return filing

The ITAT Delhi held that an assessment order u/s 143(3) was invalid due to jurisdictional error. The AO issued notice u/s 143(2) without the assessee filing any return of income u/s 139(1) or in response to notice u/s 142(1). The tribunal ruled that jurisdiction under s 143(3) can only be assumed after a valid notice u/s 143(2), which requires prior filing of return of income. Forms 29B, 3CA, and 3CEB cannot substitute for return of income. The defect was not curable under s 292BB. Assessment order was quashed in favor of the assessee.

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Issues Involved:
The validity of the assessment order u/s 143(3) of the Income-tax Act, 1961 based on the notice issued u/s 143(2) of the Act prior to the filing of the return of income.

Issue 1: Validity of Assessment Order

The Appellate Tribunal ITAT DELHI considered cross appeals arising from the order dated 09.11.2017 passed by the Commissioner of Income Tax (Appeals)-28, New Delhi, for the assessment year 2014-15. The assessee challenged the validity of the assessment order dated 30.12.2016 passed u/s 143(3) of the Act. The Assessing Officer made additions for unexplained expenditure and purchases. The first appellate authority granted partial relief to the assessee but did not address the challenge to the validity of the assessment order. The assessee contended that the notice issued u/s 143(2) was invalid as it was issued before the filing of the return of income, rendering the assessment order invalid. The Department argued that the assessee's participation in the assessment proceedings cured any infirmity in the notice. The Tribunal analyzed the provisions of section 143 of the Act, emphasizing that the jurisdiction to make an assessment u/s 143(3) is based on the notice u/s 143(2), triggered upon the filing of the return of income. As the notice was issued before the return, the initiation of assessment proceedings was deemed to suffer from a serious jurisdictional error. The Tribunal held that the notice was invalid, rendering the assessment order invalid, and subsequently quashed the assessment order.

Outcome:
The Appellate Tribunal partially allowed the assessee's appeal and dismissed the Revenue's appeal, setting aside the order of the first appellate authority due to the invalidity of the assessment order based on the notice issued prior to the filing of the return of income.

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