Reassessment Under Section 147 Quashed for Want of Section 143(2) Notice: Analysis of ITAT Delhi Ruling in Raj Kumar Kapoor Vs Assessing Officer

1. Background and Procedural History

The Delhi Bench of the Income Tax Appellate Tribunal in Raj Kumar Kapoor Vs Assessing Officer annulled a reassessment completed under Section 147 on a pure question of jurisdiction. The Tribunal held that once an assessee furnishes a return in response to a notice under Section 148, it becomes obligatory for the Assessing Officer to serve a statutory notice under Section 143(2). The reassessment was struck down even though the return filed in response to Section 148 had been treated as “invalid” by CPC for want of e-verification.

The appeal arose from an order passed by the Ld. CIT(A) under Section 250 of the Income Tax Act 1961 for A.Y. 2014-15, affirming a substantial addition under Section 56(2)(vii)(b)(ii) in respect of purchase of immovable property.

1.1 Grounds Raised Before the Tribunal

The assessee challenged both:

  • The validity of the reassessment proceedings under Section 147, and
  • The quantum addition of ₹2,11,33,400 made by invoking Section 56(2)(vii)(b)(ii) on account of the difference between the stated purchase consideration and the stamp duty valuation.

In addition to the original grounds relating to valuation and reference to the DVO, the assessee raised an additional legal ground before the Tribunal, contending that:

  1. No notice under Section 143(2) was issued after filing of the return in response to notice under Section 148; and
  2. In the absence of such notice, the entire reassessment was void ab initio.

The Tribunal admitted this additional jurisdictional ground, following the principle laid down by the Supreme Court in National Thermal Power Corporation vs. CIT, 229 ITR 383 (SC), which permits raising a pure question of law not requiring fresh investigation of facts at the appellate stage.

2. Facts of the Case

2.1 Original Return and Reopening

  • The assessee, an individual, initially filed a return of income on 22.07.2014 declaring total income of ₹3,01,930.
  • Subsequently, information was received from ITO (I & CI), Delhi, indicating that the assessee had purchased an immovable property on 13.03.2014 for a declared price of ₹1,30,00,000.
  • The stamp valuation authority, however, had adopted a value of ₹3,41,33,400 for the same property.

On the basis of this information, the Assessing Officer recorded reasons and issued a notice under Section 148 dated 31.03.2021. In compliance with this notice, the assessee filed a return of income on 26.04.2021 once again declaring income of ₹3,01,930.

2.2 Assessment Proceedings and Addition

  • After receipt of the return in response to Section 148, the Assessing Officer issued a notice under Section 142(1) calling for details in relation to the property transaction.
  • No notice under Section 143(2) was issued at any stage after the filing of the return in response to Section 148.
  • The Assessing Officer proceeded to pass an order under Section 147 read with Section 144B, computing total income at ₹2,14,35,330.
  • The key addition comprised ₹2,11,33,400 under Section 56(2)(vii)(b)(ii), being the difference between the stamp duty valuation and the declared purchase consideration.

2.3 Order of the First Appellate Authority

The assessee carried the matter before the Ld. CIT(A) and, inter alia, contended that: