Sub
section (2) of Section 143 provides that where a return has been furnished under
section 139, or in response to a notice 142(1), the Assessing Officer or the
prescribed income-tax authority, as the case may be, if, considers it necessary
or expedient:
v to ensure that the assessee has not understated
the income or has not computed excessive loss or has not under-paid the tax in
any manner, shall serve on the assessee a notice requiring him, on a date to be
specified therein, either:
(a)
to attend the office of
the Assessing Officer or
(b)
to produce, or cause to
be produced before the Assessing Officer any evidence on which the assessee may
rely in support of the return:
Text
of Section 143(2)
[1][(2) Where a return has been furnished under section 139, or
in response to a notice under sub-section (1) of section 142, the Assessing
Officer or the prescribed income-tax authority 71, as the case may be, if,
considers it necessary or expedient to ensure that the assessee has not
understated the income or has not computed excessive loss or has not under-paid
the tax in any manner, shall serve on the assessee a notice requiring him, on a
date to be specified therein, either to attend the office of the Assessing
Officer or to produce, or cause to be produced before the Assessing Officer any
evidence on which the assessee may rely in support of the return:
PROVIDED
that no notice under this sub-section shall be served on the assessee after the
expiry of [2][three]
months from the end of the financial year in which the return is furnished.]
KEY NOTE
1. Substituted by the Finance Act, 2016, with
effect from 01.06.2016.
2. Substituted
for the words “six” by the Finance Act, 2021, with effect from 01.04.2021.
Text of Rule 12E
[1][Prescribed authority
under sub-section (2) of section 143
12E. The prescribed authority under
sub-section (2) of section 143 shall be an income-tax authority not below the
rank of an Income-tax Officer who has been authorised by the Central Board of
Direct Taxes to act as income-tax authority for the purposes of sub-section (2)
of section 143].
KEY NOTE
1. Inserted by the Income-tax (Fifth Amendment)
Rule, 2014, vide Notification No. 105 of 2016, dated 16.11.2016, with effect
from 16.11.2016.
Time limit for issuance of
notice under section 143(2)
The notice under Section 143(2) can be
issued after an income tax return has been filed but within a period of three
months from the end of the financial year in which the return was filed.
For example, say, Mr ‘A’ filed his returns on 31.07. 2022 for the
financial year 2021-22. The assessing officer can issue a notice under Section
143(2) only within 30 June 2023. This is because he can only issue the notice
within a period of 3 months from the end of the financial year 2021-22, the
financial year in which Mr ‘A’ filed the returns.
Consequences of not
complying with the notice issued under section 143(2)
(i) Penalty for failure to comply with notice issued under section 143(2)
[Section 272A(1)(d)]
If the taxpayer fails to comply with notice issued to him under section 143(2), then as per section 272A he shall be liable for a penalty of Rs. 10,000 for each failure.
(ii)
Assessing Officer will complete the assessment
under section 144 (Total income shall be calculated by Assessing Officer to the
best of his judgment and determine the tax payable by the assessee on the basis
of such judgement
CBDT notifies Prescribed Income-tax Authority’ under Section 143(2)
for Returns
Notification No. 25/2021-Income-tax. Dated 31.03.2021
S.O. 1437(E). - In exercise of powers conferred under sub-section
(2) of section 143 of Income-tax Act, 1961 (43 of 1961) (the Act) read with
Rule 12E of the Income-tax Rules, 1962, the Central Board of Direct Taxes
hereby authorises the Assistant Commissioner of Income-tax/Deputy Commissioner
of Income-tax (NaFAC) having her / his headquarters at Delhi, to act as the
‘Prescribed Income-tax Authority’ for the purpose of sub-section (2) of section
143 of the Act, in respect of returns furnished under section 139 or in
response to a notice issued under sub-section (1) of section 142 of the said
Act, or sub-section (1) of section 148 of the Act, for the purpose of issuance
of notice under sub-section (2) of section 143 of the said Act.
2. This notification shall come into force from the 1st
day of April, 2021.
ACIT (e-Verification), Delhi designated as authority under section 143(2) r.w. Rule 12E
[Notification No. 65/2019- Income Tax, Dated 13.09.2019]
CBDT notifies Assistant Commissioner of Income-tax (e-Verification),
Delhi, to act as prescribed Income-tax Authority for the purpose of Section
143(2) of Income Tax Act, 1961 read with
rule 12E of the Income-tax Rules, 1962 vide Notification No. 65/2019- Income
Tax dated 13.09.2019.
Notification No. 65/2019- Income Tax Income Tax, Dated 13.09.2019
S.O. 3279(E). - In pursuance of the powers conferred by sub-section
(1) and (2) of section 120 and sub-section (2) of Section 143 of the Income-tax
Act, 1961 (43 of 1961) (hereinafter referred to as said Act), read with rule
12E of the Income-tax Rules, 1962, the Central Board of Direct Taxes hereby
authorises that the Assistant Commissioner of Income-tax (e-Verification),
having headquarter at Delhi, to act as prescribed Income-tax Authority for the
purpose of sub-section (2) of section 143 of the said Act, in respect of
returns furnished under section 139 or in response to a notice under
sub-section (1) of section 142 of the said Act during the financial year
commencing on 1st day of April, 2018 for the purposes of issuance of notice
under sub-section (2) of section 143 of the said Act.
2. This notification shall come into force from the date of its
publication in the Official Gazette.
Revised format of Issue of notices under section 143(2) of
Income-tax Act, 1961
CBDT F. No. 225/157/2017/ITA.II, dated 23.06.2017
Subject: – Issue
of notices under section 143(2) of Income-tax Act, 1961 in revised format - Regarding
With reference to the above, I am
directed to state that Central Board of Direct Taxes has decided to modify
format of notice(s) issued under section 143(2] of the Income-tax Act which
intimate the concerned assesse about selection of his/her case for scrutiny.
This has become necessary in view of Board’s decision to utilise ‘E-Proceeding‘
facility for electronic conduct of assessment proceedings in a widespread
manner from this financial year.
2. The three formats of notice(s) are: Limited Scrutiny (Computer
Aided Scrutiny Selection} Complete Scrutiny (Computer Aided Scrutiny Selection)
Compulsory Manual Scrutiny The revised format of 143(2) notice(s) with a note
on benefits & Procedures of’ E-Proceeding’ facility are enclosed for
information of the field authorities.
3. I am further directed to state that all scrutiny notices under
section 143(2) of the Act, shall henceforth, be issued in these revised formats
only. The Systems Directorate is effecting necessary changes in the 1TBA module
in this regard.
4. The above may be brought to the notice of all for necessary
compliance.
Limited Scrutiny (Computer Aided Scrutiny Selection)
Notice under Section 143(2) of the Income-tax Act. 1961
PAN No: ……………………… Dated: ………………………
To
Sir/Madam
This is for your kind information that the return of income for
Assessment Year ………………………filed vide ack. no ………………………on………………………has been
selected for Scrutiny. Following issue(s) have been identified for examination:
2. In view of the above, I would like to give you an opportunity to
produce any evidence/information which you feel is necessary in support of the
said return of income on or before ………………………
3. The above mentioned evidence/information is to be furnished
online electronically in ‘E-Proceeding’ facility through your account in
e-Filing website of Income-tax Department. Further proceedings shall also be
conducted electronically (*). A brief note on salient features of ‘E-Proceeding’
is enclosed.
4. In case you do not wish to produce any evidence/information, as
mentioned in para 2, you are requested to intimate the same electronically on
or before
5. Specific questionnaires/requisition of information or documents
would be sent subsequently, if required. 6. Para(s) (2) to (4) are applicable
if you have an account in e-Filing website of Income-tax Department. Till such
an account is created by you, assessment proceedings shall be carried out
either through your e-mail account or manually (if e-mail is not available).
(*) Subject to exceptions as per the enclosed note
Yours faithfully,
Seal (Name
of the Assessing Officer) (Designation)
(Telephone No./Fax No.)
(E-mail ID)
Complete Scrutiny (Computer Aided Scrutiny Selection)
Notice under
Section 143(2) of the Income-tax Act, 1961
PAN No: ………………………
Dated: ………………………
To Sir/Madam
Dated:
This is for your kind information that the return of income for
Assessment Year ………………………filed vide ack. no on has been selected for Complete
Scrutiny.
2. In view of the above, I would like to give you an opportunity to
produce any evidence/information which you feel is necessary in support of the
said return of income on or before
3. The above mentioned evidence/information is to be furnished
online electronically in ‘E-Proceeding’ facility through your account in
e-Filing website of Income-tax Department. Further proceedings shall also be
conducted electronically (*). A brief note on salient features of
‘E-Proceeding’ is enclosed.
4. In case you do not wish to produce any evidence/information, as
mentioned in para 2, you are requested to intimate the same electronically on
or before
5. Specific questionnaires/requisition of information or documents
would be sent subsequently, if required.
6. Para(s) (2) to (4) are applicable if you have an account in
e-Filing website of Income-tax Department. Till such an account is created by
you, assessment proceedings shall be carried out either through your e-mail
account or manually (if e-mail is not available). (*) Subject to exceptions as
per the enclosed note
Yours faithfully,
Seal (Name
of the Assessing Officer)
(Designation)
(Telephone No./Fax No.) (E-mail ID)
Compulsory Manual Selection
Notice under
Section 143(2) of the Income-tax Act, 1961
PAN No:
Dated:
PAN No: ……………………… Dated: ………………………
To Sir/Madam
This is for your kind information that the return of income for
Assessment Year ………………………filed vide ack. no ………………………on ……………………………………………… has
been selected for Scrutiny on the basis of parameter at Para 1(………………………) of
Manual Compulsory Guidelines of CBDT issued vide Instruction No
………………………dated………………………
2. In view of the above, I would like to give you an opportunity to
produce any evidence/information which you feel is necessary in support of the
said return of income on or before
3. The above mentioned evidence/information is to be furnished
online electronically in ‘E- Proceeding’ facility through your account in
e-Filing website of Income-tax Department. Further proceedings shall also be
conducted electronically (*). A brief
note on salient features of ‘E- Proceeding’ is enclosed.
4. In case you do not wish to produce any evidence/information, as
mentioned in para 2, you are requested to intimate the same electronically on
or before
5. Specific questionnaires/requisition of information or documents
would be sent subsequently, if required.
6. Para(s) (2) to (4) are applicable if you have an account in
e-Filing website of Income-tax Department. Till such an account is created by
you, assessment proceedings shall be carried out either through your e-mail
account or manually (if e-mail is not available).
7. In cases where order has to be passed under section 153A/153C of
the Income-tax Act, 1961 read with section 143(3), assessment proceedings would
be conducted manually.
(*) Subject to exceptions as per the enclosed note
Yours faithfully,
Seal
(Name of the Assessing Officer)
(Designation)
(Telephone No./Fax No.) (E-mail ID)
CBDT Letter F. No. 225/157/2017/ITA.II], Dated 23.06.2017
Subject :
Section 143 of the income-tax act, 1961 - assessment - general - issue
of notices under
section 143(2) in revised
format
With reference to the above, I am directed to state that Central
Board of Direct Taxes has decided to modify format of notice(s) issued under
section143(2) of the Income-tax Act which intimate the concerned assessee about
selection of his/her case for scrutiny. This has become necessary in view of
Board's decision to utilise ‘E-Proceeding’ facility for electronic conduct of
assessment proceedings in a widespread manner from this financial year (Annex).
2. The three formats of notice(s) are:
♦ Limited Scrutiny (Computer Aided Scrutiny
Selection) (Annex-I).
♦ Complete Scrutiny (Computer Aided Scrutiny
Selection) (Annex-II)
♦ Compulsory Manual Scrutiny (Annex-III)
The revised format of 143(2) notice(s) with a note on benefits
& Procedures of ‘E-Proceeding’ facility are enclosed for information of the
field authorities.
3. I am further directed to state that all scrutiny notices under
section 143(2) of the Act, shall henceforth, be issued in these revised formats
only. The Systems Directorate is effecting necessary changes in the ITBA module
in this regard.
4. The above may be brought to the notice of all for necessary
compliance.
CBDT Letter F. No. DIT(S)-2/CASS/2016-17, Dated 28.09.2016
Subject : Section 143, read with section
139A, of the income-tax act, 1961 - Assessment –
Generation of scrutiny notices
under section 143(2) for pan selected in cass-2016 well
before time barring date
Kindly refer to letter No. F. No. System/ITBA/lnstruction/Assessment/2015-16,
dated 15.03.2016, F. No. System/ITBA/lnstruction/Assessment/CASS Cycle
2/2016-17, dated 25.07.2016 and F. No. DGIT(S)-2/ADG(S)-2/CASS 2016-17/93,
dated 16.09.2016 requiring Assessing officers to generate scrutiny notices
under section 143(2) for PANs selected in cycle 1, cycle 2 and cycle 3 of
CASS-2016.
2. It is seen that till 27.09.2016, notices have not been issued in
991 cases.
3. These 991 cases include 80 cases which are lying with inactive
codes.
4. It is requested that PANs available in the inactive code list,
where AO is marked as Old/Defunct, may please be migrated to their correct
jurisdiction on priority basis by the CIT(CO) or by the higher authority(Range
and above whosoever is Active for that old/defunct AO, so that notices under
section143(2) for scrutiny can be issued on time. Also, in cases where no
employee number is attached with an AO code a review of AO on priority basis
may be undertaken by respective RCC.
5. An Assessing officer wise summary and list of such cases as
mentioned in para 2 is available in ITAXNET [Path: Resources → Downloads →
Systems → Generation of scrutiny notices under section143(2) required]
6. In view of the above, you are requested to make arrangements for
issue of notice under section 143(2) well before the time barring date i.e.
30.09.2016.
CBDT Instruction No. 8 of 2016 [F. No. 142/8/2016-TPL] Dated
15.09.2016
Subject : Income Declaration Scheme, 2016 - Where time
for issuance of a notice under section 143(2)/153A/153C pursuant to search,
seizure or survey operation, as the case may be, for relevant assessment
year(s) has not expired shall not be eligible to avail said scheme
The Income Declaration Scheme, 2016 (the Scheme) has come into
effect from 1st June, 2016 and is open for declarations upto 30.09.2016. Vide
Circular No.16 of 2016 dated 20.05.2016; it was clarified that a person will
not be eligible to file declaration under the Scheme for the assessment year(s)
in respect of which a notice under section 142(1)/143(2)/148/153A/153C has been
served upon him on or before 31.05.2016. It was also clarified that where a
search has been conducted under section 132 or requisition has been made under
section 132A or a survey has been carried out under section 133A of the
Income-tax Act, in a previous year then the person shall not be eligible under
the Scheme if the time for issuance of a notice under section 143(2)/153A/153C
for the relevant assessment year has not expired.
2. In relation to the above, queries have been received from field
formation and other stakeholders as to whether a declaration under the Scheme
can be filed for an assessment year for which the proceedings under section
142(1)/143(2)/148/153A/153C were pending as on 31.05.2016 but the said
proceedings have been completed.
3. In this context, it is clarified that a declaration under the
Scheme can be filed in respect of the assessment year for which notice under
section 142(1)/143(2)/148/153A/153C has been served on or before 31.05.2016 but
the proceedings have been completed and the period of filing declaration under
the Scheme has not expired. However, the declarant shall not be entitled to
file the declaration in respect of the income which is the subject matter of
the assessment order. It is reiterated that the cases where the time for
issuance of a notice under section 143(2)/153A/153C pursuant to search, seizure
or survey operation, as the case may be, for the relevant assessment year(s)
has not expired shall not be eligible to avail the Scheme.
4. This instruction may be brought to the notice of all the
officers concerned and other stakeholders.
CBDT Letter F. No. 225/162/2016/ITA.II], Dated 11.07.2016
Subject : Section 143 of the Income-Tax Act, 1961 - Assessment - General - Issue
of Notices under Section 143(2) in Revised Format
With reference to the
above, I am directed to state that Central Board of Direct Taxes, with approval
of the Revenue Secretary, has decided to modify notice under section
143(2) of the Income-tax Act. Henceforth, there shall be three formats of the
said notice namely:
♦ Limited Scrutiny - Annex A
♦ Complete Scrutiny - Annex B
♦ Manual Scrutiny - Annex C
2. The revised format of 143(2) notice(s) are enclosed (without
annexure on benefits of email based assessment) for kind information of the
field authorities.
3. I am further directed to state that all scrutiny notices, shall
henceforth, be issued in these revised formats. The Systems Directorate is
effecting necessary changes in the ITD module in this regard.
4. The above may be brought to the notice of all for necessary compliance.
ANNEX
A
Limited Scrutiny
Notice under section 143(2) of the Income-tax Act, 1961
|
PAN: . . . . . . . . . |
Dated :. . . . . .
|
To
Sir/Madam
This is for your kind
information that the return of income for Assessment Year . . . . . . . . . . .
. . filed vide . . . . . . . . . on ........... has been selected for Scrutiny.
Following issues have been identified for examination:
2. In view of the above, we
would like to give you an opportunity to produce, or cause to be produced, any
evidence which you feel is necessary in support of the said return of income on
.......... (date) in the office of the undersigned.
3. Sending a communication
to the undersigned in this regard shall also be treated as sufficient
compliance in case no evidence is sought to be produced as required in
Para 2 above.
4. Specific questionnaire/show-cause
notice shall be sent giving you another opportunity in case any adverse view is
contemplated.
5. (#) The assessment
proceeding in your case is proposed to be conducted through email based
communication. The email provided in the said return of income shall be used
for communication for this purpose. In case you wish to communicate through any
other alternate email, the same may kindly be informed. A brief note regarding
benefits of this facility and procedure is enclosed overleaf. In case you do
not wish to participate in this taxpayer friendly initiative, you may convey
your refusal to the undersigned by the above mentioned date. In case, you wish
to opt out from this scheme at any subsequent stage due to any technical
difficulties faced by you, the same can be done with prior intimation to the
undersigned.
Yours
faithfully,
Seal
(Name
of the Assessing Officer)
(Designation)
(Telephone
No./Fax No.)
(E-mail
id.)
ANNEX
B
Complete Scrutiny
Notice under section 143(2) of the Income-tax Act, 1961
|
PAN: . . . . . . . . . |
Dated :. . . . .
. |
To
Sir/Madam
This is for your kind
information that the return of income for Assessment Year . . . . . . . . .
filed vide . . . . . . . on . . . . . . . . has been selected for Complete Scrutiny.
2. In view of the above, we
would like to give you an opportunity to produce, or cause to be produced, any
evidence which you feel is necessary in support of the said return of income on
........... (date) in the office of the undersigned.
3. Sending a communication
to the undersigned in this regard shall also be treated as sufficient
compliance in case no evidence is sought to be produced as required in
Para 2 above.
4. Specific
questionnaire/show-cause notice shall be sent giving you another opportunity in
case any adverse view is contemplated.
5. (#) The assessment
proceeding in your case is proposed to be conducted through email based
communication. The email provided in the said return of income shall be used
for communication for this purpose. In case you wish to communicate through any
other alternate email, the same may kindly be informed. A brief note regarding
benefits of this facility and procedure is enclosed overleaf. In case you do
not wish to participate in this taxpayer friendly initiative, you may convey
your refusal to the undersigned by the abovementioned date. In case, you wish
to opt out from this scheme at any subsequent stage due to any technical
difficulties faced by you, the same can be done with prior intimation to the
undersigned.
Yours
faithfully,
Seal
(Name
of the Assessing Officer)
(Designation)
(Telephone
No./Fax No.)
(E-mail
id.)
ANNEX
C
Manual Selection
Notice under section 143(2) of the Income-tax Act, 1961
|
PAN: . . . . . . . . . |
Dated :. . . . . . |
To
Sir/Madam
This is for your kind
information that the return of income for Assessment Year . . . . . . . . . . .
. . .filed vide . . . . . . . . . . . on . . . . . . . . . . . has been
selected for Scrutiny on the basis of parameter at Para 1(. . . . . . . . . . .
. . ) of the Manual Compulsory Guidelines of CBDT issued vide Instruction
No. . . . . . . . . . . . . . . dated . . . . . . . . . . .
2. In view of the above, we
would like to give you an opportunity to produce, or cause to be produced, any
evidence which you feel is necessary in support of the said return of income on
............ (date) in the office of the undersigned.
3. Sending a communication
to the undersigned in this regard shall also be treated as sufficient
compliance in case no evidence is sought to be produced as required in
Para 2 above.
4. Specific
questionnaire/show-cause notice shall be sent giving you another opportunity in
case any adverse view is contemplated.
5. (#) The assessment
proceeding in your case is proposed to be conducted through email based
communication. The email provided in the said return of income shall be used
for communication for this purpose. In case you wish to communicate through any
other alternate email, the same may kindly be informed. A brief note regarding
benefits of this facility and procedure is enclosed overleaf. In case you do
not wish to participate in this taxpayer friendly initiative, you may convey
your refusal to the undersigned by the abovementioned date. In case, you wish
to opt out from this scheme at any subsequent stage due to any technical
difficulties faced by you, the same can be done with prior intimation to the
undersigned.
Yours
faithfully,
Seal
(Name
of the Assessing Officer)
(Designation)
(Telephone
No./Fax No.)
(E-mail
id.)
CBDT Letter F. No. DIT(S)-2/CASS/2014-15/16205, Dated 28.09.2015
Subject : Section143 of the income-tax Act, 1961 - Assessment -
General - Generation of Scrutiny notices under section 143(2) (Time Barring
Matter)
Kindly refer to letter no. F. No. DIT(S)-2/CASS/2014-15/16153 dated
24.09.2015, AST Instruction no. 137 dated 28.09.2015 and AST Instruction no.
138 dated 18.09.2015 requiring Assessing officers to generate scrutiny notices
under section 143(2) for PANs selected in cycle 1 and cycle 2 of CASS-2015.
2. It is seen that till 28-09-2015, notices have not been issued in
1,604 cases.
3. These 1604 cases include 331 cases which are lying with inactive
codes. With reference cases with inactive codes, a letter no. DIT(S)-2/CASS/2014-15/16205
dated 23.09.2015 has been communicated to field through ITAXNET.
4. An Assessing officer wise summary and list of such cases as
mentioned in para 2 is available in ITAXNET. [Path: Resources → Downloads →
Systems → Generation of scrutiny notices u/s 143(2) required]
5. In view of the above, you are requested to make arrangements for
issue of notice u/s 143(2) well before the time barring date i.e. 30.09.2015.
CBDT Letter F. No. DIT(S)-2/CASS/2014-15/16205, Dated 24.09.2015
Subject : Section143 of the income-tax act, 1961 - Assessment -
General - Generation of scrutiny notices under Section 143(2) for pan selected
in cass - 2015
Kindly refer to letter F. No.-DIT(S)-2/CASS/2014-15/16153 dated
17.09.2015, AST. Instruction No. 137 dated 28.08.2015 and AST Instruction No.
138 dated 18.09.2015 requiring Assessing officers to generate scrutiny notices
under section 143(2) for PANs selected in cycle 1 and cycle 2 of CASS-2015.
2. It is seen that till 23.09.2015, notices u/s 143(2) have not
been issued in 3,663 cases. The Pr. CCIT wise breakup of 3663 cases in which
notices have not been issued is as following:
|
Ahmedabad |
155 |
Bhubaneshwar |
55 |
Bangalore |
294 |
Bhopal |
93 |
Chandigarh |
191 |
|
Chennai |
200 |
Delhi |
353 |
Guwahati |
98 |
Hyderabad |
431 |
Kanpur |
78 |
|
Kolkata |
330 |
Kochi |
128 |
Mumbai |
463 |
Nagpur |
37 |
Patna |
172
|
|
Pune |
288 |
Jaipur |
140 |
Lucknow |
157 |
|
|
|
|
3. These 3663 cases include 458 cases which are lying with inactive
codes. With reference to 458 cases which are lying with inactive codes, a letter
no DIT(S)-2/CASS/2014-15/16205, dated 23.09.2015 has been communicated to field
through ITAXNET.
4. An Assessing Officer wise summary of pending notices and list of
such cases as mention in para 1 is available on ITAXNET. [Path: Resources ->
Download -> Systems-> Generation of scrutiny notices u/s 143(2) required]
5. As you are aware the validity of most of Remote Security
Authentication (RSA) tokens will expire on 27th September, 2015 (Refer letter
F. No. ADG(S)-IV/2015-16, dated 21.08.2015 issued by ADG(S)-4 in respect of
'Replacement of RSA Tokens'), therefore you are requested to make arrangements
for issue of scrutiny notices under section 143(2) well before the time barring
date i.e. 30.09.2015.
CBDT Instruction No. 1/2015 [F. NO. 225/319/2014-ITAT.II], Dated
13.01.2015
Subject : Section 143 of the Income-tax Act, 1961 - Assessment -
General - Clarification as to whether provision of section 143(1D) permits
processing of returns having a refund claim, where notice under section 143(2)
has been issued
Sub-section (1D) of section 143 of the Income-tax Act, 1961 (‘Act’) provides that where a notice has been issued to a taxpayer under sub-section (2) of section 143 of the Act, it shall not be necessary to process the return in such a case.
2. Some doubts have been expressed, in view of the words "shall not be necessary" used in the said sub-section, as to whether this provision permits processing of returns having a refund claim, where notice under section 143(2) of the Act has been issued.
3. The matter has been examined by the Board. Sub-section (1D) of section 143 of the Act was introduced by the Finance Act, 2012 with effect from 01.07.2012. The purpose of introduction of this sub-section has been stated in the Explanatory Note to the Finance Act as under:
“Under the
existing provisions, every return of income is to be processed under
sub-section (1) of section 143 and refund, if any, due is to be issued to the
taxpayer. Some returns of income are also selected for scrutiny which may lead
to raising a demand for taxes although refunds may have been issued earlier at
the time of processing.
It is therefore
proposed to amend the provisions of the Income-tax Act to provide that
processing of return will not be necessary in a case where notice under
sub-section (2) of section143 has already been issued for scrutiny of the
return.”
Thus, in cases where an unprocessed return is selected for scrutiny, the legislative intent is to prevent the issue of refund after processing as scrutiny proceedings may result in demand for taxes on finalisation of the assessment subsequently.
4. Considering the unambiguous language of the relevant provision and the intention of law as discussed above, the Central Board of Direct Taxes, in exercise of the powers conferred on it under section 119 of the Act hereby clarifies that the processing of a return cannot be undertaken after notice has been issued under sub-section (2) of section 143 of the Act. It shall, however, be desirable that scrutiny assessments in such cases are completed expeditiously.
5. This may be brought to the notice of all concerned for strict compliance.
Failure of Assessing Officer in issuing notice within period of limitation under section 143(2) which is a notice giving jurisdiction to Assessing Officer to frame assessment cannot be condoned by referring to section 292BB
In
the instant case, financial year has come to an end on 31.03.2013. Six months
time would lapse on 30.09.2013. Notice was issued on 31.10.2013. It is clear
from various judgments that the notice issued within the period of limitation,
if found not served on the assessee within the stipulated period, i.e.,
defective service of notice cannot invalidate the assessment, or in other
words, the existence of the notice well within the period of limitation
prescribed under the provision is sine qua non for invoking section 292BB.
This
view is further fortified by the instructions issued by the CBDT in Circular
No. 1/2009 dated 27.03.2009 wherein, it has been observed that notices under
sub-section (2) of section 143 though issued by registered post within the
period of limitation, the same have been held invalid on the ground that the
assessee had received the notice after the limitation date. In order to address
these issues and to reduce litigation, a new section, viz., section 292BB has
been inserted and the provision of section 143(2) has been amended.
The
parameters set out in section 292BB are that the notice was:
(a) not served upon assessee; or
(b) not served in time; or
(c) served upon assessee in an improper manner.
Thus,
what is significant is service of notice. It is obvious that the issuance of
notice is a pre-condition to cure the defects in service of notice.
In
the light of judgment of the Supreme Court in the case of CIT v. Lakshman
Das Khandelwal (2019) 417 ITR 325 : 266 Taxman 171 : 108 taxmann.com 183 (SC),
it is clear that the infirmities in the manner of service of notice alone would
be amenable to under section 292BB, but not the complete absence of notice
itself; Notice issued beyond the period of limitation partakes the character of
absence of notice itself in the eye of law and as such, section 292BB would not
save such a notice de hors the limitation prescribed.
The
Tribunal has rightly observed that the foundation process of reassessment is
under section 148, but such jurisdiction is subject to further compliance as
being stipulated in the statute itself and, thus, quashed the assessment being
invalid. It is well-settled legal principle that issuance of notice beyond
period of limitation or absence of notice goes to the root of the matter and is
jurisdiction aspect, not a procedural irregularity and same is not curable.
In
this instant case, the failure of the Assessing Officer in issuing the notice
within the period of limitation under section 143(2), which is a notice giving
jurisdiction to the Assessing Officer to frame assessment cannot be condoned by
referring to section 292BB. Infirmities in manner of service of notice alone
would be amenable to under section 292BB, but not complete absence of notice
itself; notice issued beyond period of limitation partakes character of absence
of notice itself in eye of law and as such, section 292BB would not save such a
notice de hors limitation prescribed. Therefore, failure of Assessing Officer
in issuing notice within period of limitation under section 143(2) which is a
notice giving jurisdiction to Assessing Officer to frame assessment could not
be condoned by referring to section 292BB and consequently Assessing Officer
could not assume jurisdiction to frame assessment. We find no ground to
interfere with the impugned order of the Tribunal. In the result, the appeal
stands dismissed. [In favour of assessee] (Related Assessment year : 2012-13) -
[PCIT(Central) v. Cherian Abraham
(2022) 137 taxmann.com 73 (Karn.)
Case of assessee was transferred from ITO, Ward-3 to ITO, Ward-4 and impugned order under section143(3) was passed by ITO, Ward-4 without issuing notice under section143(2) and only in pursuance with notice issued by ITO, Ward-3, who had no jurisdiction over assessee at relevant time, said impugned order would be null and void
Case of assessee was transferred from jurisdiction of ITO,
Ward-3 to ITO, Ward-4 - ITO, Ward-4 who had jurisdiction over assessee during
relevant assessment year framed scrutiny assessment under section 143(3).
It was noted that impugned order was passed only in pursuance to notice
under section 143(2) which was issued by ITO, Ward-3 who had no
jurisdiction over assessee at relevant time. Since no notice was issued
under section 143(2) by ITO, Ward-4, assessment order passed by him would
be without any jurisdiction and would be null and void. [In favour of assessee]
(Related Assessment year : 2007-08) - [PCIT
v. Nopany & Sons (2022) 136 taxmann.com 414 (Cal.)]
SLP dismissed against High Court ruling that date of filing of original return under section 139(1) has to be considered for purpose of computing period of limitation under sub-section (2) of section 143 and not date on which defects actually came to be removed under section 139(9)
Assessee filed its return of income
under section 139(1) on 10.09.2016. Since return was defective, assessee
was called upon to remove such defects, which came to be removed on 07.07.2017,
that was, within time allowed by Assessing Officer. Thereafter, impugned notice
under section 143(2) came to be issued on 09.08.2018, informing
petitioner that return of income filed by it on 07.07.2017 had been selected
for scrutiny. Assessee assailed impugned notice by submitting that notice was
barred by limitation as same had been issued beyond permissible time limit, as
provided under section 143(2). High Court by impugned order held
that section 139(9) does not require an assessee to file a fresh return of
income, but requires assessee to remove defects in original return of income
filed by him within time provided therein and date of filing of original return
has to be considered for purpose of computing period of limitation under
sub-section (2) of section 143 and not date on which defects
actually came to be removed. SLP against said impugned order was to be
dismissed. [In favour of assessee] (Related Assessment year : 2016-17) – [DCIT
v. Kunal Structure (India) (P) Ltd. (2021) 277 Taxman 401 : 123 taxmann.com 392 (SC)]
Time-barred notice under section 143(2) akin to absence of notice, incurable under section 292BB
Karnataka
High Court rules that issuance of notice beyond limitation period or absence of
notice is a matter of jurisdiction not just procedural irregularity, thus not
curable by resorting to Section 292BB; Assessee-Individual was subjected to
search proceedings and subjected to assessment for Assessment year 2012-13
under section 143(3) r.w.s. 153C whereby an addition of Rs. 11.79 Cr was made
towards unexplained loan advanced by Assessee; CIT(A) dismissed Assessee’s
appeal while the ITAT allowed it, quashing the orders of the lower authorities
by holding that notice under section 143(2) was issued beyond prescribed
time-limit and thus, there was no jurisdiction to frame assessment; On appeal
before the High Court, Revenue submitted that Assessee had not objected to the
jurisdiction in its reply to notice under section 142(1) and cooperated with
assessment proceedings and that limitation period should have been calculated
from date of filing of Assessee’s reply, i.e. 08.10.2013; Revenue submitted
that the delay in issuance of notice under section 143(2) was curable under
section 292BB; Assessee submitted that the notice under section 143(2) was
issued beyond stipulated time-limit and Assessee’s reply did not extend limitation
period; Assessee argued that plea of Section 292BB was not raised before ITAT
and that it dealt with the service of notice in existence and not with a
non-existent notice, also referred to CBDT Circular dated 27.03.2009 to contend
that there was difference in issue and service of notice and Section 292BB
deals with service of notice issued well within period of limitation to cure
defects but does not apply when notice was not issued within limitation
prescribed; High Court finds the notice to be issued after the lapse of six
months from the end of the financial year in which return was filed and
observes that rulings relied upon by the Revenue depict that existence of
notice well within the period of limitation is a sine qua non for invoking Section
292BB which also gets support from CBDT Circular No. 1/2009; High Court refers
to the Supreme Court ruling in CIT
v. Laxman Das Khandelwal (2019) 417 ITR 325 (SC) wherein it was held that infirmities in manner of
service of notice alone would be amenable under section 292BB but not complete
absence of notice; High Court observes notice issued beyond limitation period
partakes character of absence of notice and holds Section 292BB would not save
such a notice and remarks that issuance of notice beyond limitation period or
absence of notice is a matter of jurisdiction not just procedural irregularity
and is incurable; High Court thus holds that Revenue’s failure to issue notice
within limitation under section 143(2) cannot be condoned by reference to
Section 292BB. (Related Assessment year : 2012-13) – [PCIT(C) v. Cherian Abraham – Date
of Judgement : 05.10.2021 (Karn.)]
No section 143(2) notice requirement if no valid
filed return filed by Assessee
In the present case, the assessee did not file the original return of
income as well as also not filed return of income in response to the notice under
section 147 of the Act within the time allowed by the Assessing Officer of 30
days. Thus the issue is whether in case the return filed by the assessee as late
as in the month of September, 2017 can be treated as valid return or not. The
answer is clearly ‘No’ as even after 30 days any return of income filed by the
assessee would not have been taken cognizance by the Assessing Officer. There
is no requirement of the law that if the return is filed any time before
Assessing Officer under section 148 read with 143 (3) of the Act, the Assessing
Officer should have been issued notice under section 143(2). The question will
arise then that if the assessee was issued a notice u/s 148 of the Act and he
does not file any return of income till the date of framing of the assessment
order or also filed a return before passing of the assessment order under
section 143(2) of the Act, then what is the stand Revenue should take? In such
case, it is not at all possible that the assessee can contest that notice under
section 143(2) should have been issued, in all such cases where reassessment is
required to be made. The onus of filing of return of income on the assessee is
a responsibility which is cast upon him to be fulfilled by him, if he fails to
take benefit of any of the provisions of law the assessee cannot plea that he
will not comply with the law and not follow time limit before the Assessing
Officer and the Assessing Officer he is duty bound to follow the law even in
belated compliance by the assessee. (Related Assessment Year : 2010-11) – [Rakesh
Aggarwal v. ITO - Date of Judgement : 15.12.2020 (ITAT Delhi)]
Failure to issue a notice under section 143(2) renders the assessment order void even if the assessee has participated in the proceedings – Deeming fiction does not operate to save complete absence of notice
For
section 292BB to apply, section 143(2) notice must have emanated from
department and it is only infirmities in manner of service of notice that
section seeks to cure and it is not intended to cure complete absence of notice
itself
A search and
seizure operation was conducted at premises of the Assessee who was carrying on
brokerage business. He submitted his return and assessment was completed under
section 143(3) making addition on account of unexplained cash. On Appeal, the
CIT(A) deleted the addition. The Department filed an appeal to the Tribunal.
The Assessee filed cross objections challenging the jurisdiction of the
Assessing Officer on the ground that notice under section 143(2) had not been
issued. The Tribunal vide impugned order upheld the
cross-objection and quashed the entire reassessment proceedings on the finding
that the same stood vitiated as the Assessment Officer lacked jurisdiction in
absence of notice under Section 143 (2) of the Act of 1961 by holding that the Assessing
Officer had no valid
jurisdiction to pass the assessment order and the very foundation of the
assessment proceedings is bad in law. Hence, these proceedings culminating in
the assessment order, as well as the impugned order stand quashed. Nothing else
remains to be adjudicated. In consequence, the revenue’s appeal is dismissed. This view was upheld by the High Court.
Held : A close look at section 292BB shows that if the assessee has participated in the proceedings, it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to section 292BB, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said section. The scope of section 292BB is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee and section does not save complete absence of notice and, thus, for section 292BB to apply, the notice must have emanated from the department and it is only the infirmities in the manner of service of notice that the section seeks to cure and it is not intended to cure complete absence of notice itself. Since the facts on record are clear that no notice under section 143(2) was ever issued by the department, the findings rendered by the High Court and the Tribunal and the conclusion arrived at were correct. There is no reason to take a different view in the matter. Consequently, Appeal fails and is dismissed. [In favour of assessee] (Related Assessment year : 2010-11) – [CIT v. Lakshman Das Khandelwal (2019) 417 ITR 325 : 266 Taxman 171 : 108 taxmann.com 183 (SC)]
Mere mentioning of new address in the return of income is not enough - If change of address is not specifically intimated to the Assessing Officer, he is justified in sending the notice at the address mentioned in PAN database - If the notice is sent within the period prescribed in section 143(2), actual service of the notice upon the assessee is immaterial - CIT(A) is directed to decide the appeal on merits
The assessee
participated in the assessment proceedings. However, the assessee challenged
the notice under sections 143(2) and 142(1) of the Act on the ground that the
said notrices were not served upon the assessee as the assessee company never
received those notices and subsequent notices served and received by the
compoany were beyond the period of limitation prescribed under proviso to
Section 143 of the Act. The Assessing Officer has not accepted the contention
of the assessee. On appeal the CIT(A) held that the order is bad in law,
however the appeal was not decided on merits as regards the merits of the
addition. Order of CIT(A) is affirmed by the Tribuanl and High Court. On appeal
by the revenue allowing the appeal o the Court held that, mere mentioning of new address in the
return of income is not enough. If change of address is not specifically
intimated to the Assessing Officer, he is justified in sending the notice at
the address mentioned in PAN database. If the notice is sent within the period
prescribed in Section 143(2), actual service of the notice upon the assessee is
immaterial. Order of High Court and Tribunal is set aside and CIT(A) is
directed to decide the appeal on merits on other grounds. (Related
Assessment year 2006-07) – [PCIT v. I-Ven
Interactive Ltd. (2019)
418 ITR 662 : 311 CTR 165 : 267 Taxman 471
: 182 DTR 473 (SC)]
Service of scrutiny notice on authorized representative of assessee on ground of non-availability of assessee is deemed service of notice on assessee and sufficient compliance of requirement of section 143(2)
Non-availability of assessee to
receive scrutiny notice sent by registered post as many as on two occasions and
service of notice on authorized representative of assessee whom assessee now
disown, is sufficient to draw an inference of deemed service of notice on
assessee and sufficient compliance of requirement of section 143(2).
Assessee
to receive the notice sent by registered post as many as on two occasions and
service of notice on 19th October, 2006 on the authorized representative of the
respondent Assessee whom the respondent Assessee now disowns, in our considered
view, is sufficient to draw an inference of deemed service of notice on the
respondent. Assessee and sufficient compliance of the requirement
of Section 143(2) of the Income Tax Act, 1961.
On
the aforesaid view that we have taken we are of the opinion that the High Court
that what is required to be
satisfied by the Revenue is service of notice and not mere issuance thereof was not right in coming to the impugned conclusion in the
facts of the instant matter. We, accordingly, allow this appeal and set aside
the order of the High Court. [In favour of revenue] - [ITO,
Etawah v. Dharam Narain (2018) 253 Taxman 479 : 90 taxmann.com 325 (SC)]
Notice under section 143(2) having been served upon assessee
on very next working day due date being Sunday, was valid
Assessment (Notice under section 143(2)) - High Court by impugned order held that since notice under section143(2) had been served
upon assessee on very next working day as due date being Sunday, there was
sufficient compliance of first proviso to section 143(2) and notice was
valid. Special Leave Petition filed by assessee against impugned order was to
be dismissed. [In favour of revenue] (Related Assessment year : 2010-11) - [Gujarat State Plastic Manuf. Association v.
Deputy Director of Income-tax, Ahmedabad (2014) 227 Taxman 380 : 51 taxmann.com
372 (SC)]
Notice under section 143(2) is mandatory, and in absence of such service, Assessing Officer cannot proceed to make an inquiry on return filed in compliance with notice issued under section 148
Notice under section 143(2) is
mandatory and in absence of such service, Assessing Officer cannot proceed to
make an inquiry on return filed in compliance with notice issued under section
148. [In favour of assessee] (Related Assessment years : 2005-06 and 2006-07) –
[ACIT, Panaji v. Geno Pharmaceuticals Ltd. (2013) 214 Taxman 83 : 32 taxmann.com 162 (Bom.)]
For determination of undisclosed income for a block period
under provisions of section 158BC, provisions of section 142 and
sub-sections (2) and (3) of section143 are applicable and no
assessment can be made without issuing notice under section143(2) - Therefore,
where Assessing Officer, for any reason, repudiates return filed by assessee in
response to notice under section 158BC(a), he must necessarily
issue a notice under section 143(2) within time prescribed in proviso
to section 143(2)
The appellate Tribunal
held that non-issue of a notice under section
143(2) is
only a procedural irregularity and the same is curable. On appeal, the High
Court, disagreeing with the Tribunal, held that the provisions of section 142 and sub-sections (2) and
(3) of section 143 would have
mandatory application in a case where the Assessing Officer in repudiation of
return filed in response to a notice issued under section 158BC(a) proceeds to make an inquiry.
Section 158BC(b)
provides for an enquiry and assessment. The said provision reads “the Assessing
Officer shall proceed to determine the undisclosed income of the block period
in the manner laid down in section 158BB and the provisions
of section 142, sub-sections (2) and (3) of sections 143,
144 and 145 shall, so far as may be, apply”. An analysis of this
sub-section indicates that after the return is filed, this clause enables
the Assessing Officer to complete the assessment by following the procedures
like issue of notice under section 143(2)/142 and complete the assessment
under section 143(3). This section does not provide for
accepting the return as provided under section 143(1)(a). The Assessing Officer has to complete the
assessment under section 143(3) only. In case of default in not filing the
return or not complying with the notice under section 143(2)/142, the
Assessing Officer is authorized to complete the assessment ex parte under section 144. Clause (b) of section 158BC, by referring
to sections 143(2) and (3) would appear to imply that the provisions
of section 143(1) are excluded but section 143(2) itself becomes
necessary only where it becomes necessary to check the return, so that where
block return conforms to the undisclosed income inferred by the authorities,
there is no reason why the authorities should issue a notice under section
143(2). However, if an assessment is to be completed under section 143(3),
read with section 158BC, notice under section 143(2) should be
issued within one year from the date of filing of block return. Omission on the
part of the assessing authority to issue notice under section 143(2)
cannot be a procedural irregularity and the same is not curable and, therefore,
the requirement of a notice under section 143(2) cannot be dispensed with.
The other important feature that is required to be noticed is that
the section 158BC(b)
specifically refers to some of the provisions of the Act which are required to
be followed by the Assessing Officer while completing the block assessment
under Chapter XIV-B. This legislation is by incorporation.
This section even speaks of sub-sections which are to be
followed by the Assessing Officer. Had the intention of the Legislature been to
exclude the provisions of Chapter XIV, the Legislature would have or could have
indicated that also. A reading of the provision would clearly indicate that if
the Assessing Officer, for any reason repudiates the return filed by the
assessee in response to notice under section 158BC(a), he must necessarily issue notice
under section 143(2) within the time prescribed in the proviso
to section 143(2). Where the Legislature intended to exclude certain
provisions from the ambit of section 158BC(b), it has done so specifically. Thus,
when section 158BC(b)
specifically refers to applicability of the provision, proviso thereto cannot
be excluded. The clarification given by the CBDT in its circular No. 717, dated
14.08.1995, has a binding effect on the department, but not on the Court. This
circular clarifies the requirement of law in respect of service of notice under
sub-section (2) of section143. Accordingly, even for the purpose of
Chapter XIV-B, for the determination of undisclosed income for a block period
under the provisions of section 158BC, the provisions
of section 142 and sub-sections (2) and (3) of section
143 are applicable and no assessment can be made without issuing a notice
under section 143(2).
Section 158BH
provides for application of the other provisions of the Act. It reads : “Save
as otherwise provided in this Chapter, all the other provisions of this Act
shall apply to assessment made under this Chapter”. This is an enabling
provision, which makes all the provisions of the Act, save as otherwise
provided, applicable for proceedings for block assessment. The provisions which
are specifically included are those which are available in Chapter XIV-B of the
Act, which includes section 142 and sub-sections (2) and (3)
of section 143. On a consideration of the provisions of Chapter XIV-B of
the Act, we are in agreement with the reasoning and the conclusion reached by
the High Court. - [ACIT v. Hotel
Blue Moon (2010)
321 ITR 362 : 188 Taxman 113 (SC)]
Very informative blog on income tax. Thankyou so much for sharing this blog with us.
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