BHARAT KANTILAL CHANGEDE,PUNE V. ITO WARD 6(3), PUNE

ITA 1902/PUN/2025

AI Insights

The case involves Bharat Kantilal Chengede, an individual and partner in Milan Plastic Industry, who appealed against the order of the CIT(A) / NFAC, Delhi, which upheld the validity of re-assessment proceedings for the assessment year 2012-13. The primary contention was the absence of a notice under section 143(2) of the Income Tax Act, 1961, after the assessee filed his return in response to a notice under section 148. The Assessing Officer had made additions to the assessee's income, which were contested on both procedural and merit grounds. The Tribunal's decision focused on the procedural impropriety of not issuing the mandatory notice under section 143(2), leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829251 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Pune
• Assessment Year: misc
• Appeal Filed On: 07-08-2025
• Other Referred Cases: PCIT vs. Staunch Marketing (P.) Ltd., PCIT vs. Shri Jai Shiv Shankar Traders (P.) Ltd., PCIT vs. Draft Infrabuild (P.) Ltd., CIT vs. Nagendra Prasad, Raja Bashumiya Maniyar vs. ITO, ACIT vs. Logic Control Pvt. Ltd., Bababhai Sardarbhai Shaikh vs. ITO, ACIT vs. Hotel Blue Moon, CIT vs. Laxman Das Khandelwal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BASAVARAJ HIREM ATH
• Assessee Lawyers: SUHAS BORA; SAMPADA INGALE
• Keywords: Set aside; Question of law
• Section: 147; 148; 142(1); 54F; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1902/PUN/2025 Assessment year : 2012-13 Bharat Kantilal Chengede 4, Budhwar Peth, Bajirao Road, Near Vitthal Mandir, Pune – 411002 Vs. ITO, Ward 6(3), Pune PAN: AAUPC5241M (Appellant) (Respondent) Assessee by : Shri Suhas Bora, Sampada Ingale, CA and Riya Oswal, CA Department by : Shri Basavaraj Hiremath, Addl.CIT Date of hearing : 08-01-2026 Date of pronouncement : -01-2026 O R D E R PER R.K. PANDA, V.P: This appeal filed by the assessee is directed against the order dated 03.07.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2012-13. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in upholding the validity of re-assessment proceedings in absence of issue of notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and thereby sustaining the addition of Rs.57,05,787/- made by the Assessing Officer on account of long term capital gain by denying the exemption u/s 54F of the Act. Printed from counselvise.com 2 ITA No.1902/PUN/2025 3. Facts of the case, in brief, are that the assessee is an individual and a partner in the partnership firm M/s. Milan Plastic Industry. He derives income from share in the partnership firm, income from capital gain and income from other sources. The case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 of the Act on 25.03.2019 which was duly served on the assessee. The assessee in response to the notice issued u/s 148 of the Act filed his return of income on 11.12.2019 declaring total income of Rs.3,76,494/-. The Assessing Officer thereafter issued notice u/s 142(1) of the Act. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.57,05,787/- on account of long term capital gain and also made addition of Rs.75,84,125/- being the difference between total fixed deposits declared by the assessee at Rs.25,68,457/- and information obtained from the bank u/s 133(6) of the Act at Rs.1,01,52,582/-. 4. Before the Ld. CIT(A) / NFAC the assessee, apart from challenging the addition on merit, challenged the validity of re-assessment proceedings on the ground that no notice u/s 143(2) of the Act was issued to the assessee after filing the return of income on 11.12.2019 in response to notice issued u/s 148 of the Act, therefore, such assessment proceedings completed without issue of notice u/s 143(2) of the Act makes the assessment nullity. However, the Ld. CIT(A) / NFAC was not satisfied with the arguments advanced by the assessee and upheld the validity of re-assessment proceedings on the ground that the same are saved by Printed from counselvise.com 3 ITA No.1902/PUN/2025 section 292BB of the Act. The relevant observations of the Ld. CIT(A) / NFAC on this issue read as under: 5. So far as the merit of the case is concerned, he dismissed the arguments made by the assessee and upheld both the additions. 6. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal. Printed from counselvise.com 4 ITA No.1902/PUN/2025 7. The Ld. Counsel for the assessee at the outset submitted that the Assessing Officer issued a notice u/s 148 of the Act on 25.03.2019, copy of which is placed at page 1 of the paper book. He submitted that the assessee in response to the same filed his return of income on 11.12.2019, copy of which is placed at page 2 of the paper book. He submitted that after the return was filed no notice u/s 143(2) of the Act was issued by the Assessing Officer. 8. Referring to the decisions of Hon’ble Delhi High Court in the case of PCIT vs. Staunch Marketing (P.) Ltd. reported in (2017) 81 taxmann.com 482 (Del), PCIT vs. Shri Jai Shiv Shankar Traders (P.) Ltd. reported in (2015) 64 taxmann.com 220 (Del), PCIT vs. Draft Infrabuild (P.) Ltd. reported in (2023) 166 taxmann.com 4 (Del) and the decision of Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad reported in (2023) 156 taxmann.com 19 (Patna), he submitted that the Hon’ble High Courts have held that even where the return was filed belatedly if the Assessing Officer considers such return while framing the assessment, notice u/s 143(2) of the Act is mandatory. 9. Referring to the decisions in the following cases, he submitted that similar view has been taken holding that once the return is filed in response to the notice u/s 148 of the Act, issue of notice u/s 143(2) of the Act is mandatory: i) Raja Bashumiya Maniyar vs. ITO vide ITA No.455/PUN/2025 order dated 27.05.2025 for assessment year 2010-11 Printed from counselvise.com 5 ITA No.1902/PUN/2025 ii) CIT vs. Nagendra Prasad reported in (2023) 156 taxmann.com 19 (Patna) iii) ACIT vs. Logic Control Pvt. Ltd. vide ITA No.3974/DEL/2025 order dated 21.11.2025 for assessment year 2011-12 iv) Bababhai Sardarbhai Shaikh vs. ITO vide ITA No.144/PUN/2025 order dated 23.10.2025 for assessment year 2015-16 10. He also relied on the following decisions: i) ACIT vs. Hotel Blue Moon reported in (2010) 188 Taxman 113 (SC) ii) CIT vs. Laxman Das Khandelwal reported in (2019) 108 taxmann.com 183 (SC) 11. He submitted that since the Assessing Officer in the instant case has admittedly not issued any notice u/s 143(2) of the Act after the assessee filed his return of income in response to the notice u/s 148 of the Act, such assessment proceedings are liable to be quashed for non-issue of notice u/s 143(2) of the Act. He submitted that the provisions of section 292BB of the Act cannot come to the rescue of the department. He accordingly submitted that on this preliminary ground the order of the Ld. CIT(A) / NFAC is liable to be set aside and the grounds raised by the assessee should be allowed. 12. The Ld. DR on the other hand referring to the decision of Hon’ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd. vide ITA No.950/2008 order dated 22.07.2011 submitted that when the assessee filed its return of income in response to the notice u/s 148 of the Act, non issue of notice u/s 143(2) of the Act thereafter will not invalidate the assessment proceedings. Printed from counselvise.com 6 ITA No.1902/PUN/2025 13. The Ld. Counsel for the assessee in his rejoinder submitted that the decision relied on by the Ld. DR is dated 11.07.2011 and the assessment years involved in that case were 1999-2000 to 2003-04. However, the Hon’ble Delhi High Court in the subsequent decisions has held that the failure to issue notice u/s 143(2) of the Act after filing of the return in response to the notice u/s 148 of the Act is fatal to the order of re-assessment proceedings. He submitted that in any case when two views are possible, the view which is in favour of the assessee has to be accepted. 14. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case issued notice u/s 148 of the Act on 25.03.2019. We find the assessee in the instant case filed his return of income on 11.12.2019 which is after the statutory period of 30 days given by the Assessing Officer. It is also an admitted fact that the assessment order was passed on 20.12.2019 and no notice u/s 143(2) of the Act has been issued and served on the assessee before completion of the assessment. Under these circumstances, we have to see as to whether non-issue of notice u/s 143(2) of the Act renders the assessment proceedings invalid when the assessee filed the return in response to the notice issued u/s 148 of the Act belatedly. Printed from counselvise.com 7 ITA No.1902/PUN/2025 15. We find an identical issue had come up before the Hon’ble Delhi High Court in the case of PCIT vs. Draft Infrabuild (P.) Ltd. (supra). We find the Hon’ble High Court, following its earlier order in the case of PCIT vs. Shri Jai Shiv Shankar Traders (P.) Ltd. (supra) and various other decisions, has held that the failure by the Assessing Officer to issue a notice to the assessee u/s 143(2) of the Act after the assessee files his return of income in response to the notice u/s 148 of the Act is fatal to the order of re-assessment proceedings. The relevant observations of Hon’ble High Court read as under: Printed from counselvise.com 8 ITA No.1902/PUN/2025 Printed from counselvise.com 9 ITA No.1902/PUN/2025 16. We find Hon’ble Patna High Court in the case of CIT vs. Nagendra Prasad (supra) has held that where notice was issued by the Assessing Officer under Section 148 requiring the assessee to file a return within thirty days but return was filed after eight and a half months, since return was filed by the assessee in response to said notice though delayed, there should have been a notice issued under section 143(2) as requirement to issue notice could not be dispensed with. The relevant observations of Hon’ble High Court read as under: “4. The only question of law arising in the facts and circumstances of the case is whether notice should have been issued under section 143(2) of the Income-tax Act? Printed from counselvise.com 10 ITA No.1902/PUN/2025 5. Admittedly, the notice was issued by the Assessing Officer under section 148 of the Act on 14-7-2008 requiring the assessee to file a return within thirty days. A return was filed much later on 31-3-2009, after eight and a half months. 6. On identical facts, in M.A. No. 239 of 2011 titled as Chand Bihari Agrawal v. Commissioner of Income Tax, Central, Patna decided on 25-7-2023, this Court considered the issue and held against the revenue. 7. We find that the question of law has to be answered in favour of the assesee and against the revenue. Hotel Blue Moon (supra) governs the issue which has been followed in Chand Bihari Agrawal (supra). 8. The Miscellaneous Appeal stands dismissed.” 17. The various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that when the assessee files return in response to the notice u/s 148 of the Act, though, belatedly, non-issue of notice u/s 143(2) of the Act makes the re-assessment proceeding a nullity. 18. So far as the decision relied on by the Ld. DR is concerned, no doubt, the Hon’ble Delhi High Court on an earlier occasion has taken a view that non-issue of notice u/s 143(2) of the Act does not make the re-assessment proceedings invalid where the assessee files the return in response to the notice u/s 148 of the Act. However, it is to be noted that subsequent to this decision, the Hon’ble High Court recently in three other decisions has held that when the assessee files return in response to the notice u/s 148 of the Act, though, belatedly, the issue of notice u/s 143(2) of the Act is a mandatory requirement and non-issue of the same makes the re-assessment proceedings invalid. In any case, it is the settled position of law that when two views are possible on an issue, the view which is favourable to the assessee has to be adopted. Since the Assessing Officer in the instant case has Printed from counselvise.com 11 ITA No.1902/PUN/2025 admittedly not issued any notice u/s 143(2) of the Act after the assessee filed the return in response to the notice u/s 148 of the Act, though, belatedly, therefore, respectfully following the decisions cited (supra), we hold that the order passed by the Assessing Officer without following the mandatory requirement of issue of notice u/s 143(2) of the Act makes such re-assessment order a nullity. Since the assessee succeeds on this legal ground, the grounds challenging the addition on merit are not being adjudicated. 19. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 13th January, 2026. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 13th January, 2026 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 12 ITA No.1902/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 08.01.2026 Sr. PS/PS 2 Draft placed before author 12.01.2026 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Office Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "