ITAT Mumbai Quashes Reassessment: Mere Assertion of Section 143(2) Notice Issuance Insufficient Without Documentary Proof

Overview

A foundational principle of reassessment proceedings under the Income Tax Act, 1961 is that procedural mandates cannot be bypassed merely because an assessee participated in the process. The Mumbai bench of the Income Tax Appellate Tribunal, in Ramesh C. Salecha HUF Vs ITO (ITAT Mumbai), ITA Nos. 1253 and 1370/MUM/2026, pronounced on 23 September 2026, reaffirmed this principle by quashing a reassessment for Assessment Year 2009–10 on the ground that the Assessing Officer was unable to prove — through any documentary material — that a notice under Section 143(2) of the Income Tax Act, 1961 had actually been issued and served upon the assessee.

The judgment draws a critical boundary between a defective service of notice (which may be curable) and the complete non-issuance of a notice (which is not). The Department's invocation of Section 292BB was rejected as inapplicable in circumstances where the very existence of the notice could not be established on the record.

Background and Factual Matrix

Nature of the Assessee's Business and Original Return

Ramesh C. Salecha HUF was engaged in the proprietary trading of ferrous and non-ferrous metals. The assessee filed its return of income on 29 September 2009, declaring a total income of ₹5,45,892/-.

Intelligence Leading to Reopening

The Assessing Officer subsequently received inputs from the investigation wing, which had, in turn, drawn on enquiries conducted by the Sales Tax authorities. These enquiries had identified certain persons allegedly operating as bogus billers or accommodation entry providers, and statements had been recorded from them. A list of purported beneficiaries was shared with the AO, and the name of the assessee appeared therein.

Acting on this information, the AO issued a notice under Section 148 of the Income Tax Act, 1961, on 28 March 2013, to reopen the assessment. In response, the assessee, vide its letter dated 27 September 2013, requested that its original return filed under Section 139(1) be treated as the return in compliance with the Section 148 notice.

Purchases Under Scrutiny

During the course of assessment proceedings, the AO called upon the assessee to explain purchases allegedly made from three entities:

  • M/s Ruchi Impacts
  • M/s Parswan Company
  • M/s Big Trade Agency

The AO directed the assessee to furnish:

  • Ledger accounts maintained in its books
  • Copies of relevant purchase bills and delivery challans
  • Details from the stock register for verification
  • Evidence demonstrating that purchased goods had been sold or consumed
  • Bank statements evidencing payments made against such purchases

Assessee's Response

In response to the AO's directions, the assessee furnished:

  • A copy of the ledger account of M/s Big Trade Agency
  • The relevant purchase bill from that concern
  • Bank statements reflecting payments made toward those purchases
  • Its stock register

The assessee categorically stated before the AO that it had not made any purchases from M/s Ruchi Impacts or M/s Parswan Company during the year in question.

Failure of Section 133(6) Notices and Consequent Addition

Notices issued under Section 133(6) of the Income Tax Act, 1961, to all three entities via speed post were returned by the postal authority with the remark "Not Known." The AO then directed the assessee to produce these parties for examination. The assessee was unable to do so. Additionally, the assessee had sought an opportunity to cross-examine the hawala operators whose statements the Sales Tax Department had recorded, a request that was not acceded to.

Ultimately, the AO concluded that the assessee had failed to produce evidence of actual receipt of goods and transportation details. On this basis, purchases totalling ₹4,52,53,153/- were treated as bogus and added as unexplained expenditure under Section 69C of the Income Tax Act, 1961.

First Appellate Stage: CIT(A)'s Order

Before the Commissioner of Income Tax (Appeals), the assessee raised both jurisdictional and merit-based grounds. On the jurisdictional issue concerning non-issuance of a notice under Section 143(2), the CIT(A) called for a remand report from the AO.