Section 143(2) of the Income Tax Act, 1961 — Assessment — Notice — Furnishing of the return is a sine qua non for issuance of notice under Section 143(2).
Facts: Being aggrieved of the Order of Tribunal, Revenue went on appeal before High Court and raised the question of law that "Whether in the facts and the circumstances of the case, the ITAT was right in holding that the notice under Section 143(2) of the Income Tax Act was required to be issued even in the case when no return in response to Notice under Section 148 was filed."
Held , that Section 148 permits issuance of notice in certain circumstances when it is discovered that income has escaped assessment and sub section (1) thereof mandates a return to be filed upon assessee being served a notice under such provisions, whereupon the provisions of this Act shall, so far as it may be, apply accordingly as if such return were a return required to be furnished under Section 139. Section 143 pertains to an assessment and its opening words referred to "a return being made under Section 139 or in response to a notice under Section 142(1).Thus plain reading of Section 143(2) which talks about issuance of notice where return has been furnished and Section 148(1) which talks about return filed in response to notice being treated as return under Section 139, makes it clear that the procedure prescribed in Section 143(2) becomes applicable only when a return has been furnished. Admittedly in the instant case, the return was filed by the assessee after the time prescribed for filing return under Sections 139(1) and 139(4) had expired. Therefore, the return filed by the assessee has to be treated as non-est. The proceedings under Section 147 were initiated on the ground that the return for the assessment year 2005-06 was the first ever return filed by the assessee and was filed on 13.02.2008. The Assessing Officer asked to explain the opening capital and source of advances through notices on various dates from December 2012 to February 2013. However, no response was made by the assessee. Subsequently, the Assessing Officer wasasked to comply and give response to the draft assessment order. The asseessee did not respond to the draft assessment order where certain additions were proposed on account of unexplained opening capital balances of partner, unexplained loan extended to Mr. and Mrs. Shah and disallowance of interest. In absence of any explanation, the Assessing Officer made the additions. The Notice under Section 143(2) is required to be given only when return is furnished. Furnishing of the return is a sine qua non for issuance of notice under Section 143(2). If no return is furnished by the assessee, there can be no reason for issuance of notice under Section 143(2).[2018] 48 ITCD 55 (J&K)