Assessment under section 144 without notice u/s 143(2) leads to quashing where mandatory notice was not served

Issuance of a notice prior to completing an assessment is a jurisdictional requirement; where a return is filed belatedly in response to an investigative notice, the assessing officer must issue the statutory notice before making an assessment. The absence of any material proving service of that notice renders assessments completed without it invalid. Consequently, assessments framed without issuing the mandatory notice are quashed and appeals by the taxpayer are to be allowed where no notice was served.

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Issues: Whether an assessment framed under section 144 of the Income-tax Act, 1961 without issuance of a notice under section 143(2), after the assessee filed a belated return in response to a notice under section 142(1) during the pendency of assessment proceedings, is valid.

Analysis: The Tribunal examined whether a return filed belatedly but during the pendency of assessment proceedings retains the character of a valid return and whether the Assessing Officer is required to issue a notice under section 143(2) before proceeding to frame a scrutiny assessment. The Tribunal considered statutory provisions including sections 142(1), 139(4), 143(2), 144 and 234A, and relevant precedent, concluding that a return filed in response to a notice under section 142(1) during the pendency of assessment is a valid return notwithstanding delay and that the Assessing Officer remains under a statutory obligation to issue a notice under section 143(2) to assume jurisdiction for scrutiny assessment. The Tribunal further held that the deeming provision in section 292BB cures defects in service of notice but does not cure complete absence of a statutory notice; therefore non-issuance of section 143(2) notice is a jurisdictional defect rendering the assessment under section 144 unsustainable.

Conclusion: The assessment framed under section 144 without issuance of notice under section 143(2) is invalid and is quashed; decision is in favour of the assessee.

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