Sequence of Notices u/s 142(1) and 143(2) Irrelevant if Both Served Purpose of Making Valid Assessment | HC

Case Details: Hexa Steel and Power (P.) Ltd. vs. National Faceless Assessment Centre - [2025] 171 taxmann.com 539 (Orissa)

Judiciary and Counsel Details

• Arindam Sinha, ACTG. J, & M.S. Sahoo, J.
• A. Patnaik, Adv. for the Petitioner.
• A. Kedia, Jr. Standing Counsel for the Respondent.

Facts of the Case

The assessee filed its return of income, which was picked up for scrutiny assessment. Notice under section 143(2) was issued. The assessee complied. Subsequently, another notice was issued, this time under section 142(1), purporting to make an inquiry. The assessee complied, but the inquiry could not have been resorted to following a notice issued under section 143(2) on its return filed.

Furthermore, in doing the assessment, section 144B was also resorted to. As such, by notification dated 17-2-2021, substituted sub-paragraph (1) in paragraph 5 of the Faceless Assessment Scheme, 2019, required furnishing a copy of the draft assessment before the assessment was finalised.

The assessee filed a writ petition contending that the draft assessment order, preparation of it mandated under section 144B, was not made available to the assessee. Secondly, after the issuance of notice under section 143(2), a notice could not have been issued under section 142(1).

High Court Held

The High Court of Orissa held that the assessment was made invoking the provision in section 143(3) read with section 144B on the assessee having complied with both notices, firstly issued under section 143(2) and then under section 142(1). The contention of revenue that the sequence does not matter inasmuch as the power to issue notice provided for in section 143(2) and section 142(1) is to make the assessment is to be accepted.

There was no dispute that the assessee’s return was picked up for scrutiny assessment. The assessment had to be done. The commencement of the exercise of assessment was by issuing the section 143(2) notice. Then, further inquiry was felt necessary for the purpose of the assessment, and, therefore, the second notice was under section 142(1). Having complied with both notices, the assessee’s allegation of not having had a full opportunity, particularly in view of statements made in the counter, was without basis.