ITAT Holds Section 143(2) Notice within statutory period Mandatory in Reassessment; Quashes Order For Being Time-Barred

ITAT Holds Section 143(2) Notice within statutory period Mandatory in Reassessment; Quashes Order For Being Time-Barred

The Income Tax Appellate Tribunal (ITAT) Visakhapatnam Bench, in a recent case, has allowed the assessee’s appeal mainly on legal grounds relating to procedural lapses by the Assessing Officer (AO). The appeal was filed by Arimilli Rama Krishna against the Income Tax Authorities, challenging an order dated September 18, 2025, passed by the CIT(A), NFAC Delhi, for the Assessment Year 2014-15 (Financial Year 2013-14).

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The assessee had initially declared its total income at Rs 604,940 in its ITR, which was at that time accepted by the tax authorities under limited scrutiny. Later, the case was reopened based on the information received that the assessee had escaped assessment. Consequently, a notice dated March 30, 2019, was issued under Section 148 of the Act. As a result, the assessee filed his return declaring total income at Rs. 604,940 along with agriculture income of Rs. 55,200, the same as initially assessed.

During assessment of the return, the AO made an addition amounting to Rs 2.14 crore to the assessee’s income as “deemed dividend” under Section 2(22)(e). The assessee challenged the assessment before the ITAT Visakhapatnam mainly on the grounds that the notice issued under Section 143(2) was beyond the time limitation. As per the law, the notice should have been issued before September 30, 2019; however, AO issued it on December 02, 2019, which caused a significant delay.

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When the tribunal analysed the facts of the case, it held that even in reassessment cases, once a return is filed in response to Section 148, it is treated like a normal return under Section 139. Therefore, issuing notice under Section 143(2) within the legal time limit becomes mandatory. Failure to do so makes the entire reassessment invalid. Considering the same, the tribunal quashed the impugned reassessment order dated December 30, 2019, and allowed the assessee’s appeal.