Reassessment Invalidated: ITAT Delhi Rules Non-Issuance of Section 143(2) Notice as Incurable Jurisdictional Error

In the complex landscape of Indian taxation, the procedural adherence by the Revenue Department is as critical as the substantive merit of a case. A recent, significant ruling by the ITAT Delhi in the case of Rupinder Kaur Arora Vs ACIT has reinforced the sanctity of jurisdictional notices. The Tribunal categorically held that the failure to issue a notice under Section 143(2) of the Income Tax Act 1961 is not merely a procedural lapse that can be overlooked or cured by the assessee's participation in the proceedings. Instead, it constitutes a fundamental jurisdictional defect that renders the entire reassessment order null and void.

This article delves into the factual matrix of the case, the legal arguments presented, and the broader implications for the assessee facing reassessment proceedings under Section 147 read with Section 143(3).

The Factual Matrix

The dispute arose from the assessment proceedings for the Assessment Year (AY) 2012-13. The Revenue Department initiated action against the assessee based on specific information suggesting escapement of income. The allegations were substantial, involving three primary financial activities:

  1. A sale transaction amounting to Rs. 5,52,47,220/- related to trading in shares of M/s Blueprint Blue Print Securities Ltd, which the Revenue suspected to be a mechanism for generating bogus long-term capital gains.
  2. The purchase of immovable property valued at Rs. 2,15,22,100/-.
  3. Significant cash deposits observed in the assessee's bank accounts.

Based on these parameters, the Assessing Officer (AO) issued a notice under Section 148 on 29.03.2019. Subsequently, the assessment was completed under Section 147 read with Section 143(3) via an order dated 30.12.2019.

The core of the dispute, however, was not the merit of the capital gains or the cash deposits, but a specific procedural failure. The assessee contended that while the notice under Section 148 was received, the mandatory notice under Section 143(2)—which is a prerequisite for assuming jurisdiction to frame a scrutiny assessment—was never issued.

The Appellate Journey

Aggrieved by the assessment order, the assessee approached the National Faceless Appeal Centre (NFAC). The First Appellate Authority (CIT(A)), in an order dated 23.10.2024, dismissed the assessee's appeal.