The ITAT Lucknow has reaffirmed that the issuance of a notice under Section 143(2) of the Income Tax Act is a mandatory jurisdictional precondition for any scrutiny assessment, even when the return is filed belatedly in response to a notice under Section 148. The failure to issue this notice renders the entire assessment void ab initio, irrespective of the assessee’s participation or the Revenue’s reliance on Section 292BB.
Background & Facts
The Dispute
The appellant, Arun Kumar Maurya, was assessed for the assessment year 2014-15 under Section 147 read with Section 148 of the Income Tax Act, 1961. The Assessing Officer initiated reassessment proceedings by issuing a notice under Section 148 on 30.03.2021, requiring the assessee to file a return within 30 days. The assessee filed his return on 16.03.2022, nearly 11 months after the due date. On 17.03.2022, the assessee informed the Assessing Officer via communication that the return had been filed. Despite this, the Assessing Officer passed the assessment order on 19.03.2022 without issuing any notice under Section 143(2). The Commissioner of Income Tax (Appeals) upheld the assessment on 28.11.2023, leading to the present appeal.
Key Facts
- Notice under Section 148 was issued on 30.03.2021
- Return was filed by the assessee on 16.03.2022, beyond the 30-day deadline
- Communication from the assessee confirming return filing was received on 17.03.2022
- No notice under Section 143(2) was issued at any stage prior to the assessment order
- Assessment order was passed on 19.03.2022
- The Assessing Officer did not invoke Section 144 (best judgment) despite the delay
- The return was accepted for computation purposes, as the assessed income was derived from the returned income
Procedural History
- 30.03.2021: Notice under Section 148 issued
- 16.03.2022: Assessee filed return of income
- 17.03.2022: Assessee communicated to AO that return had been filed
- 19.03.2022: Assessment order passed under Section 143(3) read with Section 147
- 28.11.2023: CIT(A) dismissed appeal and upheld the assessment
- 01.08.2025: AO submitted letter acknowledging receipt of assessee’s communication
- 25.07.2025: Additional ground of appeal filed before ITAT, challenging non-issuance of Section 143(2) notice
- 30.03.2026: ITAT Lucknow delivered judgment
Relief Sought
The appellant sought annulment of the assessment order dated 19.03.2022 on the ground that it was passed without compliance with the mandatory requirement of Section 143(2), rendering it void ab initio. The appellant also sought deletion of all additions made under Sections 69 and 56(2)(vii)(b), contingent upon the quashing of the assessment.
The Legal Issue
Is the issuance of a notice under Section 143(2) of the Income Tax Act a mandatory jurisdictional requirement for a scrutiny assessment under Section 143(3), even when the return is filed belatedly in response to a notice under Section 148, and can such omission be cured by Section 292BB?
Arguments Presented
For the Appellant
The appellant’s authorized representative contended that Section 143(2) notice is not a procedural formality but a jurisdictional precondition. He relied on ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) and CIT v. Laxman Das Khandelwal (2019) 108 Taxmann.com 183 (SC), which hold that failure to issue such a notice is not a curable irregularity. He emphasized that the assessee had filed a return and communicated its filing, triggering the AO’s obligation to issue a Section 143(2) notice before making any adverse determination. He further argued that Section 292BB only cures defects in service, not the complete absence of notice, and that the jurisdictional defect could not be waived by the assessee’s participation.
For the Respondent
The Departmental Representative argued that the return was filed beyond the stipulated 30-day period under Section 148, and that the AO was justified in proceeding without a Section 143(2) notice. He relied on GKN Driveshafts (India) Ltd. v. ITO (2002) 125 Taxman 963 (SC) to suggest that delay in filing could justify bypassing procedural steps. He also contended that the assessee had participated in proceedings and therefore Section 292BB should apply. However, he conceded that no notice under Section 143(2) had been issued.
The Court's Analysis
The ITAT Lucknow conducted a comprehensive review of judicial precedents across High Courts and the Supreme Court. It held that the requirement to issue a notice under Section 143(2) is not merely procedural but jurisdictional. The Court emphasized that once an assessee files a return in response to a Section 148 notice - even belatedly - the Assessing Officer must either pass an ex parte order under Section 144 or issue a notice under Section 143(2) before making any adverse adjustment.
"The requirement of a notice under Section 143(2) of the Act cannot be dispensed with. Failure to issue a notice would result in the Assessing Officer assuming jurisdiction contrary to law."
The Court rejected the Revenue’s reliance on Section 292BB, citing CIT v. Laxman Das Khandelwal and Shaily Juneja v. ACIT, which clarify that Section 292BB applies only to defects in service, timing, or manner of notice - not to the complete non-issuance of notice. The Court noted that the AO had accepted the return for computation purposes, thereby implicitly treating it as valid, which triggered the mandatory obligation under Section 143(2).
The ITAT further relied on binding precedents from the Allahabad High Court (CIT v. Rajeev Sharma), Delhi High Court (Pr. CIT v. Jai Shiv Shankar Traders), Madras High Court (Sapthagiri Finance), and Rajasthan High Court (PCIT v. Kamla Devi Sharma), all of which have held that non-issuance of Section 143(2) notice invalidates the assessment. The Court also affirmed the decision of the co-ordinate bench in ACIT v. M/s. Wave Enterprises.
The Court observed that the AO’s failure to issue the notice was not a mere oversight but a fundamental breach of statutory procedure, rendering the assessment void ab initio. The fact that the assessee had participated in proceedings or had not objected earlier did not cure the jurisdictional defect.
The Verdict
The appeal was allowed. The ITAT Lucknow set aside the assessment order dated 19.03.2022 and the appellate order dated 28.11.2023. The entire assessment proceedings for the assessment year 2014-15 were annulled as void ab initio due to the non-issuance of the mandatory notice under Section 143(2). The Court declined to adjudicate the remaining grounds of appeal as academic, given the quashing of the assessment. The order was pronounced on 30.03.2026.
What This Means For Similar Cases
Notice Under Section 143(2) Is Non-Negotiable
- Practitioners must insist on the issuance of Section 143(2) notice in every scrutiny assessment, regardless of whether the return was filed on time or belatedly
- Any assessment passed without this notice is void and can be challenged even years later
- The mere fact that the assessee participated in proceedings or did not object does not validate the assessment
Section 292BB Does Not Cure Non-Issuance
- Section 292BB only deems notice as served if it was issued but improperly served or delayed
- It cannot be invoked where no notice was issued at all
- Revenue authorities cannot rely on Section 292BB to justify skipping the issuance of Section 143(2)
Delay in Filing Does Not Excuse Non-Issuance
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Even if a return is filed months after the deadline under Section 148, the AO must still issue Section 143(2) notice before making adverse additions
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The AO’s remedy for delay is to pass a best judgment order under Section 144 - not to bypass Section 143(2)
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Electronic filing and service do not alter the statutory mandate
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Practitioners should raise this ground as a primary challenge in all reassessment appeals
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Tax officers must ensure internal compliance checklists include verification of Section 143(2) notice issuance before finalizing any assessment
