AO Cannot Reopen Completed Income Tax Assessment After Modified Return u/s 170A: Bombay HC Quashes Notices [Read Order]

In a recent ruling, the Bombay High Court held that the Assessing Officer cannot reopen a completed assessment after a modified return is filed under Section 170A of the Income Tax Act, 1961 and quashed notices issued under Sections 143(2) and 142(1) which sought to undertake a fresh scrutiny beyond the limited scope permitted under law.

Technoforce Solutions (I) Pvt. Ltd., the petitioner, filed a writ petition challenging the notice issued under Section 143(2) and the notice dated 21 January 2026 issued under Section 142(1) for Assessment Year 2023-24.

The petitioner had originally filed its return of income on 27 November 2023, which was accepted under Section 143(1) without any adjustments. Subsequently, pursuant to an amalgamation approved by the NCLT with effect from 1 April 2021, the petitioner filed a modified return on 23 January 2025 under Section 170A of the Income Tax Act.

The petitioner’s counsel argued that the assessment for the relevant year was already completed when the modified return was filed, as no notice under Section 143(2) had been issued within the prescribed time and the limitation period had expired. The counsel argued that in such a situation, Section 170A(2)(a) applies, under which the Assessing Officer can only modify the income to give effect to the amalgamation and cannot undertake a fresh assessment.

The department argued that the filing of a modified return permits examination of the return and that the notices were issued as part of the assessment process. It was argued that the provisions of Section 170A allow the Assessing Officer to verify the modified return and that the notices were within the statutory framework.

The Division Bench of Justices B. P. Colabawalla and Firdosh P. Pooniwalla observed that Section 170A clearly distinguishes between cases where the assessment is completed and where it is pending on the date of filing of the modified return. The court explained that where the assessment is already completed, the Assessing Officer is only required to modify the total income in accordance with the order of amalgamation and the modified return.

The court further observed that there is no scope to issue notices under Sections 143(2) and 142(1) for conducting a fresh or de novo assessment in such cases. It pointed out that the impugned notices were not restricted to giving effect to the amalgamation but sought to reopen the entire assessment which is not permissible under Section 170A(2)(a).

The court held that the notices were without jurisdiction and unsustainable in law. It quashed the notices and also set aside the assessment order passed during the pendency of the petition. The Assessing Officer was directed to pass a fresh order only to modify the total income in accordance with the amalgamation and the modified return. The writ petition was allowed.

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