Notice u/s 143(2) void if type of scrutiny not mentioned i.e. limited, complete or compulsory manual

Notice u/s 143(2) without specifying whether it is a limited scrutiny or a complete scrutiny or a compulsory manual scrutiny held void – ITAT

In a recent judgment, ITAT Guwahati has held that income tax notice u/s 143(2) without specifying whether it is a limited scrutiny or a complete scrutiny or a compulsory manual scrutiny is in violation of CBDT instruction making it invalid with the result all the consequential proceedings would also be invalid.

ABCAUS Case Law Citation:
4886 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the order passed by the Ao u/s 143(3) of the Income Tax Act, 1961 (the Act).

during the course of assessment proceedings, the assessee had raised legal issue challenging the assessment framed based on notice issued u/s 143(2) of the Act alleging that the notice was not in accordance with CBDT Instruction.

The return of income of the assessee was selected for scrutiny through CASS and accordingly notice u/s 143(2) of the Act was issued. Finally, the AO made the impugned addition and assessed the income of the assessee vide order passed u/s 143(3) of the Act.

The assessee submitted that the assessment framed u/s 143(3) of the Act was invalid and ex-facie, null and void as the same was passed in consequence to invalid notice u/s 143(2) of the Act which was not as per the CBDT Instruction and accordingly, the assessment order passed consequently was void ab initio, ultra virus and nullity in the eyes of law.

The assessee submitted that the notice u/s 143(2) of the Act did not specify whether it is a limited scrutiny or a complete scrutiny or a compulsory manual scrutiny. It was submitted that the CBDT had issued specific instruction dated 23-06-2017, that the notice u/s 143(2) shall be issued in one of the three specified formats but the present notice issued was not in accordance with such said instruction and therefore, the assessment framed consequently was invalid and void ab initio.

The aseessee in defense of his arguments relied on the decisions of Co-ordinate Bench of ITAT Calcutta wherein similar issue had been decided in favour of the assessee.

On the other hand, the Revenue submitted that the notice was a computer generated notice and the non-mentioning of the fact of either limited or complete scrutiny or compulsory manual scrutiny would not render the issuance of notice u/s 143(2) of the Act as invalid.

The Tribunal observed that undisputedly the notice issued u/s 143(2) of the Act specified only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice had been issued in violation of the instruction issued by CBDT as noted above. The Tribunal opined that the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceedings would also be invalid.

The Tribunal further observed that the case of the assessee found support from the decision of the co-ordinate Bench of Calcutta wherein a similar issue has been decided in favour of the assessee. In the said judgment, the Co-ordinate Bench noted that the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon’ble Apex Court held that the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. As a result, the Co-ordinate Bench held that the notice issued u/s 143(2) of the Act which is not in the prescribed format as provided under the Act is an invalid notice and accordingly, all the subsequent proceedings thereto would be invalid and void ab initio.

In the instant case, since the facts of the assessee’s case were similar to one as decided by the co-ordinate Bench, therefore, respectfully following the same the Tribunal held that the notice issued u/s 143(2) of the Act was invalid notice and accordingly, the assessment framed consequentially was also invalid and was quashed.

As a result, the appeal of the assessee was allowed.

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