Vandana Kumari v. Principal Commissioner of Income Tax-1, Patna

What happened

A notice under section 148 dated 28 March 2021 required the petitioner to furnish a return for assessment year 2014-15 within thirty days. She did not do so in that time, and notices under section 142(1) followed, including one dated 17 August 2021 and one dated 4 February 2022 that asked her again to file a return. It was admitted that she had in fact filed the return on 28 August 2021. The Department said that a return filed after the thirty days was non est and could not count as a return under section 148, while the petitioner said that in that assessment year there was no bar on filing within the time allowed for completing the assessment. The reassessment was completed without a notice under section 143(2).

Questions before the court

• Is a return filed after the thirty days given in the section 148 notice a valid return for reassessment purposes?
• Could the reassessment be completed without issuing and serving a notice under section 143(2)?

Why the court ruled this way

The Department did not contest the petitioner's submission on the law as it stood for that assessment year, and the Court referred to an order of a Division Bench in CIT v. Nagendra Prasad, which followed an earlier decision against the Revenue on identical facts, where a return was filed eight and a half months after a section 148 notice. The notice of 4 February 2022 demanded a return as if none had been filed, which showed that the officer had not looked at the return already on record. Relying on its decision in her related case for assessment year 2013-14, where the Department accepted that the proviso to section 143(2) did not apply because the return had been filed within five months of the section 148 notice and that a notice under section 143(2) was mandatory but never issued, the Court held that the principle in Assistant Commissioner of Income-tax v. Hotel Blue Moon applied.

Controlling point

A reassessment resting on a return filed in response to section 148 is invalid if the mandatory section 143(2) notice is never issued and served.

Order and next steps

The impugned orders were set aside in terms of the first prayer of the writ application, and the writ application was allowed. The Court noted that the Senior Standing Counsel had to give up her contest on the face of the annexure to the section 142(1) notice.

Practical implications

A taxpayer who has filed a return after a section 148 notice, even beyond the thirty days, should check that a notice under section 143(2) was issued and served before the reassessment was completed. If it was not, the reassessment can be challenged as invalid.

Limits of this ruling

• The result relies on the Department's concessions and on the law that applied to assessment year 2014-15, and the Court noted that the later amendment of 2023 was not applicable.