When AO started the computation of assessed income from the returned income, the return can not be considered non-est for no e-verification
In a recent judgment, ITAT Delhi has held that when Assessing Officer started the computation of assessed income from the returned income, the return can not be considered non-est for non e-verification and therefore issuance of notice u/s 143(2) was mandatory in the reassessment proceedings and also to furnish the reasons recorded for reopening of the assessment.
ABCAUS Case Law Citation:
4622 (2025) (06) abcaus.in ITAT
In the instant case, the Income Tax Department (Revenue) had challenged the order passed by the CIT(A) National Faceless Appeal Centre (NFAC) in quashing the reassessment proceedings/order of assessment passed u/s 147 of the Income-tax Act, 1961 (the Act) by the Assessing Officer.
The original return filed by the 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 said notice, the assessee filed the return declaring the same taxable income as was admitted in the original return. However, 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 an addition under section 68 of the Act and also an addition under section 69C of the Act to the returned income under section 147 read with section 144B of the Act.
The assessee preferred an appeal before the CITA who 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 become fatal to the entire reassessment proceedings and accordingly quashed the reassessment.
The Tribunal observed that it was not in dispute that no notice under section 143(2) of the Act was ever issued to the assessee in the reassessment proceedings. It was also not in dispute that reasons recorded for reopening the assessment were also not furnished by the AO to the assessee despite making a specific request in that regard.
The Tribunal noted that the only defence of the revenue was 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, 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. Having done so, 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 the AO had intimated to the assessee that the return of income was not e-verified. The assessee immediately (i.e. the very next day) rectified the same and duly e-verified the return of income filed in response to notice under section 148 of the Act. This was ignored by the AO while framing the re-assessment.
The Tribunal further noted that admittedly, notice under section 143(2) of the Act was not issued to the assessee in the reassessment proceedings and reasons recorded for reopening the assessment were also not furnished to the assessee by the AO. These become jurisdictional defect and hence not curable even in terms of section 292BB of the Act.
The Tribunal placed reliance on the decision of Hon’ble Supreme Court wherein it was held that when no notice under section 143(2) of the Act had been issued, the entire assumption of jurisdiction fails and the assessment proceedings are required to be quashed. Further 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 accordingly, the reassessment proceedings are required to be quashed.
Accordingly, the appeal of the revenue was dismissed.
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