Rectified Defective Return Relates Back To Original Filing Date, Making Delayed Section 143(2) Notice Time-Barred

By | October 16, 2026
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Rectified Defective Return Relates Back To Original Filing Date, Making Delayed Section 143(2) Notice Time-Barred

Issue

Whether rectifying a defective return under Section 139(9) extends the limitation period for issuing a notice under Section 143(2), or if limitation must be calculated from the original filing date, rendering a delayed notice time-barred and the assessment invalid.

Facts

  • Original Filing: The assessee filed its return of income under Section 139(1) for Assessment Year 2017-18 on September 29, 2017.
  • Defect Rectification: The return was treated as defective under Section 139(9), and the defects were cured within the allowed time.
  • Scrutiny Notice: The Assessing Officer issued a scrutiny notice under Section 143(2) on September 22, 2019.
  • Assessment Completion: The assessment was completed under Section 144 on December 12, 2019, based on the return filed on September 29, 2017.
  • Limitation Expiry: As per the original filing date, the statutory deadline to issue the Section 143(2) notice was on or before September 30, 2018.

Decision

  • Doctrine of Relation Back: Held that rectifying defects under Section 139(9) does not constitute filing a fresh return; upon cure, the return relates back to its original filing date.
  • Limitation Computation: Held that the limitation period for issuing a notice under Section 143(2) must be calculated from the financial year in which the original return was furnished, not when defects were removed.
  • Assessment Quashed: Held that the notice issued on September 22, 2019 was barred by limitation, making the resulting assessment order unsustainable and liable to be quashed.
  • Outcome: Decided in favour of the assessee.

Key Takeaways

  • No Extension of Limitation: Removal of defects under Section 139(9) does not reset or extend the statutory limitation period for issuing a scrutiny notice under Section 143(2).
  • Relation Back Principle: A rectified return is legally deemed to have been filed on the date the original return was submitted under Section 139(1).
  • Jurisdictional Defect: A Section 143(2) notice issued beyond the prescribed statutory deadline is void ab initio, rendering any subsequent assessment proceedings legally invalid.
IN THE ITAT BANGALORE BENCH ‘B’
Uber Health Tech (P.) Ltd.
v.
Assistant Commissioner of Income-tax
Prashant Maharishi, Vice President
and SOUNDARARAJAN K., Judicial Member
IT Appeal No. 2021 (Bang) OF 2025
[Assessment year 2017-18]
SEPTEMBER  21, 2026
Harshit Srivatsava, CA for the Appellant. N.S. Shashidhara, CIT for the Respondent.
ORDER
Prashant Maharishi, Vice President. – This appeal has been filed by Uber Health Tech Private Limited (the assessee/appellant) for assessment year 2017-18 against the appellate order dated 18 July 2025 passed by the National Faceless Appeal Centre, Delhi [the learned CIT(A)]. By that order, the learned CIT(A) dismissed the assessee’s appeal against the assessment order dated 12 December 2019 passed under section 143(3) read with section 144C of the Income-tax Act, 1961 (the Act), by the Assistant Commissioner of Income-tax, Circle 7(1)(1), Bangalore [the learned AO]. The learned AO assessed the assessee’s total income after making an addition of Rs. 63,951,505 to the returned loss of Rs. 17,354,790 declared in the return of income filed on 29 December 2017.
2. The Assessee has raised the following grounds of appeal:
1. The Ld. CIT(A) and Ld. AO, both the officers have erred in not appreciating the facts and circumstances of the case and submissions made by the appellant and has further erred in passing order which is bad in law and on facts.
2. That the impugned assessment order dated 12 December 2019 is void ab initio because the underlying notice issued against the return filed vide Acknowledgement No. 226290071290917 dated 29th September 2017 for the assessment u/s 143(2) of the Act dated 22nd September 2019 was barred by limitation. Hence the impugned assessment order dated 12th December 2019 is non-est in the eyes of law and the same may kindly be QUASHED.
3. The Ld. CIT(A) and Ld. AO both the officers have erred in not providing proper opportunity of being heard. Hence the impugned assessment order dated 12th December 2019 needs to be ANNULLED.
4. The Ld. CIT(A) and Ld. AO, both the officers have erred in making/confirming addition of Rs 6,39,51,505/- u/s 68 of the Act on account of receipt of share premium without appreciating the fact that the said amount was received during the F.Y. 2015-16 through proper banking channel and the same was duly recorded in the books of accounts of the relevant financial year. Hence, the addition made u/s 68 of the Act needs to be deleted.
5. That the Ld. AO has erred in completing assessment proceedings u/s 144 of the Act without applying the provision of said section hence the assessment order passed is erroneous and liable to be QUASHED.
6. The Ld. AO has erred in making adhoc addition of Rs. 64,20,188/- without rejecting the books of accounts of the appellant which is impermissible under the settled jurisprudence.
7. The Ld. CIT(A) has erred in not admitting additional evidence u/s 46A of the Act and denied the admission of such evidence without giving valid reason for not admitting the same which is against the principal of natural justice.
8. That the Ld. AO has erred in disallowing 30% of business expenses of Rs. 64,20,188/- (BEING 30% of Rs. 2,14,00,625/-) without giving any reason for disallowing such expenses and that on hand-picked rate. This action of AO is arbitrary and extreme bad in law hence the impugned addition needs to be DELETED.
9. The Ld. AO has erred in not making speaking order, which is bad in law. Hence the order dated 12th December 2019 passed u/s 144 r.w.s. 143(3) of the Act is not a valid order in the eyes of law.
10. The Ld. CIT(A) and Ld. AO, both the officers have erred in law and on facts that no addition can be made on surmise basis hence additions made/sustained by the Ld. Officers needs to be DELETED.
11. That the additions sustained by CIT(A) of Rs. 6,39,51,505 u/s 68 of the Act is bad in law and in the facts and circumstances of the case without considering the submissions of the appellant, while discharging the onus made upon him u/s 68 of the Act.
3. Briefly, the assessee is engaged in developing software platforms for health and related products. It filed its return of income on 29 September 2017, declaring a loss of Rs. 17,354,790. The case was selected for scrutiny, and notice under section 143(2) of the Income-tax Act was issued on 22 September 2019. As the assessee did not respond, a further notice under section 142(1) was issued on 13 November 2019, which also remained unanswered. A show-cause notice under section 144 was thereafter issued, but no response was filed. The learned Assessing Officer noted that the assessee had debited expenses of Rs. 21,400,625 in its books and, for want of supporting details, disallowed 30% of those expenses, amounting to Rs. 420,188. The Assessing Officer also observed that Rs. 63,951,505 was shown as securities premium reserve in the balance sheet. In the absence of supporting details, the amount was added under section 68 of the Income-tax Act, and the assessment order was passed under section 144 on 12 December 2019.
4. Aggrieved by the assessment order, the assessee filed an appeal before the learned CIT(A), along with written submissions and supporting documents. On disallowance of expenditure, the assessee submitted that it had amalgamated with another company, Around the Glass Being Private Limited, pursuant to the order of the National Company Law Tribunal dated 7 July 2023. As a result, it was in the process of compiling the relevant financial records, including expense vouchers and bank statements. The assessee also furnished details of various expenses. The learned CIT(A), however, held that the Assessing Officer had given sufficient opportunities to submit the details, which the assessee had failed to avail, and dismissed this ground. Regarding the share premium, the assessee submitted that the amount was received against allotment of preference shares in financial year 2015-16, and not in financial year 2016-17; therefore, no amount was received during the year under consideration. The assessee also produced a copy of the share allotment filed with the Registrar of Companies on 9 September 2015. It was contended that section 68 of the Income-tax Act was not applicable for the impugned assessment year, as no amount was credited in the assessee’s books during that year. The learned CIT(A) did not accept this contention and confirmed the addition. Accordingly, the assessee’s appeal was dismissed.
5. Aggrieved by the appellate order, the assessee has filed the present appeal before us. The learned authorized representative, Shri Ashish Srivastava, Chartered Accountant, filed several paper books, written submissions, and revised grounds of appeal. We have heard him.
6. Shri N.S. Shashidhara, learned Commissioner of Income-tax, appeared for the Revenue and supported the orders of the lower authorities.
7. We have carefully considered the rival contentions and perused the orders of the lower authorities. Ground No. 2 raises a legal issue: whether the notice issued under section 143(2) of the Act on 22 September 2019 was barred by limitation. The learned authorized representative, referring to a tabulated chronology, submitted that the assessee filed its return of income under section 139(1) on 29 September 2017. The return was treated as defective, and an intimation dated 1 June 2018 was issued on 3 June 2018. A first reminder for removal of the defect was issued on 19 June 2018, and the assessee removed the defect on 20 June 2018. Thereafter, on 26 September 2018, a second intimation was issued after removal of the defect. It was submitted that the time limit for issuing notice under section 143(2) is six months from the end of the financial year in which the return is furnished. Since the relevant period ended on 31 March 2018, the notice could be issued only up to 30 September 2018. The assessee contended that, once the defect is removed, the return relates back to the date of its original filing and does not become a fresh return for the purposes of the Act. Accordingly, the notice issued on 22 September 2019 was beyond limitation. In support, the authorized representative relied on several judicial precedents, includingAtul Projects India (P.) Ltd. v. Union of India [2020] 422 ITR 478 (Bombay)Prime Securities Limited v. Assistant Commissioner of Income-tax  221/317 ITR 27 (Bombay), and Kunal Structure India Private Limited v. Deputy Commissioner of Income-tax 422 ITR 482 (Gujarat). He also produced screenshots from the income-tax portal showing the date of filing of the return and the subsequent removal of defects. On this basis, it was submitted that the notice under section 143(2) was time-barred and the assessment order passed pursuant to it deserves to be quashed.
8. Thus, where an original return is treated as defective under section 139(9) of the Income-tax Act, 1961, and the assessee rectifies the defect within the permitted time, the better legal view is that the return retains its original filing date. The correction merely cures the defect in the original return and does not amount to filing a fresh return. A return is treated as invalid only when the defect is not removed within the prescribed or extended time, in which case the Act applies as if no return had been furnished. Conversely, once the defect is duly rectified, the statutory scheme treats the return as valid from the original date of filing. The Income Tax Department’s current guidance is consistent with this approach: nonresponse to a section 139(9) notice may result in the return being treated as invalid, while a timely response permits correction of the defective return. This is distinct from a case where the defective return has already become invalid and the assessee later seeks to file another return. The Department itself distinguishes between responding to a section 139(9) notice and filing a fresh or revised return, where such filing is otherwise permitted within the statutory time limit.
9. Honourable Gujarat High court in Travel Designer India (P.) Ltd. v. DCIT (Gujarat) / 191 DTR 310 (Guj), had occasion to consider the situation where the assessee filed its original return under section 139(1) on 29 November 2016. The return was treated as defective, and the assessee cured the defects on 19 July 2017 within the time allowed by the Assessing Officer. A notice under section 143(2) was later issued on 11 August 2018. The Hon’ble Gujarat High Court held that, once the defects were removed, the return related back to the original filing date. Accordingly, limitation under section 143(2) had to be computed from 29 November 2016, and not from 19 July 2017. Since the last permissible date for issuing the notice, under the provision then applicable, was 30 September 2017, the notice dated 11 August 2018 was held to be time-barred. Revenue challenged the Gujarat High Court’s decision before the Honourable Supreme Court which was dismissed on 14 February 2025 DCIT v. Travel Designer India (P.) Ltd. 482 ITR 283 (SC).
10. In Atul Projects India (P.) Ltd. (supra), the Court considered a substantially similar issue. The assessee had originally filed its return in October 2016, later removed the defects, and was thereafter issued a notice under section 143(2) on 10 August 2018. The Hon’ble Bombay High Court held, in substance, that the relevant date of filing is the date on which the return was initially presented, and not the date on which the defects were cured. Accordingly, the notice issued under section 143(2) was held to be barred by limitation.
11. The distinction between rectification of a defective return under section 139(9) and filing a revised return under section 139(5) is crucial. It is true that section 139(9) does not contemplate the filing of an altogether fresh return. It permits the assessee to rectify the defect in the return already filed. Thus, where the defect is cured within the permissible period, the corrected return relates back to the original return. Therefore, Original return is filed which is found to be defective and notices are given for removal of such defects u/s 139(9) , consequently assessee cured defect within permitted time, then original return becomes valid and all limitation date relates back to original filing date.
12. The situation may change where finding defect notice the assessee filed its a fresh return of income whether under section 139 (4) or any other provisions then in that case Original defective return is obliterated and a fresh return filed on defect-removal date, is a fresh return and all limitation starts afresh.
13. Thus we understand from the above analysis is that where a return of income furnished under section 139(1) is treated as defective under section 139(9), and the defects are subsequently removed within the time permitted, the removal of such defects does not amount to furnishing a fresh return. Upon rectification, the return relates back to the date of its original filing. Consequently, for computing the period of limitation prescribed for service/issuance of notice under section 143(2), the relevant financial year is the financial year in which the original return was furnished and not the financial year in which the defects under section 139(9) were removed.
14. In the present case, it is important to examine whether the assessee has removed the defect or has filed the fresh return of income. If it is a fresh return of income the limitation will start from filing of such fresh return of reiterating the original return filed by the assessee on 29 September 2017. Thus, in this case the assessee has removed defect on 20 June 2018 and second defect on 26 September 2018. If these two defect removal mechanism is considered as a fresh return of income, the issuance of notice on 22 September 2019 is within time and valid.
15. However, if the defects are removed by the assessee on 20 June 2018 and 13 October 2018, and it is not fresh return of income, such defect removal will relate back to the original return filed on 29 September 2017 and the last date for issuance of notice under section 143 (two) in that circumstances will expire on 30 September 2018, against which the notices issued by the revenue 22 September 2019 thus the notices the be issued beyond the prescribed time limit and the assessment order will also fall flat.
16. To ascertain this factual position, we refer to the assessment order itself. The learned Assessing Officer has recorded that the assessee filed its return of income on 29 September 2017, and that return formed the basis for assessing the assessee’s income. If the Assessing Officer considered the original return to be invalid, he could not have proceeded on the basis of that return or accepted it for assessment purposes. The Revenue itself has, therefore, treated 29 September 2017 as the date on which the return was filed. It follows that the defects subsequently removed by the assessee up to October 2018 only validated the original return filed on 29 September 2017 and did not result in a fresh return.
17. In view of the above facts do not have any hesitation in holding that the notice issued by the assessing officer under section 143 (2) of the act on 22 September 2019 which should have been issued on or before 30 September 2018 is barred by limitation and consequently in the assessment order passed by the learned assessing officer on 12 December 2019 is also not sustainable and hence quashed.
18. Accordingly ground No. 2 of the appeal of the assessee is allowed and in view of our decision, in ground No. 2, all other grounds of appeal becomes infructuous and hence dismissed.
19. Accordingly appeal of the assessee is allowed as indicated above.