ITAT Quashes Reassessments for Non-Issuance of Mandatory Notice u/s 143(2):

ITAT Quashes Reassessments for Non-Issuance of Mandatory Notice u/s 143(2) Intact Developers Pvt. Ltd., a Bengaluru-based real estate developer, filed returns of income for AYs 2015-16 to 2017-18 under Section 139(1). A survey under Section 133A was later conducted on 19.02.2018 at its premises in connection with its residential project “Intact Avenue.” During the survey, the department found no regular books of account in the office and alleged inflation of contract expenses by routing payments through certain persons, such as Abdul Rasheed, Chota Hari, and Narasimha. The Assessing Officer issued notices under Section 148 for all three years and proceeded with reassessment. The CIT(A) upheld all additions, leading the assessee to appeal before the Tribunal. Issue Raised: Whether reassessment orders passed without a Section 143(2) notice, despite the assessee’s request to treat its original returns as returns in response to Section 148, are valid. ITAT's Ruling: The Tribunal held that once the assessee, through its letter dated 20.05.2019, requested that its return filed under Section 139(1) be treated as the return filed in response to Section 148, the AO was required to either reject the request and proceed under best-judgment assessment or accept it and necessarily issue a statutory notice under Section 143(2). The AO did neither; he neither rejected the request nor issued a Section 143(2) notice and instead proceeded to complete reassessment under Section 144, asserting incorrectly that no return had been filed. Relying on Supreme Court precedent in ACIT v. Hotel Blue Moon, the Tribunal held that issuance of notice under Section 143(2) is a mandatory jurisdictional requirement for any reassessment based on a return. Section 292BB does not cure the non-issuance of the notice. Since no valid Section 143(2) notice was ever issued, the reassessments for AYs 2015-16, 2016-17, and 2017-18 stood vitiated in their entirety. The Tribunal thus quashed all the reassessment orders. To Read Full Judgment, Download PDF Given Below