TaxTMI 
TaxTMI 
2026 (10) TMI 517
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....Rs. 5,36,63,145/- are liable to be taxed under the head "Capital Gains," without appreciating the fact that the said properties were held as stockin- trade and said sale proceeds were shown as revenue from operations in the statement of profit & loss account. 3. That the Learned CIT(Appeals) failed to appreciate the fact that the cash deposits of Rs. 1,25,25,500/- made by the Appellant were out of the proceeds from sale of properties and cash withdrawals from the bank accounts thereby the addition made u/s 69A is liable for deletion. 4. The appellant craves to leave, add, amend, alter and or modify any of the grounds of appeal before or at the time of hearing. 5. For these and other grounds that may be urged before the Honourable Income Tax Appellate Tribunal, it is prayed that the additions on account of cash deposits and capital gains be deleted." Also, the assessee company has raised the following additional grounds of appeal: "1. That on the facts and circumstances of the case and in law, the Learned Assessing Officer erred in passing the impugned assessment order without issuing statutory notice u/s 143(2) of the Act and hence impugned as....
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....proceedings, called upon the assessee company to furnish details regarding the sale of immovable properties and the source of cash deposits made in the bank accounts. In reply, the assessee company submitted that it was engaged in the real estate business and that the cash deposits represented sale proceeds received in the course of its business. It was also submitted that it had incurred losses in its real estate business and that no original return of income had been filed for the relevant assessment year. The assessee company further submitted that it had sold immovable properties for an aggregate consideration of Rs. 5,36,63,145/- and that the cash deposits in the bank accounts were sourced from the sale proceeds of the said properties. 5. Thereafter, the AO directed the assessee company to furnish the details and documentary evidence relating to the purchase and sale of the properties, including the relevant sale deeds and details of the cost of acquisition. However, the assessee company failed to furnish the requisite documentary evidence to the AO's satisfaction. 6. The AO, accordingly, treated the cash deposits of Rs. 1,25,25,500/-, which comprised, viz. (i). cash....
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....AR also placed reliance on the decision of the coordinate Bench of the Tribunal in the case of Sanghi Textiles Private Limited vs. ITO, ITA No. 1311/Hyd/2025, dated 07.01.2026, wherein the Tribunal has held that the return of income filed in response to a notice under section 148 is to be construed as a return of income filed under section 139 of the Act and that the AO is under a statutory obligation to issue notice under section 143(2) for framing the assessment. The Ld. AR submitted that section 148 of the Act, though facilitates calling upon the assessee to furnish a return of income, does not provide the machinery and procedure prescribed for framing the assessment. It was submitted that once the return is treated as a return under section 139, the requirement under section 143(2) necessarily follows. 12. Alternatively, the Ld. AR challenged the validity of the notice under section 148 on the ground that the proceedings were required to be conducted in accordance with section 151A of the Act and the e-Assessment of Income Escaping Assessment Scheme, 2022, notified vide Notification No. 18/2022 dated 29.03.2022. In this regard, reliance was placed on the judgment of the Hon'....
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....en thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both parties in the backdrop of the orders of the authorities below. 15. Admittedly, it is a matter of fact borne from the record that the notice under section 148 of the Act was issued to the assessee company on 24.03.2023. Also, it is undisputed that, in response to the said notice, the assessee company furnished its return of income on 28.12.2023. Further, a perusal of the assessment order and a screenshot of the e-filing on the assessee company's portal reveal that no notice under section 143(2) of the Act was issued to the assessee company. Also, the Ld. Sr. DR had neither controverted the aforesaid claim of the assessee's counsel, nor brought on record any material proving to the contrary. 16. We shall, in the backdrop of the aforesaid factual premises, first consider as to whether the return of income furnished by the assessee company in response to the notice issued under section 148 of the Act, dated 24.03.2023, was required to be treated as a return under section 139 of the Act and, consequently, whether issuance of notice under section 143(2) was mandatory. 17. B....
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....n furnished in response to the notice as if such return were a return required to be furnished under section 139. The specific statutory consequence that a return furnished beyond the period allowed under section 148 shall not be deemed to be a return under section 139 was introduced only with effect from 01.04.2023. Therefore, while the assessee company admittedly furnished its return on 28.12.2023, the consequence contemplated by the "third proviso" to section 148 cannot, in our considered view, be invoked in respect of the notice under section 148 issued on 24.03.2023, since the said proviso came into force only from 01.04.2023. In this regard, we find support from the decision of the coordinate Bench in Sanghi Textiles Private Limited vs. ITO, ITA No. 1311/Hyd/2025, dated 07.01.2026, wherein it was held that the return of income filed in response to a notice under section 148 is to be construed as a return of income filed under section 139 of the Act and that the AO is under a statutory obligation to issue notice under section 143(2) for framing the assessment. The coordinate Bench further observed that section 148 facilitates calling upon the assessee to file a return of incom....
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....sued notice under section 143(2) of the Act. Also, support is drawn from the judgment of the Hon'ble High Court of Patna in the case of CIT Vs. Nagendra Prasad, (2023) 156 Taxmann.com 191 (Patna). The Hon'ble High Court had observed that where the notice was issued by the A.O. u/s 148 requiring the assessee to file his return of income within thirty days but the said return was filed after eight and a half months, since the return was filed by the assessee in response to the said notice, though delayed, there should have been a notice issued under Section 143(2) as the requirement to issue notice could not be dispensed with. Accordingly, based on our aforesaid observations, we are of the view that the "return of income" filed by the assessee company on 21.10.2021 i.e., in response to the notice u/s. 148 of the Act dated 27.03.2021, though delayed, remained a "return of income" in the eyes of the law. 19. Applying the aforesaid principle to the facts of the present case, we are of the view that once the assessee company furnished its return of income on 28.12.2023 in response to the notice under section 148 dated 24.03.2023, and the "third proviso" to section 148 cannot b....
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.... of income filed under section 139 of the Act with all the provisions of the Act to be applied in the similar manner as it would apply to a return of income filed under section 139 of the Act, therefore, the AO to ensure that the assessee had not under stated the income disclosed by him in the return of income filed in response to notice under section 148 of the Act remains under a statutory obligation to issue a notice under section 143(2) of the Act, in a similar manner as if he would have done in response to a return of income furnished under section 139 or under section 142(1) of the Act. 21. We, thus, are of the firm conviction that for framing of assessment under section 148 of the Act, as per the law as was then available in the statute, the AO was obligated to issue a notice under section 143(2) of the Act. We say so, for two reasons, viz., (i) as observed by us herein above, the return of income filed by the assessee in response to notice under section 148 of the Act is to be construed as if it is a return of income filed under section 139 of the Act; and (ii) that section 148 of the Act though provides for a notice to be issued to the assessee calling upon him to file ....
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....pening and also reference to the Transfer Pricing Officer (TPO) were to be quashed. We further find that the Hon'ble High Court of Patna in the case of CIT vs. Nagendra Prasad (2023) 156 Taxmann.com 19 (Patna) had observed that where the notice was issued by AO under section 148 of the Act requiring the assessee to file a return within 30 days, but the said return was filed after 8½ months, since return of income was filed by the assessee in response to the notice under section 148 of the Act, though delayed, there should have been a notice issued under section 143(2) as the requirement to issue notice cannot be dispensed with. Further, the Hon'ble High Court of Delhi in the case of PCIT v. S.G. Portfolio Pvt. Ltd. (2023) 454 ITR 761 (Delhi) had, inter alia, held that where the assessee company had filed the return of income in response to notice under section 148 of the Act, the AO was required to issue notice under section 143(2) of the Act for framing the assessment. Also, the Hon'ble High Court of Madras in the case of Sapthagiri Finance & Investments vs. ITO (2012) 25 taxmann.com 341 (Madras) had, inter alia, held that where the AO found that there was an issue in the r....