EXCEL FINANCIAL CONSULTANTS (P) LIMITED,HOWRAH V. ITO, WARD 13(1), KOLKATA

ITA 2608/KOL/2025

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Excel Financial Consultants (P) Ltd. appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2018-19. The primary contention was the validity of the notice issued under section 143(2) of the Income Tax Act, 1961, which was claimed to be in violation of the CBDT Circular No. F.NO.225/157/2017/ITA-11 dated 23.06.2017. The Tribunal examined the notice and found it not to be in the prescribed format, leading to the conclusion that the notice was invalid. This decision was supported by precedents from similar cases, emphasizing the binding nature of CBDT instructions on tax authorities.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837943 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 11-11-2025
• Other Referred Cases: Shib Nath Ghosh Vs. ITO, Kamlesh Singh Vs. ITO, M/s Durga Automotives Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAMPA RAY
• Assessee Lawyers: SOMNATH GHOSH
• Keywords: Invalid notice; Bad and doubtful debts
• Section: 143(3); 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM ITA No. 2608/KOL/2025 (Assessment Year: 2018-19) Excel Financial Consultants (P) Ltd. C/o S.N. Ghosh & Associates, Advocates, 2 Garstin Place, 2 nd Floor, Suite No.203, Off Hare Street, Kolkata-700001, West Bengal Vs. ITO, Ward 13(1) Aaykar Bhawan Poorva, 110, Shanti Pally, 9 th Floor, Eastern Metropolitan Bypass, Kolkata-700107, West Bengal (Appellant) (Respondent) PAN No. AACCE1409J Assessee by : Shri Somnath Ghosh, AR Revenue by : Shri Pampa Ray, DR Date of hearing: 29.01.2026 Date of pronouncement: 17.02.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 10.09.2025 for the AY 2018-19. 2. The only issue raised by the assessee is against the issue of notice u/s 143(2) in violation of CBDT Circular No. F.NO.225/157/2017/ITA-11 on 23.06.2017. 3. The facts in brief are that the assessee filed the return of income u/s 139(1) of the Act on 28.10.2018, declaring total loss of ₹10,29,598/-, which was selected for scrutiny under Computer Assisted Scrutiny Printed from counselvise.com Page | 2 ITA No. 2608/KOL/2025 Excel Financial Consultants (P) Ltd.; A.Y. 2018-19 Selection (CASS). Thereafter the notice u/s 143(2) & 142(1) of the Act were issued on 23.09.2019 & 22.10.2020 respectively along with the questionnaire which were duly served upon the assessee. The AO was framed u/s 143(3) read with section 144B of the Act vide order dated 31.05.2021, by determining the total income at ₹3,72,974/-. 4. In the appellate proceedings also the ld. CIT (A) confirmed the order of the ld. AO by dismissing the appeal of the assessee. 5. After hearing the rival contentions and perusing the materials available on record, I find that the notice was issued u/s 143(2) of the Act on 23.09.2019, a copy of which is available at page no. 41 of the Paper Book of the assessee. I note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:- “आयकर नियम 1962 क े नियम 12 क े साथ पठित आयकर अधिनियम 1961 की िारा 143 (2) क े अिीि िोठिस Notice under section 143(2) of the income-tax Act, 1961 read with Rule 12E of the Income Tax Rules, 1962 संवीक्षा (जांच) (क ंप्यूिर आिाररत संवीक्षा चिि) Scrutiny (Computer Aided Scrutiny Selection) प्रियं करदाता, Dear Taxpayer, आपक े द्वारा नििाारण वर्ा 2018-19 क े लिए ठदिांक, 28/10/2018 को पावती िं. 351466501281018 क े तहत आयकर प्रववरणी दाधचत करिे क े लिए आपको िन्यवाद। Thank you for filing your return of income for Assessment Year 2018-19 vide Ack, no. 351466501281018 on 28/10/2018. 2. प्रववरणणका की तैयार करिे में आपक े ध्याि एवं पररिम को स्वीकार करते हुए, क ुछ मुद्दों पर और स्पष्िीकरण की आवश्यकता है, जजिक े कारण आपकी आय प्रववरणणका को संगीक्षा (जांच) क े लिए चुिा गया है, ये मुद्दे िारंभ में निम्िािुसार है: Printed from counselvise.com Page | 3 ITA No. 2608/KOL/2025 Excel Financial Consultants (P) Ltd.; A.Y. 2018-19 2. While acknowledging the care and diligence you may have taken in preparing the return, there are certain issues which need further clarification, for which your return of Income has been selected for scrutiny and such issues initially are as under: S. No. Issues i. Verification of Transactions 3. उपरोक्त को ध्याि में रखते हुए उल्िेणखत मुद्दों क े उत्तर आप संबंधित दस्तावेजो (यठद कोई हो) सठहत नििाारण अधिकारी को 'ई-कायावाही' सुबबिा में अपिे ई-फाइलिंग वैबसाइि खाते क े जररए (www.incometaxindiaefiling.gov.in) अपिी सुप्रविािुसार, ठदिांक 08/10/2019 तक या उससे पहिे इिेक्रॉनिक माध्यम से िस्तुत कर दें। 3. In view of the above, you may submit your response with supporting documents (if any) on the above mentioned issues to the Assessing Officer electronically in 'e- Proceedings' facility through your account in e-Filing website (www.incometaxindiaefiling.gov.in) at your convenience on or before 08/10/2019. 4. नििाारण िक्रिया क े दौराि यठद आवश्यक हुआ तो सूचिा/कागजात क े लिए प्रवस्तृत िश्िाविी या मांग पत्र बाद में जारी क्रकया जाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document may be issued subsequently. 5. आप क े संदभा क े लिए 'ई-कायावाही' पर एक संक्षक्षप्त िौि संिग्ि है। यठद आपको अपिा उत्तर दजा करिे में क्रकसी भी सहायता की आवश्यकता है तो आप िोि फ्री कॉि सेंिर िं 1800 103 4215 पर संपक ा कर सकते है। 5. A brief note on 'e-Proceeding' is enclosed for your kind reference. In case you require any assistance in filing your response, you may contact toll free Call Centre number 1800 103 4215. संिग्िः यथोपरर Enclosure: as above भवदीय/ Yours faithfully. सहायक आयकर आयुक्त (ई-सत्यापि) Assistant Commissioner of Income-tax (e-Verification) आयकर अधिनियम 1961 की िारा 143 (2) क े अिीि प्रवठहत आयकर िाधिकारी Prescribed-Income-tax Authority u/s 143(2) of the Income Tax Act, 1961 Printed from counselvise.com Page | 4 ITA No. 2608/KOL/2025 Excel Financial Consultants (P) Ltd.; A.Y. 2018-19 6. In our opinion, the notice issued u/s 143(2) of the Act which is not in the prescribed format as provided under the Act is an invalid notice and accordingly, all the subsequent proceedings thereto would be invalid and void ab initio. The case of the assessee find support from the decision of Shib Nath Ghosh Vs. ITO in ITA No. 1812/KOL/2024 for A.Y. 2018-19 vide order dated 29.11.2024, wherein the co-ordinate Bench has held as under:- “10. After hearing both the sides and the materials available on record, we find that the notice issued u/s 143(2) dated 9th August, 2017 was not in any of the formats as provided in the CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017. We have examined the notice, copy of which is available at page no.1 of the Paper Book and find that the same is not as per the format of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 as stated above. In our opinion, the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon'ble Apex Court in case of UCO Bank (supra) held that the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:-:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases Which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by Issuing circulars binding on the taxing authorities. In order to aid proper determination of the income of money lenders and banks, the Central Board of Direct Taxes issued a circular dated October 6, 1952, providing that where interest accruing on doubtful debts is credited to a suspense account, It need not be included in the assessee's taxable income, provided the Income-tax Officer is satisfied that recovery is practically improbable. Twenty-six years later, on June 20, 1978, in view of the judgment of the Kerala High Court In STATE BANK OF TRAVANCORE v. CIT [1977] 110 ITR 336, the Board by another circular, withdrew with immediate effect the earlier circular. However, by circular dated October 9, 1984, the Board decided that Interest in respect of doubtful debts credited to suspense account by banking companies would be Printed from counselvise.com Page | 5 ITA No. 2608/KOL/2025 Excel Financial Consultants (P) Ltd.; A.Y. 2018-19 subjected to tax but Interest charged in an account where there has been no recovery for three consecutive accounting years would not be subjected to tax in the fourth year and onwards. The circular also stated that if there is any recovery in the fourth year or later, the actual amount recovered only would be subjected to tax in the respective years. This procedure would apply to assessment year 1979-80 and onwards. 11. Similarly, Hon'ble Calcutta High Court in case of Amal Kumar Ghosh (supra), held as under:- “Held, allowing the appeal, (1) that even assuming that the intention of the Central Board of Direct Taxes was to restrict the time for selection of the cases for scrutiny to a period of three months, It could not be said that the selection in the case of the assessee was made within the period. The return was filed on October 29, 2004, and the case was selected for scrutiny on July 6, 2005. By any process of reasoning, it was not open to the Tribunal to come to a finding that the Department acted within the four corners of Circulars Nos. 9 and 10 Issued by the Central Board of Direct Taxes The circulars were evidently violated. The circulars were binding upon the Department under section 119.” 12. Therefore case of the assessee is therefore squarely covered by the ratio laid down in the above decisions and respectfully following the same , we are inclined to hold the assessment as invalid being based on the invalid issue of notice u/s 143(2) of the Act. The first additional ground raised by the assessee is allowed.” 7. Similarly, decision of the co-ordinate bench in case of Kamlesh Singh Vs. ITO in ITA No. 2459/KOL/2025 vide order dated 12.01.2026, wherein it has held as under:- “6. I have considered the rival submissions. As it is noticed that the Assessing Officer who has passed the assessment has not issued notice u/s.143(2) of the Act. Such notice has been issued by an authority who has no jurisdiction over the assessee on this ground notice u/s.143(2) of the Act is quashed and I do so. 7. It is also noticed that the notice issued u/s.143(2) of the Act is not in line with the Circular issued by the CBDT in respect of e-notice. This being so, respectfully following the decision of the coordinate bench of the Tribunal in the case of M/s Durga Automotives Pvt. Ltd., referred to supra, the notice is found to be invalid and consequently the same stands quashed. Since there is no valid notice issued u/s.143(2) of the Act to the assessee before completion of the assessment u/s.143(3) of the Act, the consequential assessment order passed by the Assessing Officer also stands quashed.” 8. Considering the facts of the instant case in the light of the decisions of the co-ordinate bench, I am inclined to hold that notice issued u/s Printed from counselvise.com Page | 6 ITA No. 2608/KOL/2025 Excel Financial Consultants (P) Ltd.; A.Y. 2018-19 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially to that is also invalid and is hereby quashed. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 17.02.2026. Sd/- (RAJESH KUMAR) (ACCOUNTANT MEMBER) Kolkata, Dated: 17.02.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "