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143(3)

ITA 1961 · Section 143(3)

Regular Assessment

Chapter XV — Vol XV — Procedure AssessmentITA 1961Up to AY 2025-26

AO completes assessment by order in writing — accepting / modifying return. Time-limit u/s 153 — 12 months from end of relevant AY (regular cases) / 21 months (TP cases). Faceless framework u/s 144B — operative from 1-4-2021 onwards.…

Section 143(3) — Regular Assessment

AO completes assessment by order in writing — accepting / modifying return. Time-limit u/s 153 — 12 months from end of relevant AY (regular cases) / 21 months (TP cases). Faceless framework u/s 144B — operative from 1-4-2021 onwards.

JUDICIAL EVOLUTION — Faceless Personal Hearing

Mantra Industries Ltd. v. NFAC, (2021) 437 ITR 269 (Bombay HC) — emphasised that personal hearing under s. 144B(7)(vii) cannot be denied where the assessee specifically requests it.

HELD: Where personal hearing is sought by the assessee in writing, the Faceless AO is duty-bound to grant the same through video conference. Denial of opportunity vitiates the assessment. (per Mantra Industries ¶ 18).

DEPARTMENTAL PRACTICE — DIN + Faceless Procedure

CBDT Circular 19/2019 dated 14-08-2019 mandates Document Identification Number (DIN) on every Department communication. Notices/orders without DIN are non-est. Faceless framework: SOP F. No. 137/24/2021-ITA-I dated 24-08-2021 prescribes the National Faceless Assessment Centre (NaFAC) workflow.

SECTIONS 147-149 — REASSESSMENT (POST FA 2021)

Architecture (Post FA 2021)

  • s. 147 — substantive provision: AO may assess income that has escaped assessment, subject to procedural safeguards.
  • s. 148 — issue of notice; conditions: (a) information leading to belief of escapement; (b) prior approval u/s 151.
  • s. 148A — pre-notice procedure: (a) inquiry, (b) show-cause to assessee, (c) order. [Mandatory pre-FA-2021 reform].
  • s. 149 — time-limit: 3 years (general) / 10 years (where escapement ≥ ₹50L).
  • s. 151 — sanction by specified rank-officer (Pr. CCIT / CCIT).

JUDICIAL EVOLUTION — Reasons-to-Believe Doctrine

Phool Chand Bajrang Lal v. ITO, (1993) 203 ITR 456 (SC) — four-element reasons-to-believe doctrine — tangible material, specific information, nexus to escapement, recordable reasons.

JUDICIAL EVOLUTION — Transitional Notices (Ashish Agarwal)

UOI v. Ashish Agarwal, (2022) 444 ITR 1 (SC) — reassessment notices issued 1-4-2021 to 30-6-2021 under unamended s. 148 deemed s. 148A(b) notices under new regime; assessee-opportunity to be granted before final s. 148.

JUDICIAL EVOLUTION — Constitutional Validity (Rajeev Bansal)

Rajeev Bansal v. UOI, (2024) 469 ITR 46 (SC) [Constitution Bench] — constitutional validity of post-FA 2021 reassessment regime upheld; time-limit interpretation provided.

JUDICIAL EVOLUTION — JAO/FAO Jurisdiction (Hexaware)

The Bombay HC in Hexaware Technologies Ltd. v. ACIT, (2024) 464 ITR 430 (Bom HC), held that under the Faceless Reassessment Scheme (Notification 18/2022), ONLY the Faceless Assessing Officer has jurisdiction to issue notice u/s 148/148A; the Jurisdictional Assessing Officer is denuded of authority. JAO-issued notices post 29-3-2022 are void ab initio.

HELD: It is unequivocal that the issuance of a notice under Section 148 of the Act shall be by the Faceless Assessing Officer and not by the Jurisdictional Assessing Officer. The very initiation of the reassessment proceedings on the basis of impugned notices issued by the JAO is, therefore, contrary to the provisions of Section 151A of the Act read with the Notification dated 29 March 2022 and is, accordingly, without jurisdiction. (per Hexaware ¶ 32).

PLANNING NOTES & LITIGATION DEFENCE

(i) On receipt of any s. 148 notice post 29-3-2022, immediately verify FAO designation — JAO-issued notice (rare under Faceless Scheme but possible by oversight) is challengeable. Cite Hexaware. (ii) The s. 148A(d) order is the antecedent jurisdictional fact — demand its service before responding to s. 148. (iii) The 50-lakh threshold in s. 149(1)(b) is jurisdictional fact — verify the AO's quantification through AIS / TIS. (iv) Time-limit defences: 3-year ordinary / 10-year extended for ≥ ₹50L escapement — strict computation, no condonation.

SECTIONS 153A-153D — SEARCH ASSESSMENT (BLOCK PERIOD)

Architecture

  • s. 153A — assessment of 6 AYs preceding the AY of search + 4 'relevant AYs' (subject to ₹50L undisclosed-income threshold) — total 10 years.
  • s. 153B — time-limit: 21 months from end of FY of search execution (extended for TP).
  • s. 153C — assessment of person other than searched person where seized material relates to him.
  • s. 153D — prior approval of JCIT mandatory for s. 153A / 153C orders.

JUDICIAL EVOLUTION — Approval Mechanism

CIT v. M.M. Financial Services Pvt. Ltd., (2018) 410 ITR 56 (Del HC) — held that s. 153D approval cannot be a mechanical / rubber-stamp exercise; the approving authority must apply mind to each AY's draft order.

PLANNING NOTES

(i) For all s. 153A / 153C assessments, demand the s. 153D approval letter — mechanical approval is challengeable. (ii) For s. 153C cases, demand the satisfaction-note from searched-person's AO + receiving AO; cite Calcutta Knitwears + Touchstone Holdings. (iii) Time-limit u/s 153B is strict — completion beyond limit makes order void. Verify carefully.

SECTIONS 154-158 — RECTIFICATION / NOTICE OF DEMAND / INTIMATION

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