In a significant ruling, the Income-tax Appellate Tribunal (ITAT), Bangalore Bench, has quashed reassessment orders passed under Section 147 read with Section 144 on account of non-issuance of notice under Section 143(2), holding the omission as a foundational infirmity and fatal to the reassessment proceedings.

Background & Facts

  • Assessee: Intact Developers (P) Ltd.

  • Assessment Years: 2015-16, 2016-17 & 2017-18

  • Business Activity: Construction of residential apartments

  • The Assessee filed its original return of income under Section 139(1) for AY 2015-16.

  • Subsequently, the revenue conducted a survey under Section 133A and issued a reassessment notice under Section 148, alleging bogus construction expenditure and accommodation entries through certain contractors.

The Assessee responded to the reassessment notice and requested that the original return filed under Section 139(1) be treated as the return in response to the Section 148 notice.

Proceedings Before Assessing Officer

Despite the request being on record, the Assessing Officer (AO) did not issue a notice under Section 143(2) before proceeding with reassessment. The AO completed the reassessment ex-parte under Section 147 read with Section 144, holding that no return was filed in response to the reassessment notice and disallowing construction-related expenditure.

ITAT’s Analysis & Findings

The Tribunal relied on the Delhi High Court’s decision in PCIT v. Shri Jai Shiv Shankar Traders (P) Ltd. (2016) 383 ITR 448 (Del.), where it was held that notice under Section 143(2) is a jurisdictional requirement and not a mere procedural formality. Accordingly, non-issuance of such notice renders the reassessment proceedings void and without jurisdiction.

The ITAT observed that:

  • Since the Assessee had made a specific request to treat the original return as the return for reassessment, and such communication was on record before completion of reassessment, the AO was mandatorily required to issue a Section 143(2) notice before completing reassessment proceedings.

  • The proviso to Section 148 (inserted by Finance Act, 2023), which deems belated returns as invalid, was prospective in nature and not applicable to the assessment years under consideration.

Jurisprudence Considered

The Tribunal distinguished the Revenue’s reliance on the Supreme Court’s ruling in GKN Driveshafts, clarifying that the said judgment does not justify bypassing the express statutory mandate under Section 143(2). The Tribunal further referred to the Supreme Court’s ruling in CIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC), which affirms that omission to issue a Section 143(2) notice is not curable and renders the assessment invalid.

Key Takeaways

  • Section 143(2) notice is mandatory and jurisdictional.

  • Non-issuance of Section 143(2) notice is a fundamental defect and not a procedural lapse.

  • Such omission cannot be cured under Section 292B.

  • Assessee’s request to treat original return as ITR for reassessment must be considered by AO.

  • Reassessment orders without compliance of Section 143(2) are void and liable to be quashed.

Conclusion

The ITAT, Bangalore Bench in Intact Developers (P) Ltd. v. DCIT(C) [TS-1604-ITAT-2025(Bang)] (dated 24.11.2025) reaffirmed that non-issuance of notice under Section 143(2) amounts to a jurisdictional infirmity that is fatal to the reassessment. Accordingly, the Tribunal quashed the reassessment orders passed under Section 147 read with Section 144, allowing the Assessee’s appeal.