The Income Tax Appellate Tribunal, Delhi, has delivered a decisive ruling affirming that failure to issue a section 143(2) notice within the statutory six-month window renders the subsequent assessment void ab initio. This judgment reinforces the mandatory nature of procedural compliance under the Income-tax Act, 1961, and clarifies the binding effect of CBDT instructions on jurisdictional allocation and timelines.
Background & Facts
The Dispute
The appellant, Sh. Mukul Verma, filed his income tax return for assessment year 2016-17 on 16.10.2016, declaring a taxable income of Rs. 19,02,050. The return was processed by the Assessing Officer (ITO), Ward-3, Sonipat. Subsequently, two notices under section 143(2) of the Income-tax Act were issued: the first on 04.07.2017 by the ITO, and the second on 28.09.2018 by the ACIT/DCIT, Sonepat. The final assessment order was passed on 20.12.2018 by the DCIT, Sonepat. The appellant challenged the validity of this assessment on grounds of procedural non-compliance.
Key Facts
- The assessee’s return was filed on 16.10.2016 for AY 2016-17
- The previous year ended on 31.03.2016
- First section 143(2) notice issued by ITO on 04.07.2017 (within six months of 31.03.2016)
- Second section 143(2) notice issued by ACIT/DCIT on 28.09.2018 (18 months after end of previous year)
- Final assessment order dated 20.12.2018 was framed based on the second notice
- The assessee’s income of Rs. 19,02,050 exceeded the Rs. 15 lakh threshold for Mofussil areas under CBDT Instruction No. 1/2011
- The Revenue did not dispute the date of the second notice or its timing
Procedural History
- 16.10.2016: Assessee filed return declaring income of Rs. 19,02,050
- 04.07.2017: First section 143(2) notice issued by ITO, Ward-3, Sonepat
- 28.09.2018: Second section 143(2) notice issued by ACIT/DCIT, Sonepat
- 20.12.2018: Assessment order framed by DCIT, Sonepat
- 16.07.2025: CIT(A)/NFAC upheld the assessment
- 11.03.2026: Hearing before ITAT Delhi
- 30.03.2026: ITAT delivered judgment
Relief Sought
The appellant sought quashing of the assessment order dated 20.12.2018 on the ground that the notice under section 143(2) issued on 28.09.2018 was time-barred, rendering the assessment invalid.
The Legal Issue
The central question was whether an assessment framed under section 143(3) is valid when the notice under section 143(2) is issued more than six months after the end of the relevant previous year, despite the jurisdictional transfer of the case to a higher authority under CBDT Instruction No. 1/2011.
Arguments Presented
For the Appellant
The appellant’s counsel, Sh. Sobodh Jain, argued that section 143(2) mandates that the notice must be issued within six months from the end of the relevant previous year, as per the plain language of the provision. The second notice dated 28.09.2018 was issued 18 months after 31.03.2016, clearly beyond the statutory limit. He relied on CIT v. M/s. S. S. Kothari & Co. and CIT v. R. K. Jain to establish that time is of the essence in section 143(2) notices. He further emphasized that CBDT Instruction No. 1/2011, dated 31.01.2011, governs jurisdictional allocation but does not extend statutory timelines. The fact that the notice was issued by a higher authority (ACIT/DCIT) did not cure the procedural defect.
For the Respondent
The Revenue, represented by Ms. Harpreet Kaur Hansra, Sr. DR, did not contest the date of the second notice or its timing. No counter-argument was advanced to justify the delay or to assert that the notice was issued within the statutory period. The Department conceded no legal basis for the late issuance.
The Court's Analysis
The Tribunal observed that the statutory mandate under section 143(2) is unambiguous: the notice must be issued within six months from the end of the relevant previous year. The previous year for AY 2016-17 ended on 31.03.2016, making the last permissible date for issuance of the notice 30.09.2016. The notice issued on 28.09.2018 was therefore 18 months late.
"The provision is mandatory and not directory. The legislature has fixed a clear time limit to ensure expeditious disposal and to prevent undue delay in assessment proceedings."
The Tribunal further held that CBDT Instruction No. 1/2011, which reassigns cases above Rs. 15 lakh to ACIT/DCIT, pertains only to jurisdictional allocation and does not override or extend statutory timelines. The transfer of jurisdiction does not validate an otherwise invalid notice. The Court emphasized that procedural compliance is not a technicality but a substantive requirement for the validity of an assessment order.
The Revenue’s failure to rebut the appellant’s unchallenged factual assertion that the notice was issued beyond the statutory period was fatal to its case. The Tribunal held that an assessment based on a time-barred notice is a non-est in law - it has no legal existence and cannot be sustained.
The Verdict
The appellant succeeded. The ITAT Delhi quashed the assessment order dated 20.12.2018 as void ab initio for being based on a time-barred section 143(2) notice. All other contentions were rendered academic. The case was remanded to the Assessing Officer for fresh consideration, subject to issuance of a valid notice within the statutory period.
What This Means For Similar Cases
Statutory Timelines Are Non-Negotiable
- Practitioners must verify the date of issuance of section 143(2) notices against the end of the previous year - the six-month window is absolute
- Any notice issued after 30.09.2016 for AY 2016-17 is invalid, regardless of the authority issuing it
- Revenue authorities cannot rely on jurisdictional transfers to cure procedural defects
Jurisdictional Transfer Does Not Extend Deadlines
- CBDT instructions on case allocation (e.g., Instruction No. 1/2011) govern who hears the case, not when the notice must be issued
- Even if a case is transferred to a higher officer, the original statutory timeline remains binding
- Failure to issue notice within six months cannot be excused by administrative reassignment
Assessment Orders Based on Invalid Notices Are Void
- An assessment based on a time-barred notice is not merely defective - it is legally non-existent
- Such orders cannot be upheld even if the income is correctly assessed on merits
- Practitioners should raise this as a preliminary objection in all appeals and writ petitions
