Mandatory Section 143(2) notice requirement: absence renders assessment under Sections 147/144 void and deletes penalties.

Absence of a mandatory notice under section 143(2) after the assessee filed a return in response to a section 148 notice defeats the jurisdictional foundation to scrutinize that return; consequently an assessment framed under section 147 read with section 144 without issuing the statutory 143(2) notice is void ab initio. Because the assessment is thereby invalid, consequential penalty proceedings predicated on the validity of that assessment, including penalties under section 271(1)(c) and section 271F, cannot survive and are deleted.

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Issues: Whether the assessment order framed under section 147 read with section 144 of the Income-tax Act, 1961 is valid where no notice under section 143(2) of the Income-tax Act, 1961 was issued after the assessee filed a return in response to a notice under section 148 of the Income-tax Act, 1961; and whether penalties levied under section 271(1)(c) and section 271F of the Income-tax Act, 1961 survive if the assessment is held invalid.

Analysis: The assessee filed a return in response to a notice issued under section 148 of the Income-tax Act, 1961. Issuance of notice under section 143(2) is a statutory precondition for assuming jurisdiction to scrutinize such a return and to proceed under the assessment provisions applicable to returns. Framing an assessment ultimately under section 144 for alleged non-compliance does not negate the prior mandatory requirement to issue a notice under section 143(2) when a return has been filed in response to a section 148 notice. The absence of the mandatory notice affects the jurisdictional foundation of the assessment. Consequent penalty proceedings under provisions of the Income-tax Act, 1961 that depend on the validity of the assessment cannot survive once the assessment is declared void for lack of the mandatory notice.

Conclusion: The assessment order dated 20.01.2023 framed under section 147 read with section 144 of the Income-tax Act, 1961 is void ab initio for want of the mandatory notice under section 143(2) of the Income-tax Act, 1961; the penalties under section 271(1)(c) and section 271F of the Income-tax Act, 1961 are deleted.

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