Once cognizance of belated return taken, notice u/s 143(2) is mandatory – ITAT

AO taking cognizance of belated return ought to have issued the mandatory notice under section 143(2) of the Act – ITAT

In a recent judgment, ITAT Agra has held that once AO took cognizance of the belated return filed by the assessee he ought to have issued the mandatory notice under section 143(2) of the Act.

ABCAUS Case Law Citation:
4878 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) confirming order of assessment passed u/s 144/147 of the Income-tax Act, 1961 (the Act).

The AO had received information that assessee had deposited large amount of cash in his Savings Bank Account. Pursuant to this information, notice under section 148 of the Act stood issued to the assessee.

In response to the said notice, the return of income was filed by the assessee. The AO proceeded to complete the reassessment proceedings under section 144 read with section 147 of the Act after issuing show-cause notice under section 142(1) of the Act due to non-cooperative attitude of the assessee during the course of reassessment proceedings. Ultimately, the reassessment stood completed.

It is pertinent to note that in the instant case, even though the assessee had filed the return belatedly, post the filing of return by the assessee, admittedly no notice under section 143(2) of the Act was issued to the assessee by the AO.

Before the Tribunal, the assessee raised a preliminary ground stating that the statutory notice under section 143(2) of the Act was not issued in the instant case by the AO which became fatal to the entire assessment proceedings per se.

The question before the Tribunal was as to whether non-issuance of notice under section 143(2) of the Act for a belated return filed by the assessee would become fatal to the assessment proceedings or not?

The Tribunal observed that the case of the assessee fell under the jurisdiction of Hon’ble Allahabad High Court wherein the issue had been decided in favour of the assessee by the Hon’ble Jurisdictional High Court wherein in the reassessment proceedings, an addition on account of unexplained gift was sought to be examined and made.

The Tribunal further noted that in the said reassessment proceedings, notice under section 148 of the Act was issued by the assessing officer. The assessee responded to the notice under section 148 of the Act by duly filing the return of income. Thereafter, no notice under section 143(2) of the Act was issued to the assessee.

The Tribunal noted that the Hon’ble Jurisdictional Allahabad High Court held that in the absence of any notice issued under section 143(2) of the Act after receipt of fresh return submitted by the assessee in response to notice under section 148 of the Act, the entire procedure adopted for escaped assessment shall not be valid as the requirement of notice under section 143(2) of the Act is mandatory and cannot be dispensed with.

The Tribunal further noted that similarly, the Hon’ble Supreme Court also held that issuance of statutory mandatory notice under section 143(2) of the Act cannot be dispensed with and non-issuance of the same would become fatal to the entire search assessment proceedings.  Also, the Hon’ble Apex Court had held that non-issuance of notice under section 143(2) of the Act would not be cured by the provisions of section 292BB of the Act by holding that for section 292BB of the Act to apply, section 143(2) notice must have emanated from department and it is only infirmities in manner of service of notice that section seeks to cure and it is not intended to cure complete absence of notice itself. 

The Tribunal observed that in the instant case, even though the assessee had filed the return just 7 days before the completion of reassessment proceedings, the AO had taken due cognizance of the said belated return while completing the reassessment, which was evident from the fact that the AO while computing the income in the final page of the assessment order stated the income returned by the assessee and thereafter proceeded to make the impugned addition. Hence the AO having taken due cognizance of the belated return filed by the assessee ought to have issued the mandatory notice under section 143(2) of the Act and then proceeded to frame the re-assessment.

The Tribunal held that the entire reassessment proceedings deserved to be quashed as void ab initio. Accordingly, the ground raised by the assessee was allowed. 

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