ASSISTANT COMMISSIONER OF INCOME-TAX , DELHI V. LOGIC CONTROL PVT. LTD., DELHI

ITA 3974/DEL/2025

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the CIT(A), which had set aside the reassessment made under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The reassessment was challenged due to the non-issuance of a notice under Section 143(2) after the assessee, Logic Control Pvt Ltd, filed a return in response to a notice under Section 148. The Tribunal examined whether the CIT(A) was correct in applying the decision of the Supreme Court in Hotel Blue Moon, which was found not applicable as the case involved a different context of assessment under Section 158BC. The core legal issue was the necessity of issuing a notice under Section 143(2) in reassessment proceedings under Section 148.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787626 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 17-06-2025
• Other Referred Cases: Hotel Blue Moon, PCIT Vs. Dart Infrabuild Pvt Ltd, Shri Jai Shiv Shankar Traders (P.) Ltd. v. Principal Commissioner of Income-tax, Society for Worldwide Interbank Financial Telecommunications v. DIT, Rajeev Sharma, Salarpur Cold Storage (P.) Ltd. v. CIT, Sapthagiri Finance & Investments v. ITO, Vision Inc.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: SALIL AGGARWAL
• Keywords: Reassessment proceedings; Block assessment; Reason to believe; Procedural lapse
• Section: 148; 143(3); 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3974/DEL/2025 [A.Y 2011-12] The A.C.I.T. Vs. Logic Control Pvt Ltd Ward – 19(1) 1115, Hemkund Chamber New Delhi 89, Nehru Place South East Delhi, New Delhi PAN: AAACL 0413 F (Appellant) (Respondent) Assessee By : Shri Salil Aggarwal, Sr. Adv Shri Shailesh Gupta, CA Shri Uma Shankar, Adv Department By : Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing : 07.10.2025 Date of Pronouncement : 21.11.2025 PER NAVEEN CHANDRA, AM :- This appeal by the Revenue is directed against the order of the ld. CIT(A), Delhi dated 30.04.2025 pertaining to A.Y 2011-12. 2. The sole grievance of the Revenue is that the ld. CIT(A) wrongly applied the decision of the Hon'ble Supreme Court in the case of Hotel Blue Moon which was in the context of assessment u/s 158BC of the Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 2 of 11 Income-tax Act, 1961 [the Act, for short] whereas in the instant case, the same does not apply as the case is reopening u/s 148 of the Act. 3. Briefly stated, the facts of the case are that the assessee was a non-filer and it’s case was reopened u/s 148 of the Act vide notice dated 29.03.2018. The return in response to notice u/s 148 of the Act was filed on 11.09.2018 declaring an income of Rs 58,92,107/- which was processed u/s 143(1). The Assessing Officer framed assessment u/s 143(3) r.w.s 147 of the Act on 14.12.2018 at Rs 2,48,73,357/-. 4. The issue for adjudication before us is as to whether the assessment made u/s 143(3) r.w.s 147 of the Act is legally valid in the absence of any service of notice u/s 143(2) of the Act. 5. The ld. DR vehemently stated that the reliance of the ld. CIT(A) on the case of Hotel Blue Moon, Civil Appeal No.1198 Of 2010 dated 02.02.2010 is not applicable in the instant case as the case of the assessee was reopened u/s 148 of the Act and the assessee filed delayed return in response to the same. The return was filed beyond the stipulated time and hence the issue/service of notice u/s 143(2) is not applicable in such a case. 6. Per contra, the ld. counsel for the assessee forcefully argued that the issue of notice u/s 143(2) of the Act is a must while framing order u/s 143(3) r.w.s 147 of the Act. The ld. counsel for the assessee further Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 3 of 11 stated that in the instant case, notice u/s 143(2) of the Act was not issued at all. It is the say of the ld. counsel for the assessee that the Assessing Officer has further considered the return filed on 11.09.2018 in response to notice u/s 148 of the Act and has accepted the return as valid while determining the total income. In view of the same, the ld. counsel for the assessee argued that the decision in the case of PCIT Vs. Dart Infrabuild Pvt Ltd 460 ITR 532 is squarely applicable. 7. We have heard the rival submissions and have perused the relevant material on record. The uncontroverted facts in the instant case are that the assessee’s case was reopened u/s 148 of the Act vide notice dated 29.03.2018 and the return in response to notice u/s 148 of the Act was filed on 11.09.2018. The RoI was processed u/s 143(1) at Rs 58,92,107/-. The Assessing Officer made an addition of Rs 1,89,81,250/- and ultimately framed the assessment u/s 143(3) r.w.s 147 of the Act on 14.12.2018 at Rs 2,48,73,357/-. It is also an admitted fact that the notice u/s 143(2) was not issued in the instant case. 8. The legal requirement of issuance of notice u/s 143(2) was established by the hon’ble Supreme Court in the case of Hotel Blue Moon (supra) where the return filed is necessary to be checked and for framing order u/s 143(3) r.w.s 147 of the Act. We find that the decision Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 4 of 11 of Hon'ble Jurisdictional High Court of Delhi in the case of Dart Infrabuild [supra] is squarely applicable which reads as under: “15. This brings us to the second aspect of the matter, i.e., the consequences of the failure of the appellant/revenue to issue notice under Section 143(2) of the Act before framing the assessment order. Concededly, the appellant/revenue did not issue a notice under Section 143(2) of the Act, although it had on record the ROI filed by the respondent/assessee for the AY in issue, i.e., 2010- 11. The return was, concededly, filed on 04.12.2015. This return was considered while framing the assessment under Section 147/144 of the Act. The only reason furnished for not issuing a notice under Section 143(2) of the Act is that the ROI was not filed within the thirty (30) days provided via the notice dated 30.03.2015 issued under Section 148. This argument does not impress us because if we were to hold [as we have], that the said notice was directed towards the wrong address, the respondent/assessee could have not adhered to the timeline provided in the said notice. 15.1 The respondent/assessee became aware of the Section 148 notice being issued after it received the notice dated 12.06.2015 under Section 142(1) of the Act. The fact that the respondent/assessee had filed an ROI on 04.12.2015 is not disputed. The fact that this ROI, as noticed above, was taken into account is also not in dispute. Therefore, in our opinion, before framing an assessment order, the AO ought to have issued a notice under Section 143(2) of the Act. The submission advanced on behalf of the appellant/revenue that, while it could consider the invalid Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 5 of 11 return while framing the assessment order, it was not obliged to issue a notice under Section 143(2) of the Act because it was not filed within the timeframe given in the Section 148 notice is untenable in law, since the ROI, which was belated, was considered by the AO while carrying out the assessment. 15.2 The absence of notice, under Section 143(2), impregnates the proceedings with a jurisdictional defect and, hence, renders it invalid in the eyes of the law. This position is no longer res integra, as demonstrated by the observations made in Principal Commissioner of Income-tax v. Shri Jai Shiv Shankar Traders (P.) Ltd. (2015) 64 taxmann.com 220 (Delhi): “12. The narration of facts as noted above by the court makes it clear that no notice under section 143(2) of the Act was issued to the assessee after December 16, 2010, the date on which the assessee informed the Assessing Officer that the return originally filed should be treated as the return filed pursuant to the notice under section 148 of the Act. 13. In DIT v. Society for Worldwide Interbank Financial Telecommunications [2010] 323 ITR 249 (Delhi), this court invalidated a reassessment proceeding after noting that the notice under section 143(2) of the Act was not issued to the assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under section 143(2) of the Act only after the return filed by the assessee is actually scrutinised by the Assessing Officer. 14. The interplay of sections 143 (2) and 148 of the Act formed the subject matter of at least two decisions of the Allahabad Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 6 of 11 High Court in CIT v. Rajeev Sharma [2011] 336 ITR 678 (All) it was held that a plain reading of section 148 of the Act reveals that within the statutory period specified therein, it shall be incumbent to send a notice under section 143(2) of the Act. It was observed (page 687): The provisions contained in sub-section (2) of section 143 of the Act is mandatory and the Legislature in its wisdom by using the word reason to believe' had cast a duly on the Assessing Officer to apply mind to the material on record and after being satisfied with regard to escaped liability, shall serve notice specifying particulars of such claim. In view of the above, after receipt of return in response to notice under section 148, it shall be mandatory for the Assessing Officer to serve a notice under sub-section (2) of Section 143 assigning reason therein . . .in absence of any notice issued under sub-section (2) of section 143 after receipt of fresh return submitted by the assessee in response to notice under section 148, the, entire procedure adopted for escaped assessment, shall not be valid. 15. In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. [2014] 50 taxmann.com 105 (All), it was held as under: 10. Section 292BB of the Act was inserted by the Finance Act, 2008 with effect from April 1, 2008. Section 282BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated In any enquiry relating to an assessment or reassessment, it shall be deemed that any Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 7 of 11 notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him ; or ii) not served upon him in time ; or (iii) served upon him in an improper manner. IN other words, once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to section 292BB of the Act, however, carves out an exception to the effect that the section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292BB of the Act cannot obviate the requirement or complying with a jurisdictional condition. For the Assessing Officer to make an order of assessment under section 143(3) of the Act, it is necessary to issue a notice under section 143(2) of the Act and in the absence of a notice under section 143(2) of the Act, the assumption of jurisdiction itself would be invalid. 16. In the same decision in Salarpur Cold Storage (P.) Ltd. (supra), the Allahabad High Court noticed that the decision of the Supreme Court in Hotel Blue Moon (supra) where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not \"a procedural irregularity and the same is not curable and, therefore, Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 8 of 11 the requirement of notice under Section 143(2) cannot be dispensed with.\" 17. The Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO [2012] 25 taxmann.com 341/210 Taxman 78 (Mad.) (Mag.). The facts of that case were that a notice under Section 148 of the Act was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1) of the Act. Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148 of the Act. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2) of the Act. It was observed that: \"Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 9 of 11 the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act.\" 18. As already noticed, the decision of this Court in Vision Inc. (supra) proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143 (2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of \"service\" of notice was concerned and not with regard to failure to \"issue\" notice. In other words, the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2) of the Act, prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB of the Act. 19. The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment.” Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 10 of 11 9. The facts of the instant case demonstrate that the facts are identical to the case decided by the hon’ble Delhi High Court above. The assessee has filed a return in response to notice u/s 148 which was processed u/s 143(1). The AO has framed the assessment u/s 147 r.w. section 143(3), taking the income as assessed u/s 143(1) as the starting point which shows that the AO has considered the return filed u/s 148 as valid return. In the factual matrix of the instant case, we respectfully follow the above decision in Dart Infrabuild [supra] of the Hon'ble Delhi Court and hold that failure of the Assessing Officer to issue notice u/s 143(2) of the Act is fatal to the order of the re-assessment. The assessment order so framed is quashed as void ab initio. Grounds 1 and 2 of appeal of the Revenue are dismissed. 10. In the result, appeal of Revenue in ITA No. 3974/DEL/2025 is dismissed. Order pronounced in open court on 21.11.2025. Sd/- Sd/- [ANUBHAV SHARMA] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 21st November, 2025. VL/ Printed from counselvise.com ITA No. 3974/DEL/2025 [A.Y 2011-12] Logic Control Page 11 of 11 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order 2. Date on which the typed draft order is placed before the Dictating Member 3. Date on which the typed draft order is placed before the other Member [in case of DB] 4. Date on which the approved draft order comes to the Sr. P.S./P.S. 5. Date on which the fair Order is placed before the Dictating Member for sign 6. Date on which the fair order is placed before the other Member for sign [in case of DB] 7. Date on which the Order comes back to the Sr. P.S./P.S for uploading on ITAT website 8. Date of uploading, inf not, reason for not uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which the file goes for Xerox 11. Date on which the file goes for endorsement 12. The date on which the file goes to the Superintendent for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to the dispatch section for dispatch the Tribunal order 15. Date of Dispatch of the Order 16. Date on which the file goes to the Record Room after dispatch the order Printed from counselvise.com "