ITR was not non est for no e-verification when AO took cognizance of returned income

Return could not be said to be non est for non e-verification when AO had been taken due cognizance of the returned income in the Assessment order.

In a recent judgment, Allahabad High Court has held that return could not be held to be non est for non e-verification when AO had been taken due cognizance of the returned income in the Assessment order.

ABCAUS Case Law Citation:
5002 (2026) (01) abcaus.in HC

This return of the respondent assessee was duly processed under section 143(1) of the Act accepting the returned income. Subsequently, based on the information received from DDIT investigation, the assessment of the assessee was sought to be reopened vide issuance of notice under section 148 of the Act.

In response to the notice, the assessee filed the return declaring the same taxable income as was admitted in the original return.   Since this return of income was not e-verified, the same was treated as invalid and non-est by the AO.

The assessee had also sought for furnishing of reasons recorded for reopening of assessment. Since the return filed by the assessee in response to notice under section 148 of the Act was treated as non-est, the AO did not furnish the reasons for reopening of assessment and also did not issue notice under section 143(2) of the Act in the reassessment proceedings. 

Ultimately, the reassessment proceedings stood completed after making addition under section 68 and under section 69C of the Act to the returned income under section 147 read with section 144B of the Act.

The CIT(A) observed that the AO had not issued notice under section 143(2) of the Act to the assessee and also had not furnished the reasons recorded for reopening of assessment. Both these deficiencies were fatal to the entire reassessment proceedings and accordingly he quashed the reassessment.

Before the Tribunal, the Revenue submitted that the return filed by the assessee in response to notice under section 148 of the Act was not e-verified and accordingly the AO had treated the return as non-est. Since the return was treated as non-est, the stand of the revenue was that there was no requirement for the AO to either issue notice under section 143(2) of the Act or furnish the reasons recorded for reopening the assessment.

The Tribunal observed that in the assessment order itself, the AO had started the computation of income from the returned income for computing the assessed income of the assessee. This proved that return filed by the assessee either the original return or the return filed in response to notice under section 148 of the Act had been taken due cognizance by the AO.

The Tribunal further observed that having taken note of the income returned, it was mandatory for the AO to issue notice under section 143(2) of the Act first in the reassessment proceedings and also furnish the reasons recorded for reopening of the assessment. 

The Tribunal further noted that when the AO intimated to the assessee that the return of income was not e-verified.  The assessee immediately on very next day rectified the same and duly e-verifies the return of income filed in response to notice under section 148 of the Act.

The Tribunal opined that non issue of notice under section 143(2) of the Act and non furnishing, reasons recorded to the assessee by the AO became jurisdictional defect and hence not curable even in terms of section 292BB of the Act as held by the Hon’ble Supreme Court that when no notice under section 143(2) of the Act has been issued, the entire assumption of jurisdiction fails and the assessment proceedings are required to be quashed. 

The Tribunal further observed that the Hon’ble Bombay High Court had categorically held that where no reasons recorded for reopening of assessment were furnished to the assessee, it becomes fatal to the entire reassessment proceedings per se and the reassessment proceedings are required to be quashed.

Accordingly, the Tribunal dismissed the appeal of the Revenue. However, the Income Tax Department challenged the order before the Hon’ble High Court.

The Hon’ble High Court observed that here wass no challenge to the finding of the Tribunal that the computation of the income was made by the assessing authority in the reassessment proceedings on the strength of return thus filed. Further, there was no challenge to the finding of the CIT (Appeals) as confirmed by the Tribunal that the ‘reasons to believe’ to initiate the reassessment proceedings, though prayed for by the assessee, were never supplied. Also, it was not in doubt that no notice of the reassessment proceedings was issued to the assessee under Section 143(2) of the Act.

The Hon’ble High Court noted that the reasoning of the CIT (Appeals) as confirmed by the Tribunal was that though the return filed through physical mode may not have been confirmed through electronic mode at the relevant time, at the same time, substantially, procedural requirement stood fulfilled inasmuch as the assessing officer himself made the computation of income on the basis of the figures disclosed in the return filed through the physical mode. uAlso, pon such defect being pointed out, the next date itself, the assessee e-verified the same.

The Hon’ble High Court also noted the decision of the Hon’ble Supreme Court that notice under Section 143(2) is not procedural and omission to serve that notice is not curable. Requirement of its issuance cannot be dispensed with.

The Hon’ble High Court held that there was no good ground to offer interference on the hair-splitting objection raised by the revenue.

Accordingly, the appeal was dismissed.

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