s.143(2) — The scrutiny notice
The notice that turns a filed return into a scrutiny assessment: who may issue it, by when, and what follows when it is issued late, by the wrong officer, or not at all.
One structure since 1 June 2016, one change since. The present sub- section was substituted entire by the Finance Act 2016 with effect from 1 June 2016, with a proviso barring service after SIX months from the end of the financial year in which the return is furnished. The Finance Act 2021, Act No. 13 of 2021, substituted "three" for "six" with effect from 1 April 2021. So a notice served up to 31 March 2021 is tested against six months and one served from 1 April 2021 against three. The proviso is keyed to the financial year in which the return is furnished rather than to the date of the notice, so for a return furnished in financial year 2020-21 which text governs is a question in itself; and testing an older notice against the three month rule produces a wrong answer in the assessee's favour, which is worse than no answer. The grammatical oddity "if, considers it necessary" is in the enacted text and is not a transcription slip. Sourcing: the current text was read on the Department's Year 2026 edition, the substitution on Finance Act 2016 section 68(b), and the six to three change on footnote 86 to the Year 2021 edition.
Income-tax Act, 1961
s.143(2)
Income-tax Act, 2025
s.270(8)
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 143(2) of the Income-tax Act, 1961 is the notice without which no assessment under section 143(3) can be made. Where a return has been furnished under section 139 or in response to a notice under section 142(1), the Assessing Officer or the prescribed income-tax authority, as the case may be, considering it necessary or expedient to ensure that the assessee has not understated the income, has not computed excessive loss or has not under-paid the tax in any manner, shall serve a notice requiring the assessee on a specified date either to attend the office or to produce evidence in support of the return. The proviso bars service after three months from the end of the financial year in which the return is furnished, and six months for a notice served up to 31 March 2021. Two features repay attention. The sub-section names two possible issuers disjunctively, and the prescribed income-tax authority is prescribed by rule 12E of the Income-tax Rules 1962 as an authority not below the rank of an Income Tax Officer authorised by the Board, with the office named by notification: Notification No. 65/2019 designated the Assistant Commissioner (e-Verification), Delhi and is keyed to returns furnished during the financial year commencing 1 April 2018; Notification No. 79/2020 designated the Assistant or Deputy Commissioner (National e-Assessment Centre), names no financial year and took effect from 13 August 2020; Notification No. 25/2021 designated the Assistant or Deputy Commissioner (NaFAC) from 1 April 2021 and also covers returns under section 148(1). No designation covering returns furnished in financial year 2019-20, or before 13 August 2020 in 2020-21, could be traced, so the list should not be read as a continuous chain, and whether 25/2021 is still the operative designation was not closed against a primary source. The second feature is that the proviso bars SERVICE and not issue, which is the opposite of the rule in section 149 and is often got wrong. The counterpart in the Income-tax Act, 2025 is section 270(8).
What the provision does
Converts a filed return into a scrutiny proceeding and fixes the outer date for doing so. It is the statutory precondition of an assessment under section 143(3), so an assessment framed without it is open to attack; but it does not itself authorise any addition, it does not define the scope of the enquiry, which is set by the reason for selection, and it says nothing about which officer among those competent in the station should issue it. For a notice from 1 April 2021 in a case taken into faceless assessment it is served by the National Faceless Assessment Centre and names no rank, so it tells the reader nothing about who holds the case.
Threshold questions
- When the notice was SERVED, not issued, because the proviso bars service, and in which financial year the return was furnished, because the limit is computed from that
- Which limit applies, six months for a notice served up to 31 March 2021 and three months from 1 April 2021
- Who issued it, by designation, and whether that officer was the Assessing Officer or the prescribed income-tax authority for that class of return on that date
- Whether the notice came from a named officer or from the National Faceless Assessment Centre, because from 1 April 2021 a challenge framed on rank has nothing to attach to and the question becomes who holds the case underneath
- Whether the case was selected for complete or limited scrutiny, and whether the notice says so, because the challenge to the notice on its face and the travelling beyond scope challenge both live there
- Where the selection was limited, whether the additions stay inside the reason recorded for selection
- Whether a notice issued at all, because section 292BB does not cure its complete absence
In practice
The recurring disputes.
Who may issue it, the Assessing Officer or the prescribed authority
The sub-section names both, disjunctively, and the Board has designated a prescribed authority by notification for successive classes of return. The assessee's point is that "as the case may be" is not surplusage: it points to whichever of the two is the right issuer for the case in hand, so once a class of returns has been given to a designated authority, a notice in that class from the jurisdictional officer is not the notice the section contemplates. The Revenue's point is that Parliament preserved two routes in terms, and that the faceless machinery was built on the same assumption: section 144B(1)(iii)(a), as it stood between 1 April 2021 and 31 March 2022, contemplated a notice under section 143(2) issued "by the Assessing Officer or the prescribed income-tax authority, as the case may be", as paragraph 5(1)(iii)(a) of the Faceless Assessment Scheme had done from 17 February 2021. One answer to that is temporal: neither speaks to a notice issued before 2021, and neither is in force now, the Finance Act 2022 having substituted section 144B entire without carrying the clause forward. So on the present text the question has to be decided on section 143(2) and rule 12E alone, and it appears to be open.
Service or issue
The proviso says no notice shall be SERVED after the expiry of the period. Section 149, by contrast, bars the ISSUE of a reassessment notice. The assessee's point is that the words must be given their ordinary meaning, so a notice issued inside the period but served outside it is bad, and the Department's dispatch record rather than the date printed on the notice decides it. The Revenue's answer is section 292BB, and it is a strong one here, because late service is the one objection section 292BB names in terms, in limb (b): an assessee who took part and said nothing until the appeal has lost it. The assessee's reply is the proviso to section 292BB, which disapplies the section entirely where the objection was raised before the assessment was completed, so the whole point turns on when the objection went on the record. What follows from late service should also be worked out before the ground is taken: a notice served out of time cannot support an assessment under section 143(3), but what the Department may then still do, and by when, is a separate question under sections 147 to 151 and section 153.
Whether the notice must state the scope of selection
An argument run with increasing frequency is that a notice which does not state whether the case has been selected for complete or for limited scrutiny is void, and that where the selection was limited an addition outside its scope must go. The Revenue's answer is that the category is communicated separately, so an omission in the body of the notice is an omission in a document and squarely within section 292B; and that where the selection reason concerned the very transaction assessed, nothing travelled beyond anything. Note what the second limb is worth before it is pleaded: where an addition is shown to be outside the scope of a limited selection, what falls is the addition and not the assessment, so it is a quantum ground wearing jurisdictional clothes and belongs in the alternative. The selection reason, and any approval for converting a limited scrutiny into a complete one, are both documents: ask for them in writing at the outset and record the answer.
Which way the officer was wrong
Almost every decision in this line is a case in which the officer who acted was too junior for the returned income. The pattern now commonly run is the reverse, a senior officer taking a small case, and the Revenue's answer is strongest there. The limits exist for the equitable distribution of work; a senior officer has every power the junior officer has and more; no want of competence and no prejudice can be shown; and the Explanation to section 120(1) contemplates in terms a higher authority performing a lower authority's functions. The assessee's answer has to be structural: an allocation that binds in one direction only is not an allocation, so if work has been distributed by income an officer is vested with the cases on his side of the line and not with those on the other, and the Explanation is conditional on a direction of the Board which on these records is never produced. One High Court has dealt with the senior officer pattern, in PCIT v. Mintu Das, and it affirmed the Tribunal on the footing that no substantial question of law arose rather than by deciding the point; no law report citation for it could be traced.
What the omission of the notice costs
The Supreme Court in ACIT v. Hotel Blue Moon held that omission to issue a notice under this sub-section "cannot be a procedural irregularity and the same is not curable", though expressly for the purposes of Chapter XIV-B, and in CIT v. Laxman Das Khandelwal that section 292BB "does not save complete absence of notice" because the section "is not intended to cure complete absence of notice itself". Laxman Das Khandelwal does not use the word jurisdictional and neither judgment considers section 292B, so a submission that the Supreme Court has held this a jurisdictional notice, or has held section 292B inapplicable to it, is asking the authorities for more than they give. The live question on most files is not complete absence but defective issue, and the step from one to the other is the assessee's to make.