Reassessment after s.148 notice: missing s.143(2) service treated as fatal, not curable u/s292BB; remand ordered.

In reassessment proceedings under s.148, the dominant issue was whether non-service of notice under s.143(2) vitiates the assessment and whether the defect is curable under s.292BB. The Tribunal held that a return filed in response to s.148, even if belated, is to be treated as a return under s.139, making issuance and service of s.143(2) a jurisdictional prerequisite; relying on SC precedent, non-service is a fatal defect not curable by s.292BB. The matter was remanded to the AO to verify service; if s.143(2) was not served before completion, the assessment must be declared null and void, and the appeal was partly allowed for statistical purposes.

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1. ISSUES PRESENTED AND CONSIDERED

1. Whether, after a return is filed in response to a notice issued under section 148, the Assessing Officer is duty bound to serve a statutory notice under section 143(2) as a jurisdictional pre-condition for completing reassessment under section 147 (including where the return was filed beyond the time mentioned in the notice under section 148).

2. Whether the reassessment is liable to be treated as null and void if notice under section 143(2) was not served on or before completion of assessment, and whether the matter should be remanded to verify the fact of service.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Mandatory nature of service of notice under section 143(2) after filing return in response to section 148

Legal framework (as discussed by the Tribunal): The Tribunal examined reassessment where a notice under section 148 was served and the assessee subsequently filed a return. It held that once such return is filed, the statutory notice under section 143(2) is a jurisdictional notice for making an assessment under section 143(3)/144/147, and non-issuance/non-service is not curable. The Tribunal also noted that, for the assessment year under consideration, there was no provision deeming a belated return filed pursuant to section 148 to be not a return under section 139; it referred to the later introduction (with effect from 1.4.2023) of a proviso to section 148 to highlight that such deeming fiction did not apply for the year in appeal.

Interpretation and reasoning: The Tribunal reasoned that after a return is filed in response to section 148, the Assessing Officer may either accept the return (in which case service of section 143(2) would not be necessary), or, if not satisfied, proceed to require further investigation. Where the Assessing Officer does not accept the return as filed and proceeds to determine income through reassessment, service of notice under section 143(2) is mandatory to assume jurisdiction. The Tribunal further held that the assessee's filing of return beyond the time mentioned in the section 148 notice did not, for the relevant year, deprive it of character as a return; hence the jurisdictional requirement of section 143(2) remained applicable.

Conclusion: The Tribunal conclusively held that, upon filing of a return in response to section 148 (even if filed belatedly for the relevant year), the Assessing Officer is duty bound to serve notice under section 143(2) before completing reassessment; non-service is fatal to jurisdiction and not curable.

Issue 2: Consequence of non-service of section 143(2) and remand for verification of service

Legal framework (as applied): The Tribunal treated service of notice under section 143(2) within the prescribed time as a pre-requisite for framing reassessment once a return has been filed. It also held that the defect of non-service is not curable (including by deeming provisions related to participation), and therefore goes to the root of validity of reassessment.

Interpretation and reasoning: The Tribunal noted that the assessment order recorded issuance of notice under section 143(2) on the same day the return was filed, but the assessee consistently asserted that the notice was never served on or before completion of assessment. Since the controversy was factual-whether there was valid service-the Tribunal directed the Assessing Officer to verify service. It held that if service is not proved, the entire reassessment must fail; if valid service is demonstrated, the Assessing Officer must proceed to decide the assessment on merits after giving fresh opportunity of hearing.

Conclusion: The Tribunal remanded the matter for verification of service of notice under section 143(2). It directed that (i) if the notice was not served on or before completion of assessment, the reassessment shall be null and void; and (ii) if service is validly established, the Assessing Officer shall pass a fresh order on merits after providing opportunity of hearing.

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