LUV BHARDWAJ,DELHI V. DCIT,CENTRAL CIRCLE-26, DELHI

ITA 2979/DEL/2025

AI Insights

The case involves an appeal by Luv Bhardwaj against the reassessment order passed by the ACIT, Circle-52(1), New Delhi, which was confirmed by the CIT(A)-29, New Delhi. The reassessment was based on information that the assessee received unexplained money from two companies amounting to Rs.2.15 crore during the Assessment Year 2012-13. The primary legal contention was whether a notice under Section 143(2) of the Income Tax Act was mandatory before proceeding with the reassessment, especially when the return was filed belatedly. The Tribunal, referencing several Supreme Court and High Court decisions, held that such a notice is indeed mandatory, and its absence invalidates the reassessment proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839269 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2025
• Other Referred Cases: ACIT vs. Hotel Blue Moon, PCIT vs. Silver Line and Anr, CIT vs Delhi Kalyan Samiti, Krishna Kumar Makrania vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA BHANU MANDAL
• Assessee Lawyers: PRANAV YADAV
• Keywords: Reassessment proceedings
• Section: 147; 144; 142(1); 153A; 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE MS MADHUMITA ROY, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No.2979/Del/2025 Assessment Year : 2012-13 Luv Bhardwaj, 9H, 9th Floor, Hansalaya Building, Barakhamba Road, Delhi – 110 063. PAN: AAQPB3050P Vs. DCIT, Central Circle-26, Delhi (Appellant) (Respondent) Assessee by : Shri Pranav Yadav, Advocate Revenue by : Shri Chandra Bhanu Mandal, Sr. DR Date of Hearing : 06.01.2026 Date of Pronouncement : 20.02.2026 ORDER PER MADHUMITA ROY, JM: The instant appeal filed by the Assessee is directed against the order dated 27.03.2025 passed by the Ld. Commissioner of Income-tax (Appeals)-29, New Delhi [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) in appeal arising out of the assessment order dated 21.12.2019 passed by the ACIT, Circle-52(1), New Delhi (hereinafter referred to as ‘the Ld. AO’) under Section 147/148 of the Act for Assessment Year 2012-13. Printed from counselvise.com ITA No.2979/Del/2025 2 2. The facts of the case are that the case was reopened u/s 147 of the Act against the assessee firm who has filed his return of income for AY 2012-13 on 06.12.2012 declaring the total income at Rs.42,50,930/- for the year under consideration. The return was processed u/s 143(1) on 26.02.2013 at the returned income. Subsequently, on the basis of an information received from the Office of the Dy. Director of Income-tax (Investigation), Unit 7(1), New Delhi that the assessee received unexplained money from two companies for the year under consideration, namely, Popular Realtech P. Ltd. and Hope Realtech Pvt. Ltd. to the tune of Rs.2.15 crore, the assessee was summoned. However, the source of such amount was not explained in spite of opportunity being given to the assessee. Since the nature of receipt of money in his bank account and genuineness of the transaction and the financial profile of these two companies or their credit worthiness was not established, the reassessment proceedings initiated against the assessee was finalized by making addition in the hands of the assessee to the tune of Rs.2,57,50,930/- which was in turn confirmed by the First Appellate Authority, hence, the instant appeal before us. 2. It is the case of the Revenue that notice u/s 143(2) of the Act is not required to be served upon the assessee since no return has been filed. 3. On the other hand, it is the case of the assessee that since the assessee has filed belated return of income, notice u/s 143(2) of the Act has to be issued in the Printed from counselvise.com ITA No.2979/Del/2025 3 absence of which the entire proceedings is vitiated as without jurisdiction and liable to be quashed. In this regard, the Ld. AR relied upon the order of the Hon’ble Supreme Court in the case ACIT vs. Hotel Blue Moon, 321 ITR 362 (SC) and that of the Hon’ble Delhi High Court in the case PCIT vs. Silver Line and Anr, 283 CTR 148 (Del), wherein it has been held that whenever the return filed by an assessee is not accepted at its face, it is mandatory for the AO to issue a notice under section 143(2) of the Act for proceeding further. It is, thus, not open for the AO to not issue a notice under Section 143(2) of the Act and proceed directly under Section 144 of the Act by rejecting the return filed by the assessee. He has further relied upon the decision of the Hon’ble Delhi High Court in the case CIT vs Delhi Kalyan Samiti (ITA 699/2015, order dated 22.03.2016) and the order passed by the coordinate Bench in the case of Krishna Kumar Makrania vs. DCIT in ITA No.3214/Del/2024, order dated 05.05.2025. 4. We have considered the above decision. In fact, in the case of Delhi Kalyan Samiti (supra) it has been held that whenever the return filed by an assessee is not accepted at its face, it is mandatory for the AO to issue a notice under section 143(2) of the Act for proceeding further. Thus, it is not open for the AO to not issue a notice under Section 143(2) of the Act and proceed directly under Section 144 of the Act by rejecting the return filed by the assessee. Further consideration of the coordinate Bench’s order in the case of Krishna Kumar Makrania vs. DCIT in ITA No.3214/Del/2024, order dated 05.05.2025 Printed from counselvise.com ITA No.2979/Del/2025 4 it is found that the judgement passed by the Hon’ble Supreme Court in the case of Hotel Blue Moon (supra), the judgement passed by the Hon’ble Delhi High Court in the case PCIT vs. Silver Line and Anr. (supra) and the judgement passed by the Hon’ble Delhi High Court in the case CIT vs. Pawan Gupta, 318 ITR 322 (Del) were considered on the identical issues and held that issuance of notice u/s 143(2) of the Act is mandatory when the AO is not accepting the return filed by the assessee even if the same is a belated return. The relevant observations are reproduced hereinbelow:- “12. We have further considered the judgment passed by the Hon’ble Delhi High Court in the case of CIT v. Delhi Kalyan Samiti in ITA No. 696/2015 dated 22.03.2016, as relied upon by the Ld. AR, wherein the Sr. Counsel for the Department submitted that no notice u/s. 143(2) was required to be issued to the assessee and the said assessment was framed u/s. 144(1)(b) of the Act on account of failure on the part of the assessee to comply with the terms of a notice issued u/s. 142(1) of the Act or failure to comply with the notice issued under section 142(A) of the Act and further that issuance of notice u/s. 143(2) of the Act is, therefore, not a necessary precondition for the same. He further contended that the position would not be different even if the returns were filed in the regular course. The Division Bench, in that particular matter, observed that it is well established that if the AO does not accept the return filed by the assessee on its face, he is required to issue notice u/s. 143(2) of the Act and provide an opportunity to the assessee to produce the necessary materials in support of his return, the relevant observation whereof is reproduced as follows: \"9. It is now well established that if the AO does not accept the return filed by the Assessee on its face and he is required to issue a notice under Section 143(2) of the Act and provide an opportunity to the Assessee to produce the necessary material in support of his return. MrShivpuri had argued that a notice under Section 143(2) was required to be issued only in cases where the AO considers it necessary or expedient to do so and in cases where the Assessee had not filed its response to the notice under Section 142(1) it was not necessary for the AO to issue such notice under Section 143(2). In our view, this contention is bereft of any merits and completely ignores the scheme of the machinery provisions for assessment under the Printed from counselvise.com ITA No.2979/Del/2025 5 Act. It is now well settled by a number of decisions (See: Pr. CIT v. Silver Line and Anr.: 283 CTR 148 (Del), ACIT v. Hotel Blue Moon: 321 ITR 362 (SC) and CIT v. Pawan Gupta: 318 ITR 322 (Del)) that whenever the return filed by an Assessee is not accepted at its face, it is mandatory for the AO has to issue a notice under Section 143(2) of the Act for proceeding further. It is thus not open for the AO to not issue a notice under Section 143(2) of the Act and proceed directly under Section 144 of the Act by rejecting the return filed by the Assessee. 10. The decision of this Court in Ashok Chaddha (supra) was rendered in the context of Section 153A of the Act and in our view, the same is not applicable in the present case. This Court in several cases pertaining to proceedings under Section 147 has held that a notice under Section 143(2) is mandatory. [See: Alpine Electronics Asia (P.) Ltd. v. DGIT: 341 ITR 247 (Del), DIT v. Society for Worldwide Interbank Financial Telecommunication: 323 ITR 249 (Del), Pr. CIT v Shri Jai Shiv Shankar Traders Pvt. Ltd.: 282 CTR 435 (Del) and CIT v. Rajeev Verma: 336 ITR (All)]. It is also relevant to note that clause (b) of the proviso to Section 148(1) of the Act also specifically extends the period for issuance of notice under Section 143(2) of the Act.\" 13. Under these facts, the said Court observed that this contention is bereft of any merits and completely ignores the scheme of the machinery provisions for assessment under the Act. 14. We have further considered the judgment passed by the Hon’ble Jurisdictional High Court in the case of Shaily Juneja v. ACIT, reported in [2024] 167 taxmann.com 90 (Delhi) dated 27.08.2024, which was duly taken into consideration by the Coordinate Bench in the case of Bimla Devi v. DCIT (supra). Relying upon the judgment passed by the Hon’ble Delhi High Court in the case of PCIT vs. Silver Line and Anr., reported in 283 CTR 148 (Del); the judgment passed by the Hon’ble Supreme Court in the case of ACIT vs. Hotel Blue Moon, reported in 321 ITR 362 (SC); and judgment in the case of CIT vs. Pawan Gupta, reported in 318 ITR 322 (Del), it has been held in that matter that whenever the return filed by the assessee is not accepted at its face, it is mandatory for the AO to issue notice u/s. 143(2) of the Act for proceeding further; it is thus, not open for the AO not to issue notice under Section 143(2) of the Act and to proceed directly under section 144 of the Act by rejecting the return of income filed by the assessee. 15. Needless to add that the case before us is on identical fact of that of the case made out and considered by the Hon’ble Delhi High Court in the Printed from counselvise.com ITA No.2979/Del/2025 6 matter of Shaily Juneja vs. ACIT (Supra) which was duly considered by the Coordinate Bench in the case of Bimla Devi vs. DCIT in ITA 3212/Del/2024 (Supra). Thus, issuance of notice under Section 143(2) of the Act is mandatory before completion of the reassessment proceedings u/s. 148 of the Act. 16. Having regard to the entire aspect of the matter we find that issuance of notice under Section 143(2) of the Act though mandatory before completion of reassessment proceedings under Section 148 of the Act before the amendment brought by the Finance Act, 2023, having its effect from 01.04.2023, specifying that any return furnished beyond the period allowed in Section 148 to furnish such return of income shall be deemed not to be a return under Section 139 of the Act and consequential requirement of notice under Section 143(2) of the Act is not mandatory for such return only, which is not at all applicable to the case in hand; Thus, it is held that failure to issue such notice under Section 143(2) of the Act in the present case before us would render the reassessment proceedings invalid. Thus, in the absence of mandatory notice under Section 143(2) of the Act by the Ld. AO in this particular case before the completion of reassessment proceedings under Section 147 of the Act as impugned is found to be invalid, arbitrary, erroneous and bad in law which ultimately vitiates the entire proceedings and is thus. liable to be quashed. With the above observations we, therefore, quash the reassessment proceedings challenged before us. Accordingly, the legal ground raised by the assessee is allowed. 17. In view of our finding on legal ground, the other grounds raised in the appeal have become academic and need not to be adjudicated. 18. In the result, assessee’s appeal in ITA No. 3214/Del/2024 is allowed as indicated above. 4.1. Thus, under the facts and circumstances of the case in hand, in the absence of mandatory notice under Section 143(2) of the Act before completion of the reassessment proceedings under Section 147 of the Act, particularly for non- acceptance of belated return as impugned before us, is found to be invalid, arbitrary and bad in law and vitiates the entire proceedings and, thus, respectfully relying upon the several judgements passed by different judicial forums, the order impugned is found to be liable to be quashed. We order accordingly. Printed from counselvise.com ITA No.2979/Del/2025 7 Since the appeal is being disposed of on the legal ground raised by the assessee, all other grounds preferred become academic. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20.02.2026. Sd/- Sd/- (RENU JAUHRI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 20th February, 2026. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "