Section 143(2) Notice by Prescribed Authority Valid Despite Case Centralization With Jurisdictional Assessing Officer

ORDER

P. SAM KOSHY, ACJ.- Heard Mr. Naga Deepak, learned counsel for the petitioner; and Mr. N. Praveen Reddy, learned Senior Standing Counsel for Income Tax Department appearing on behalf of the respondents.

2. The instant Writ Petition under Article 226 of the Constitution of India has been filed by the petitioner challenging the notice dated 19.06.2026, bearing Document Identification Notice and No.ITBA/AST/S/143(2)/2026-27/1089903537(1), issued by the respondent No.2 under sub-section (2) of Section 143 of the Income Tax Act, 1961, (for short the ‘Act’) for the assessment year 2025-26, and the notices dated 30.07.2026 and 01.09.2026 issued by respondent No.1 under Section 142(1) of the Act for the said assessment year as being without jurisdiction, illegal, arbitrary and void ab initio, and consequently to set aside the same.

3. Vide the impugned notices dated 30.07.2026 and 01.09.2026, respondent No.1 had called upon the petitioner to furnish information based on the earlier notice served by the respondent No.2.

4. The facts of the case are that the petitioner was a private limited company incorporated under the Companies Act, 1956 and is engaged in the business of manufacture and marketing of pharmaceutical formulations.

5. Respondent No.1 was the assessing officer presently exercising jurisdiction over the petitioner and was the authority that had issued the notices under Section 142(1) of the Act referred to hereinafter. Respondent No.2 was the officer notified by respondent No.4 as the ‘Prescribed Income-tax Authority’ for the purposes of sub-section (2) of Section 143 of the Act, and was the authority that had issued the impugned notice. Respondent No.3 was the administrative authority in-charge of the Central Charge with which the petitioner’s case stood centralised, and respondent No.4 was the Board.

6. A search and seizure operation under Section 132 of the Act was conducted on 22.12.2020 in the group cases of M/s. Yashoda Healthcare Services Private Limited and others, and the petitioner was covered by the said search. Consequent upon the search, respondent No.3, by a proposal bearing F.No. Pr.CIT(C)/H/Centralization/2020-21 dated 05.03.2021, addressed to the Principal Commissioner of Income Tax-2, Hyderabad, recommended the centralisation of eight cases of the said group with the Assistant Commissioner of Income Tax, Central Circle-2(2), Hyderabad for a coordinated investigation and assessment. The petitioner figured at serial No.6 of the schedule to the said proposal, its then jurisdiction being recorded as Circle-8(1), Hyderabad, and the reason for centralisation being recorded as “Covered under Section 132”. The proposal further directed that the Permanent Account Number (for short ‘PAN’) of the petitioner be migrated to the Assistant Commissioner of Income Tax, Central Circle- 2(2), Hyderabad, whose Assessing Officer Code was DLC-CC-50-2.

7. Pursuant to and in consequence of the said proposal, petitioner’s case stood centralised with respondent No.1 and all proceedings under the Act in respect of the petitioner had since been conducted by respondent No.1. The order passed under Section 127 of the Act effecting the said transfer was never served upon the petitioner and the production thereof was called for from the respondents. The proceedings so centralised with respondent No.1 included assessment proceedings under Section 153A of the Act for the assessment years 2015-16 to 2020-21, assessment proceedings under Section 143(3) of the Act for the assessment year 2021-22, and proceedings under Section 147 of the Act for the assessment years 2013-14 and 2014-15, as recited by respondent No.1 in its own notice referred to hereinafter.

8. For the assessment year 2025-26, the petitioner furnished return of income under Section 139(1) of the Act on 02.12.2025, vide Acknowledgement No.709431181021225, declaring a total income of Rs.12,06,27,060/-, on which tax, interest and fee aggregating to Rs.3,16,27,537/- were payable, and a sum of Rs.3,16,27,539/- was paid.

9. While matters stood thus, a notice dated 19.06.2026 under Section 143(2) of the Act was issued to the petitioner, calling upon it to furnish evidence in support of its return for the assessment year 2025-26 on or before 04.07.2026. The said notice was issued not by respondent No.1 but by respondent No.2 at New Delhi, and bore a digital signature dated 20.06.2026, which is the ‘notice impugned’ in the present Writ Petition.

10. It was candidly stated that a response was uploaded on the e- proceedings facility of the income tax portal on 29.06.2026 against the said notice, enclosing the audited financial statements of the petitioner for the financial year 2024-25. The petitioner contended that such participation was without prejudice and was occasioned merely by the appearance of the notice on the portal, and that it did not and could not confer upon respondent No.2 a jurisdiction which the said respondent did not possess. Thereafter, respondent No.1 issued a notice dated 30.07.2026 under Section 142(1) of the Act, calling upon the petitioner to furnish the information set out in the annexure thereto on or before 14.08.2026. The petitioner submitted a reply dated 03.08.2026, uploaded on 06.08.2026, wherein it was stated that no notice under Section 143(2) of the Act had been received within the period prescribed by the proviso thereto, and the proceedings were sought to be dropped. It was subsequently stated that the said averment had been made without reference to the record of the e-proceedings facility referred to above, and the same was not pressed by the petitioner.

11. Respondent No.1 thereafter issued a further notice dated 01.09.2026 under Section 142(1) of the Act, enclosing therewith the notice dated 19.06.2026 issued by respondent No.2 and calling upon the petitioner to furnish the same information on or before 14.09.2026. Upon receipt of the impugned notices, the petitioner sought time from respondent No.1 to furnish response, and, upon legal advice, thereafter approached this Court promptly and without any delay whatsoever.

12. The petitioner submitted that the notice dated 19.06.2026 issued by respondent No.2 was wholly without jurisdiction, that no notice under Section 143(2) of the Act had been issued to the petitioner by respondent No.1 at any time, and that the period prescribed by the proviso to Section 143(2) of the Act had expired on 30.06.2026. It was accordingly contended that the assessment proceedings for the assessment year 2025-26 were void ab initio and incapable of being continued, and the petitioner was therefore constrained to approach this Court.

13. Learned counsel for the petitioner submitted that Sub-section (2) of Section 143 of the Act provides that the notice thereunder shall be served by “the Assessing Officer or the prescribed income-tax authority, as the case may be”. The expression “as the case may be” is distributive and not permissive. It signifies that of the two authorities named, one or the other is to act according as the circumstances may require, and it does not confer upon the two authorities a concurrent or interchangeable competence exercisable at the choice of the Revenue. Were the sub-section to be read as permitting either authority to act in every case, the expression “as the case may be” would be rendered wholly otiose, and a construction which renders words used by Parliament otiose is impermissible.

14. Learned counsel for the petitioner further submitted that on 19.06.2026, the only authority competent to issue a notice under sub- section (2) of Section 143 of the Act to the petitioner was respondent No.1, and that the notice issued on that date by respondent No.2 is void for want of jurisdiction. A notice under sub-section (2) of Section 143 of the Act is not a procedural formality but the very foundation of the jurisdiction to make an assessment under sub-section (3) thereof, and in the absence of a valid notice there is no assessment proceeding in existence at all.

15. Learned counsel for the petitioner also submitted that the proviso to sub-section (2) of Section 143 of the Act, as it stands amended w.e.f. 01.04.2021, prohibits the service of a notice thereunder after expiry of three months from the end of the financial year in which the return is furnished. The petitioner having furnished its return on 02.12.2025, the said period expired on 30.06.2026. No notice under sub-section (2) of Section 143 of the Act having been issued or served upon the petitioner by respondent No.1 within the said period, and none being now capable of issue or service, the defect is not one which is capable of cure and the proceedings for the assessment year 2025-26 must necessarily fail.

16. On the other hand, the learned Senior Standing Counsel for Income Tax Department relied upon the decision of the Hon’ble Delhi High Court in the case of Ambience (P.) Ltd. v. Asstt. CIT  (Delhi)/2024 SCC OnLine Del 7129 wherein it was held that the ‘Income Tax Officer in question’ had indeed vested in itself the jurisdiction to serve a notice under Section 143(2) of the Act by virtue of the notification numbered “NOTIFICATION S.O. 2432(E) [NO. 56/2022/F. NO. 225/91/2022/1TA-II], DATED 28-5-2022 which deemed the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1), Delhi to act as the ‘Prescribed Income Tax Authority’ for the purpose of issuance of notice under sub-section (2) of section 143 of the Act.

17. Having heard the contentions put forth on either side and on perusals of records, the question that falls for our consideration is “whether the notice dated 19.06.2026, issued under sub-section (2) of Section 143 of the Act, by respondent No.2 as the ‘Prescribed Income- tax Authority’ is without jurisdiction merely because the case of the petitioner stood centralised with respondent No.1 as the Assessing Officer, and, whether the notices dated 30.07.2026 and 01.09.2026 issued under Section 142(1) of the Act can be interfered with in a petition under Article 226 of the Constitution of India at the stage of show cause notice?”

18. The challenge rests on a single contention. The petitioner says that on 19.06.2026 only respondent No.1 as the Assessing Officer could issue a notice under Section 143(2) of the Act and that respondent No.2 had no competence to do so. The submission is built on the expression “as the case may be” occurring in the sub-section. Section 143(2) is reproduced below for ready reference:

“143. (2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return:

Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.]”

A plain reading of the aforesaid provision makes it evidently clear that sub-section names two authorities. One is the Assessing Officer and the other is the prescribed income-tax authority. The power of the Central Board of Direct Taxes to prescribe such an authority flows from the statute itself read with Rule 12E of the Income Tax Rules, 1962. The petitioner has pleaded in its affidavit that respondent No.2 is the officer notified by the Board as the Prescribed Income Tax Authority for the purposes of sub-section (2) of Section 143. The petitioner has not challenged the notification. It has not been contended that the notification is beyond the power of the Board or that it excludes the case of the petitioner from its scope. The only plea is that the notice should have come from respondent No. 1. That plea does not find support in the text of the sub-section.

19. The reading of “as the case may be” urged by the petitioner as a distributive expression that confers exclusive competence on the Assessing Officer in a centralised case does not commend itself to us. The sub-section does not say that the prescribed authority may act only where the Assessing Officer is unavailable. It does not carve out centralised cases from the field of the prescribed authority. Where the Board has notified an officer under Rule 12E the officer is competent to issue the notice under the sub-section. A reading that confines such an officer to a residual role would add words to the sub-section that Parliament has not used.

20. The decision of the Hon’ble Delhi High Court in Ambience (P) Ltd. (supra) supports this view. The Board had by notification dated 28.05.2022 under Rule 12E authorised a named officer to act as the Prescribed Income Tax Authority for issuing notices under Section 143(2). The Court held that the contention that the officer lacked jurisdiction was devoid of merit an rejected the argument that apart from the Assessing Officer only the officers of the National Faceless Assessment Centre could issue such a notice since that proposition found no support in the language of Section 143(2) or Rule 12E. It also rejected the argument that the prescribed authority could serve a notice but not issue it. We are in respectful agreement with that reasoning. The notification in the present case operates in the same manner and the principle applies with equal force. In paragraph Nos.9 to 14 of the aforesaid judgment, it was held as under:

“9. In the present case, the CBDT had issued a notification dated 12.05.2022 and 28.05.2022, in exercise of powers under Rule 12E of the Rules, and had authorised the Assistant Commissioner of Income Tax/Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1) Delhi to act as the ‘prescribed income-tax authority’ for the purpose of issuance of notice under Section 143(2) of the Act. The said notification is reproduced below:

“NOTIFICATION S.O. 2432(E) [NO. 56/2022/F.

NO. 225/91/2022/1TA-II], DATED 28-5-2022

10. In the present case, the impugned notice under Section 143(2) of the Act has been issued by the Assistant Commissioner of Income Tax/Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1), Delhi. In view of the above, the contention that the said Income Tax Officer did not have the jurisdiction to issue a notice under Section 143(2) of the Act, is devoid of any merit.

11. The contention that other than the Assessing Officer, only the authorised Income Tax Officers of the National Faceless Assessment Centre (NaFAC) can issue a notice under Section 143(2) of the Act as the same would be in furtherance of automation of such process, is also unmerited. This proposition is not supported by the plain language of Section 143(2) of the Act or Rule 12E of the Rules. Rule 12E of the Rules does not confine the power of the CBDT to authorise only the Income Tax Officers of the NaFAC as the prescribed authority for the purposes of Section 142(1) of the Act.

12. The contention that the prescribed income tax authority can only serve a notice under Section 143(2) of the Act but cannot issue it, is insubstantial.

13. In view of the above, we are unable to accept that the AO did not have the jurisdiction to issue the impugned notices dated 10.07.2024, 06.09.2024, 17.09.2024 under Section 142(1) of the Act or that the same are beyond the period of limitation.

14. Once it is accepted that the AO has the jurisdiction to issue a notice under Section 143(2) of the Act – which is also the contention of the petitioner in this case – the AO cannot be faulted for proceeding to complete the assessment.”

21. We now turn to the stage at which the petitioner has approached this Court. The notices impugned under Section 142(1) calls only for information. They do not determine any liability and they do not prejudice any right of the petitioner. The notice under Section 143(2) is a step that enables the Assessing Officer to proceed to examine the return. Neither notice is an order of assessment. The petitioner has a full opportunity to place its explanation and evidence before the Assessing Officer including every objection to jurisdiction that it has raised before us. If an assessment order is passed against the petitioner, the Act provides an appeal before the Commissioner of Income Tax (Appeals) and a further appeal before the Income Tax Appellate Tribunal. Every ground raised in this petition can be raised in those forums.

22. We are of the view that the petitioner has approached this Court prematurely. An assessee served with a notice calling for information is expected to respond to it and to complete the proceeding before the authority concerned. It is not expected to move to the High Court at the stage of the first notice on a ground which the statutory authorities and the appellate forums are fully competent to decide. The writ jurisdiction of this Court is not intended to supervise every preliminary step taken in the course of an assessment. Therefore, we are of the considered opinion that no case for interference is made out at this stage.

23. In view of the foregoing discussion, we hold that the notice dated 19.06.2026 issued under Section 143(2) of the Act by respondent No.2 as the Prescribed Income-tax Authority cannot be said to be without jurisdiction on the grounds urged and that no interference is warranted by this Court against the notices dated 30.07.2026 and 01.09.2026 at the stage of show cause. The Writ Petition accordingly stands dismissed and it shall also be open to the petitioner after conclusion of the assessment to avail of the appellate remedies before the statutory authorities under the Act in accordance with law. The question of law is answered against the petitioner and in favour of the respondents.

24. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.