2026 (4) TMI 50 - AT - Income Tax

Mandatory notice in reassessment: absence of section 143(2) notice cannot be cured by section 292BB.

In reassessment proceedings, once the assessee files a return in response to notice under section 148, issuance of notice under section 143(2) remains a ... Validity of reassessment proceedings - non issuance of the mandatory notice u/s 143(2) - assessee filed the return in response to notice under section 148 - whether curable defect u/s 292BB? - HELD THAT: - The Tribunal found it undisputed that the assessee filed the return on 16.03.2022 in response to notice u/s 148, informed the Assessing Officer of that fact on the next day, and that the assessment was nevertheless completed on 19.03.2022 without issuance of notice under section 143(2). It held that once a return is filed, the AO cannot disturb the returned income or proceed to make an assessment to the detriment of the assessee without first issuing notice under section 143(2). Delay in filing the return in response to notice under section 148 does not dispense with that statutory requirement; until filing of the return, the Assessing Officer could have taken recourse to best judgment assessment, but after accepting and acting upon the return he was bound to follow the scrutiny procedure. Tribunal further held that the absence of notice was a jurisdictional defect and not a mere procedural irregularity, and that section 292BB cures defects in service of a notice already issued, not complete absence of notice. In the case of PCIT vs Kamla Devi Sharma [2018 (11) TMI 874 - RAJASTHAN HIGH COURT] held that failure to issue notice u/s 143(2) of the Act in the re-assessment proceedings, prior to finalizing re-assessment order, cannot be condoned and is fatal to the order of re-assessment. In the case of PCIT vs Ashish Gupta [2026 (1) TMI 696 - ALLAHABAD HIGH COURT] held that the notice u/s 143(2) of the Act was not procedural and omission to serve notice was not curable and after that review of issuance cannot be dispensed with in re-assessment proceedings u/s 147 read with section 148 of the Act; and approved the quashing of the assessment order. In this case also, return was filed after stipulated time of 30 days, in response to notice u/s 148 of I. T. Act. Hon’ble High Court has taken similar view in the case of CIT vs Laxman Das Khandelwal [2019 (8) TMI 660 - SUPREME COURT] The Revenue's reliance on GKN Driveshafts (India) Ltd [2002 (11) TMI 7 - SUPREME COURT] was rejected as factually distinguishable and not addressing the mandatory nature of notice under section 143(2) in the present situation. The impugned appellate order was set aside and the assessment order was annulled for want of notice under section 143(2) after the assessee filed return in response to notice under section 148 Final Conclusion: The Tribunal held that, after the assessee had filed a return in response to notice under section 148, issuance of notice under section 143(2) was mandatory before any reassessment adverse to the assessee could be made. As no such notice was issued, the reassessment was annulled. Issues: Whether reassessment was vitiated for want of notice under section 143(2) after the assessee filed return in response to notice under section 148, and whether section 292BB could cure the complete absence of such notice.Analysis: Once the assessee filed return in response to notice under section 148, the Assessing Officer could not complete reassessment to the assessee's detriment without issuing notice under section 143(2). The requirement of notice under section 143(2) is jurisdictional and mandatory in reassessment as well, and delay in filing the return does not dispense with that obligation. Section 292BB cures defects in service of notice only where a notice has in fact been issued; it does not cure complete non-issuance of notice. Since no notice under section 143(2) was issued before the assessment order, the reassessment suffered from a jurisdictional defect.Conclusion: The reassessment was invalid and was rightly annulled; the issue is decided in favour of the assessee.Ratio Decidendi: In reassessment proceedings, once a return is filed in response to notice under section 148, issuance of notice under section 143(2) is a mandatory jurisdictional requirement, and section 292BB cannot cure the complete absence of such notice.