TaxTMI 
TaxTMI 
2026 (6) TMI 732
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....ion related to High Risk CRIU/VRU, the AO formed his reasons for re-opening the assessment that income charegable to tax has escaped and issued notice dated 31.03.2021 u/s. 148 of the Act. According to the AO that the assessee filed return of income on 31.01.2022 belatedly in response to notice u/s. 148 of the Act. Further, notices u/s. 142(1) of the Act issued asking the assessee to submit details and in response to which the assessee filed submissions dated 16.03.2022 which is reproduced in page no. 8 to 16 of the assessment order. The AO found the said explanation as not acceptable and proceeded to add an amount of Rs. 2,80,00,000/- on account of Manikaran Marketing Pvt Ltd and Rs. 50,00,000/- on account of M/s. Pramodanah Goods Pvt Ltd u/s. 68 of the Act on account of unexplained cash credit vide his order dated 29.03.2022 passed u/s. 147 r.w.s. 144 and 144B of the Act. The assessee having being aggrieved by the order of the AO challenged the same before the ld.CIT(A). The ld.CIT(A) reproduced reply dated 11.09.2023 in para no. 5.1 from page nos. 4 to 11 and reply dated 23.03.2022 in para no. 5.2 from page nos. 12 to 22 and another reply dated 19.08.2024 in para no. 5.3 from pa....
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.... ITAT Benches by following the judgment of Hon'ble High Court of Delhi in the case of Staunch Marketing Ltd reported in (2017) 81 taxmann.com 482 (Delhi), held that once the return is filed, notice u/s. 143(2) of the Act is mandatory prior to the framing an assessment. 7. He further submitted that the AO, at page no. 12 of the assessment order has referred to the order of the ITAT Delhi Benches in the case of Rakesh Agarwal vs ITO in ITA No. 2461/Del/2019 which held that where the return of income in response to notice issued u/s. 148 of the Act is not filed within the prescribed time, the same is to be treated as non-est and argued that the facts of the aforesaid case are clearly distinguishable from the facts of the present case. In the said case, no return of income was originally filed u/s. 139 of the Act and only a belated return of income was filed in response to notice issued u/s. 148 of the Act. He argued that in the present case, the original return of income was already filed and was very much available on record. The delay in filing the return in response to notice issued u/s. 148 of the Act occurred only due to the Covid period. He argued that the said return was fil....
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....ring the same held that no notice is required to be issued in the absence of any return of income filed in response to notice u/s. 148 of the Act. She prayed to dismiss ground no.4 raised by the assessee and confirmed the order of the ld.CIT(A). 9. Heard both the parties and perused the material available on record. We note that the assessee filed its return of income u/s. 139(1) of the Act on 18.09.2014 which was processed u/s. 143(1)(a) of the Act on 04.03.2016. The AO re-opened said assessment on 31.03.2021 vide notice u/s. 148 of the Act. According to the AO the assessee failed to file return of income in response to the notice u/s. 148 of the Act. But, however on going through the page no. 7 of the assessment order it is noted that the assessee filed return of income on 31.01.2022 vide acknowledgment no. 999751530310122 in response to the notice u/s. 148 of the Act. The AO held the same nonest in view of filing the same belatedly. A specific contention raised by the ld.AR the delay in filing return of income was entirely due to covid pandemic and we note the Hon'ble Supreme Court in the case of suo motu writ petition (c) no.3 of 2020 in re: cognizance for extension of limit....
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.... by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of sub-sections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason....
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....39; will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied." 16) The case of the revenue is that the expression `so far as may be apply' indicates that it is not expected to follow the provisions of Section 142, subsections 2 and 3 of Section 143 strictly for the purpose of Block assessments. We do not agree with the submissions of the learned counsel for the revenue, since we do not see any reason to restrict the scope and meaning of the expression `so far as may be apply'. In our view, where the assessing officer in repudiation of the return filed under Section 158 BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143. 10. On careful reading of the above decision of Hon'ble Supreme Court, we note that the Hon'ble Supreme Court was not pleased to agree with the submission of Revenue that it is not expected to follow provisions of section 142, sub section (2) & (3) of section 143 strictly for the purpose of block assessments....
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....is settled not only by the decision of the Supreme Court in the case of Hotel Blue Moon (supra) but also by a decision of this court in PR.Commissioner of Income-tax v. Shri Jai Shiv Shankar Traders (P.) Ltd. [2015] 64 taxmann.com 220/383 ITR 448 (Delhi). 12. On careful reading of the above, we note the Hon'ble High Court of Delhi was pleased to answer question in Para no. 2 against the revenue by holding once a return is filed, notice u/s. 143(2) of the Act to the assessee is mandatory prior to framing the assessment vide para 14 of said judgment by referring to the decisions of Hon'ble Supreme Court in the case of Hotel Blue Moon (Supra) and Jai Shiv Shankar Traders P Ltd (Supra). 13. Further, we note that the Hon'ble High Court of Madras in the case of Saptagiri Finance & Investments (Supra) by referring to decision of Hon'ble Supreme Court in the case of Hotel Blue Moon (Supra) held substantial question of law no. iv, in favour of the assessee, the relevant part of substantial question of law and finding thereon is reproduced herein below for ready reference: (iv) Whether on the facts and in the circumstances of the case the Tribunal was right in not appreciating....
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....ntentionally abandons it. There is nothing on record to show or one could read from the letter written by the assessee dated 18.12.2002 that the assessee abandoned such right of a notice under Section 143(2) of the Act. In the light of the above, we reject the Tribunal's reasoning. 12. As far as the contention of the Revenue that failure to issue notice under Section 143(2) of the Act is only curable defect is concerned, the decision relied on by the assessee reported in 321 ITR 362 ASST. CIT v. HOTEL BLUE MOON, also covers the said issue. It is no doubt true that the said decision dealt with the assessment done under Chapter XIV relating to block assessment. The assessee therein raised a contention that the failure to issue notice under Section 143(2) within the prescribed time for the purpose of block assessment could be fatal to the validity of the assessment made under Chapter XIVB of the Income Tax Act, 1961. In other words, the assessee contended that the issuance of notice under Section 143(2) within the prescribed period of time for the purpose of block assessment is mandatory for assessing the assessee's undisclosed income found during the search. The Reve....
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....ent, when the officer repudiates the return filed under Section 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142 and 143 (2) and (3) of the Act. 13. As far as the present case is concerned, the provisions of Section 148 also uses the expression "so far as may be apply accordingly as if such return were a return required to be furnished under Section 139". Thus, understanding this provisions in the background of the decision of the Apex Court, on the facts available, we are of the view that in completing the assessment under Section 148 of the Act, compliance of the procedure laid down under Sections 142 and 143(2) is mandatory. On the admitted fact that beyond notice under Section 142(1), there was no notice issued under Section 143(2), and in the light of the fact that the very basis of the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the transfer of property for assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148 of the Act, we hold that there was total failure on the part o....
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....ling of Return of income within a period specified in the notice. Such specified period has been prescribed to be 30 days in ITNS 34 for the relevant assessment year. In this case as the assessee had neither filed his ROI nor a reply requesting that the return filed on 1/10/2015 be treated as ROI in response to notice u/s 148 within the 30 days period of issue of notice u/s 148, hence it is held that the assessee has not filed a ROI in response to notice u/s 148 and the assessment will be completed u/s 144 of the Act." 3. Thus the case of department as per the AO and the ld. DR is that as assessee has not filed ROI in response to the notice u/s 148 of the Act so non compliance of notice 143(2) of the Act is not detrimental. But the law seems to be otherwise settled and extensively discussed in a co-ordinate bench decision in Anil Aggarwal HUF versus ITO, Ward 28(1), New Delhi ITA No. 4594/Del/2024 order dated 30.07.2025, as relied by ld. Counsel and for completeness and to avoid cost of repetition in laying principles afresh we reproduce the relevant part here below; "5. The Ld. Counsel for the assessee submitted that assessee has filed return on 28.10.2021 in res....
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....n the return of income of Rs. 69,040/- declared by the assessee in the return in response to notice issued u/s 148 of the Act, whereby the Assessing Officer acted upon the return filed by the assessee. The Assessing Officer before completion of assessment u/s 144B r.w.s. 147 of the Act appears to have not issued any mandatory notice u/s 143(2) of the Act. The Revenue also could not show that the Assessing Officer had issued any notice u/s 143(2) of the Act for the assessment year under consideration. Therefore, the question now to be adjudicated this appeal is whether the assessment framed u/s 14B r.w.s. 147 of the Act is a valid assessment in the absence of issue of notice u/s 143(2) of the Act. 9. The Hon'ble Jurisdictional High Court in the case of PCIT vs. Staunch Marketing Pvt. Ltd. (supra) considered almost an identical situation examined "whether the Tribunal fell into error in holding that the assessment for the concerned year was not effective because of lack of notice u/s 143(2) of the Income Tax Act in the given facts of the case" the Hon'ble Jurisdictional High Court decline to answer the question on an appeal filed by the Revenue. The Hon'ble High Court furthe....