AVS Infrabuild (P.) Ltd. v. Assistant Commissioner of Income‑tax – [2023] (Delhi HC): Income‑Tax Act, 1961 Section 148 & Section 292B

 

Introduction

In the recent decision of the Delhi High Court, the case of AVS Infrabuild (P.) Ltd. v. Assistant Commissioner of Income-tax (2023, Delhi HC) addresses a crucial procedural requirement under the Income-Tax Act: the validity of a notice issued under Section 148 when the notice itself contains multiple jurisdictional errors, and whether such errors can be cured by invoking Section 292B.

The decision is of significance to taxpayers, tax practitioners and authorities alike, because it emphasises that jurisdictional steps cannot be glossed over by citing rectification provisions if the defect goes to the root of jurisdiction.

Facts of the Case

• The assessing officer (AO) passed an order under Section 148A(d) of the Income-Tax Act. 

• Following that order, a notice under Section 148 was issued purportedly to the taxpayer. But the notice bore the name of a different entity – viz., “Apollo Pipes Limited” instead of the actual assessee “AVS Infrabuild Private Limited”.

• In addition, the PAN quoted in the notice was incorrect (AAACA1199D instead of AALCA2879D), the assessment year mentioned was AY 2013-14 whereas the correct AY was 2014-15, and the Document Identification Number (DIN) referenced was wrong.

• The revenue contended that by a separate letter the assessee was informed that the notice under Section 148 had been issued to it, and invoked Section 292B to claim that the defect was a “mistake” and therefore curable.

• The assessee challenged the notice and reassessment proceedings before the Delhi High Court.

Issue

• Whether the notice under Section 148, containing multiple and fundamental defects (wrong name, wrong PAN, wrong assessment year, wrong DIN), is valid and whether the AO assumed jurisdiction legally.

• Whether Section 292B can be used to cure such defects and thereby validate the notice and subsequent reassessment proceedings.

Court’s Decision & Reasoning

• The Delhi High Court held that the notice under Section 148 did not concern the assessee: the errors in name, PAN, assessment year and DIN are such that if those were excised, the notice would cease to be one under Section 148.

• By statutory mandate under Section 148, before conducting an assessment, reassessment or recomputation under Section 147, the AO must serve a valid notice on the assessee (along with copy of order under 148A(d), if required).

• The court emphasised that issuing a valid notice under Section 148 is a jurisdictional pre-condition for reassessment proceedings under Section 147. Without it, the AO cannot assume jurisdiction.

• On Section 292B: The court held that a mistake which can be corrected under Section 292B must be one that, if excised, does not change the tenor and scope of the document/notice/proceeding. Here, the defects were so grave that they changed the identity of the addressee, the assessment year, and document number.

• Therefore, Section 292B could not be invoked to cure the defects in the notice – because the defects went to jurisdiction, not mere formalities.

• Consequently, the impugned notice under Section 148, the reassessment order, the demand and penalty notices, and the order under Section 148A(d) were all quashed.

Key Legal Principles and Take-aways

1. Jurisdictional Notice Requirement: A valid notice under Section 148 is a jurisdictional requirement for reassessment under Section 147. If notice is invalid, AO has no jurisdiction.

2. Validity of Notice: Errors in identity (name, PAN) of the assessee, wrong assessment year, wrong document reference number can render the notice invalid.

3. Scope of Section 292B: This section allows correction of errors/mistakes, but only if the mistake does not alter the essential scope or tenor of the document/notice/proceeding. If it does, correction is not permissible and the document/notice fails.

4. Practical Implication for Assessees & Revenue: Revenue must ensure strict compliance with statutory requirements when issuing notices under Section 148. Assessees should check for such jurisdictional defects and may challenge such notices if they are fundamentally flawed.

Implications for Tax-Practice

• For practitioners advising clients: Always verify that the notice under Section 148 bears correct assessee name, PAN, assessment year and related identifiers.

• For Revenue/Assessing Officers: Vigilance is required—the issuance of notice must strictly conform to statutory mandate to avoid jurisdictional challenge.

• For taxpayers: A flawed notice under Section 148 may provide a strong basis for challenge—especially where the flaws are not mere typos but strike at identity, year or procedural requirements.

• This judgment reinforces the principle that procedural formalities cannot be treated as mere technicalities when they affect the core jurisdictional step.

Conclusion

The Delhi High Court’s decision in AVS Infrabuild is a strong reminder: When a notice under Section 148 contains fundamental errors in identity and year, the reassessment proceedings that follow are vulnerable to being struck down. The remedy under Section 292B cannot rescue a notice which fails at the threshold of jurisdiction. Taxpayers, practitioners and authorities alike must therefore ensure procedural accuracy to safeguard the legitimacy of reassessment steps.

FAQs

Q1: Does every error in a Section 148 notice render it invalid?

Not necessarily. Only those errors which affect the identity of the assessee, the assessment year, or the essential tenor of the notice—such that if removed nothing remains of the notice’s substance—will render it invalid. If the error is merely typographical and does not change scope, Section 292B may apply.

Q2: What kinds of mistakes can be corrected under Section 292B?

Mistakes where the substance of the notice or document remains intact and the error is incidental—such as minor typographical errors or wrong spelling which do not change the meaning of the document—may be corrected under Section 292B.

Q3: Why is the notice under Section 148 considered jurisdictional?

Because the statute mandates that no assessment, reassessment or recomputation may be made under Section 147 unless the AO has served the notice under Section 148 (and where required under Section 148A). Without that notice, the AO cannot legally assume jurisdiction to reassess income.

Disclaimer: This blog is generated for educational and informational purposes only. It should not be considered legal or tax advice. For case-specific interpretation, please consult a your tax professional or legal expert or contact us.