The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has quashed a scrutiny assessment for Assessment Year 2016–17 after finding that the notice under Section 143(2) of the Income-tax Act, 1961, was served beyond the applicable statutory deadline.
The bench of Dr. B.R.R. Kumar (Vice President) and Rahul Chaudhary (Judicial Member) rejected the Revenue’s contention that the taxpayer’s participation in assessment proceedings prevented him from challenging the notice under Section 292BB and followed the Gujarat High Court’s decision in CIT v. Panorama Builders (P.) Ltd., holding that Section 292BB cannot enlarge the statutory period prescribed for issuing a mandatory scrutiny notice.
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The appeal concerned an assessment order dated December 15, 2018, passed under Section 143(3) for Assessment Year 2016–17. The National Faceless Appeal Centre, Delhi, had dismissed the taxpayer’s appeal against that assessment through an order dated February 5, 2026.
The taxpayer raised an additional jurisdictional ground through a letter dated June 10, 2026. He contended that the statutory notice under Section 143(2) had been served on the ITBA portal only on December 19, 2017, although the applicable limitation period had expired on September 30, 2017.
Accordingly, he argued that the Assessing Officer’s assumption of jurisdiction was invalid and that the resulting assessment deserved to be quashed.
The Tribunal found that the additional ground could be adjudicated using facts already available on record.
Relying on the Supreme Court’s judgment in National Thermal Power Co. Ltd. v. CIT, 229 ITR 383 (SC), the Bench admitted the ground and proceeded to decide it because the objection went to the root of the matter.
The jurisdictional challenge thus became decisive, making it unnecessary for the Tribunal to examine the remaining grounds once the assessment was quashed.
The taxpayer had filed his original return for Assessment Year 2016–17 on August 3, 2016. A revised return under Section 139(5) was subsequently filed on October 21, 2016.
Both returns were furnished during Financial Year 2016–17, which ended on March 31, 2017.
Applying the proviso to Section 143(2) relevant to the assessment year in dispute, the Tribunal observed that a scrutiny notice could not be served after six months from the end of the financial year in which the return was furnished.
The applicable deadline was therefore September 30, 2017. However, the admitted date of service was December 19, 2017.
Since both the original and revised returns had been filed within the same financial year, the revised return did not change the deadline in this case.
The Departmental Representative relied on Section 292BB, submitting that the taxpayer had participated in the assessment proceedings and could not challenge the validity of the scrutiny notice for the first time before the Tribunal.
The taxpayer’s representative opposed this submission by citing the Gujarat High Court’s ruling in CIT v. Panorama Builders (P.) Ltd., reported at [2014] 45 taxmann.com 159 (Gujarat)/224 Taxman 203.
That decision distinguished between defects concerning service of a notice and the failure to issue a mandatory notice within the statutory limitation period.
Examining the jurisdictional High Court’s ruling, the Tribunal noted that Section 292BB provides for deemed service in circumstances where an assessee has appeared in proceedings or cooperated in an inquiry relating to assessment or reassessment.
However, the High Court had held that the provision does not deem a mandatory notice to have been issued within time when it was issued after the prescribed limitation period.
In Panorama Builders, the High Court rejected the Revenue’s attempt to use Section 292BB to overcome a time-barred notice. It held that the provision neither cures the failure to issue a mandatory notice within limitation nor enlarges the statutory period.
The Ahmedabad Bench found that the jurisdictional High Court had already rejected the Revenue’s argument in identical facts and circumstances.
Following that precedent, the Tribunal held that the taxpayer’s participation in assessment proceedings could not enable the Department to bypass the statutory deadline governing the mandatory scrutiny notice.
The Tribunal quashed the Section 143(2) notice served on December 19, 2017, as it fell beyond the six-month period applicable to the case.
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