Scrutiny Assessment Quashed for Invalid Section 143(2) Notice | ITAT
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Case Details: Swamins Ornaments vs. Income-tax Officer [2026] 187 taxmann.com 577 (Lucknow - Trib.)
Judiciary and Counsel Details
- Sudhanshu Srivastava, Judicial Member
- Rakesh Garg, Adv. for the Appellant.
- Amit Kumar, D.R. for the Respondent.
Facts of the Case
The assessee was a partnership firm consisting of two partners and trading in jewellery. The assessee filed its return of income for the relevant assessment year as a firm. The assessee’s case was selected for Complete Scrutiny under the Computer-Aided Scrutiny Selection (CASS).
During the scrutiny proceedings, the Assessing Officer (AO) noticed that during the demonetization period, the assessee had made cash deposits of Rs. 2.07 crore in its Bank Account. Considering the abnormally high sales during the demonetization period, the AO estimated the assessee’s cash sales and identified the abnormal sales. The AO computed the gross profit earned by the assessee and added the same to the total income of the assessee.
The assessee contended that the Assessing Officer (AO) issued the notice under section 143(2) in the old format. The old-format notice was issued by the AO despite the issuance of a revised-format notice. On appeal, the CIT(A) dismissed the assessee’s appeal. The assessee filed an appeal to the Tribunal.
ITAT Held
The Tribunal held that the issuance of Notice under section 143(2) in the proper format is a jurisdictional requirement, and any defect therein goes to the very root of the assessment proceedings. A Notice issued in violation of a specific provision cannot confer jurisdiction on the AO to proceed with the scrutiny assessment.
In the present case, the impugned Notice dated 21.09.2018 was not in the proper format. Therefore, it was invalid and unenforceable in law. The impugned notice was issued in violation of the binding CBDT Instruction, which applies to all Income Tax Authorities. Accordingly, the Tribunal held that it had no option but to quash the impugned Notice as bad in law.
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