Section 143(2) — Notice for Assessment

Section 143(2) of the Income-tax Act, 1961, empowers the Assessing Officer to issue a notice to the taxpayer if their return of income requires further scrutiny. This notice is a crucial step in the assessment process, ensuring that the income declared by the taxpayer is accurate and complete. The notice must be served within six months from the end of the financial year in which the return is furnished. The purpose of this notice is to verify the correctness of the return filed and to ensure that the taxpayer has not understated income or claimed excessive loss, deduction, allowance, or relief. The burden of proof lies with the taxpayer to substantiate the claims made in the return. This section is significant as it helps maintain the integrity of the tax system by allowing the tax authorities to scrutinize returns that appear to have discrepancies or require further clarification.

Common Litigation Flashpoints

1. Timeliness of the notice issuance
2. Validity of the notice if served after the deadline
3. Scope of inquiry permissible under the notice
4. Non-receipt of notice by the taxpayer

Judgments on Section 143(2) — Notice for Assessment

• Hexaware Technologies Limited vs Assistant Commissioner of Income Tax — HC,
  Reassessment notices issued after 1st April 2021 must comply with the amended provisions of the Income Tax Act, 1961, and cannot rely on the erstwhile provisions.
• DCIT-7(1)(1) vs Goldman Sachs (India) Securities Pvt. Ltd. — ITAT,
  Discount on issue of employees stock options is allowable as deduction in computing the income under the head profits and gains of business.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Ananta Landmark Pvt. Ltd. vs Deputy Commissioner of Income Tax — HC,
  Reopening of assessment after four years requires both conditions of income escaping assessment and failure to disclose material facts to be satisfied.
• PR. COMMISSIONER OF INCOME TAX CENTRAL-2 NEW DELHI vs MEETA GUTGUTIA PROP. M/S FERNS 'N' PETALS — HC,
  Completed assessments can be interfered with by the AO under Section 153A only on the basis of some incriminating material unearthed during the course of search.
• GKN Driveshafts (India) Ltd. vs Income Tax Officer and Ors. — SC,
  When a notice under Section 148 is issued, the noticee should file a return and may seek reasons, which the assessing officer must provide, allowing the noticee to file objections that must be dispose