Case Law Details
ITO Vs Piyush Tushar Paralikar (ITAT Nagpur)
Summary: The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT), Nagpur, against the order of the Commissioner of Income Tax (Appeals)/NFAC dated 03.06.2024 for Assessment Year 2018-19. The appeal arose from an assessment order passed under Sections 147, 144, and 144B of the Income Tax Act, 1961.
The Revenue challenged the CIT(A)’s decision on several grounds, including the admission of additional evidence, deletion of an addition of Rs. 6,30,000, deletion of an addition of Rs. 1,20,47,620, admission of an additional ground relating to the validity of notice under Section 148, and reliance on the Bombay High Court decision in Hexaware Technologies Ltd. v. ACIT.
The assessee had not filed a return of income for AY 2018-19. Based on information available on the ITBA portal, the Assessing Officer (AO) noticed transactions amounting to Rs. 9,91,00,025 during the relevant year. A notice under Section 148A(b) was issued, but no return or reply was initially furnished.
During reassessment proceedings, information was obtained from ICICI Bank Ltd. and Samco Securities Ltd. The AO found that the assessee had deposited Rs. 64,45,620 in ICICI Bank and Rs. 56,02,000 in Yavatmal Mahila Sahakari Bank Ltd. It was also found that a payment of Rs. 6,30,000 had been made to Samco Securities Ltd. Notices under Sections 143(2) and 142(1) were issued. The assessee subsequently filed a return declaring income of Rs. 9,160, but the return was treated as invalid because it was filed ten months after the due date. The AO completed the reassessment under Section 147 read with Section 144 and determined total income at Rs. 1,26,86,780.
On appeal, the assessee filed detailed submissions before the CIT(A). After considering the submissions, the CIT(A) allowed the appeal and directed deletion of the addition of Rs. 6,30,000 made under Section 68 and the addition of Rs. 1,20,47,620 made under Section 69A.
Before the Tribunal, the Departmental Representative argued that the notice issued by the Jurisdictional Assessing Officer (JAO) was valid because jurisdiction over the assessee vested with that officer and procedural irregularities would not invalidate the proceedings. It was also contended that the assessee had failed to establish the source of cash deposits with proper evidence and that mere claims of retail sales were insufficient without books of account, stock registers, and sales bills. According to the Revenue, the additions made by the AO were justified and the CIT(A)’s order should be set aside.
The assessee, on the other hand, argued that under Section 151A and the E-Assessment of Income Escaping Assessment Scheme, 2022, notices under Section 148 were required to be issued by a Faceless Assessing Officer (FAO). It was submitted that the notice dated 30.03.2022 had been issued by the Jurisdictional Assessing Officer and not by the FAO, rendering the notice and reassessment proceedings void. Reliance was placed on the Bombay High Court decision in Hexaware Technologies Ltd. The assessee also submitted that the cash deposits represented sale proceeds from retail trading of Patanjali products, where transactions were predominantly in cash, and that the payment to Samco Securities Ltd. had been made through banking channels. It was argued that the CIT(A) had rightly deleted both additions.
After considering the rival submissions, the Tribunal observed that the issue relating to the judgment in Hexaware Technologies Ltd. was presently under consideration before the Supreme Court along with other connected matters. In such circumstances, the Tribunal held that it would not be appropriate to grant relief solely on that ground.
Accordingly, the ITAT remitted the matter back to the CIT(A) for fresh adjudication. The Tribunal directed the CIT(A) to examine the matter afresh, take a holistic view, consider the merits of the case, and pass a reasoned and speaking order in accordance with law.
As a result, the Revenue’s appeal was allowed for statistical purposes, and the matter was restored to the CIT(A) for reconsideration.
FULL TEXT OF THE ORDER OF ITAT NAGPUR
This appeal by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi, dated 03/06/2024 passed under section 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of assessment order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act dated 23.03.2023, for the Assessment Year 2018-19.
2. The Revenue has raised the following grounds of appeal:
“1. The Ld. CIT(A) has erred in admitting additional evidence furnished during appellate proceedings without following the due procedure laid down in rule 46A of the Income Tax Rules, 1962.
2. The Ld. CIT(A) has erred in deleting the addition of Rs. 6,30,000/- without ascertaining the nature and source of cash deposited in the Bank account of the assessee.
3. The Ld. CIT(A) has erred in deleting the addition of Rs. 1,20,47,620/- only on the basis of business activities of earlier years of the assessee and in absence of documentary evidence regarding generation of cash by the assessee.
4. Any other ground that may be taken at the time of hearing.”
Revenue has raised additional grounds of appeal:-
“1. On the facts and circumstances of the case, the Ld. CIT(A) erred in admitting the additional ground challenging validity of notice u/s 148 without giving opportunity to the AO or calling for report on admissibility of the additional ground.
2. On the facts and circumstances of the case; the Ld. CIT(A) erred in following the decisions of Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. Vs. ACIT, Circle-15(1)(2) [2024] 162 taxmann.com 225, even though the matter had not reached finality.”
3. Brief facts of the case are that assessee is an individual and the return of income for the AY 2018-19 was not filed. As per the information flagged in the ITBA portal, the Assessing Officer (AO) noticed that the assessee had carried out transactions to the tune of Rs. 9,91,00,025/- during the year under consideration. A notice u/s. 148A(b) was issued and served upon the assessee, but no return of income nor any reply furnished. During the course of assessment proceedings, information was collected from ICICI Bank Ltd. and M/s. Samco Securities Ltd. On verification of the details, it was found that assessee had made deposits to the tune of Rs. 64,45,620/- with ICICI Bank and Rs. 56,02,000/- with Yavatmal Mahila Sahakari Bank Ltd. and a payment of Rs. 6,30,000/- was made to M/s. Samco Securities Ltd. Statutory notices u/s. 143(2)/142(1) of the Act were issued. In compliance, assessee filed return of income showing total income of Rs. 9,160/-, the same was treated as invalid because return was filed after 10 months from the due date of filing of return. Ld. AO completed the assessment u/s. 147 r.w.s. 144 of the Act assessing the total income at Rs. 1,26,86,780/-
4. Being aggrieved with the order of Ld. AO, assessee preferred appeal before the Ld. CIT(A). Before the Ld. CIT(A) assessee filed detailed submissions and after considering the submissions, Ld. CIT(A) allowed the appeal of the assessee and directed the Ld. AO to delete the addition of Rs. 6,30,000/-made u/s. 68 of the Act and also the addition of Rs. 1,20,47,620/- made u/s. 69A of the Act. Now, the Revenue is in appeal before this Tribunal.
5. Ld. Departmental Representation (DR) has submitted that notice issued by the Jurisdictional Assessing Officer (JAO) is valid as the jurisdiction over the assessee lies with JAO and procedural irregularities, if any, do not invalidate the proceedings. He further submitted that reliance placed by the assessee on the decision of Jurisdictional High Court in the case of Hexaware Technologies Ltd. Vs ACIT [2024] 162 taxmann.com 225 is misplaced as the issue is pending before the Hon’ble Supreme Court. Ld. DR further submitted that assessee failed to substantiate the source of cash deposits with proper evidence. Mere claim of retail sales is insufficient without maintaining proper books of accounts, stock register and sales bills. He further submitted that assessee failed to establish source of funds and the Ld. AO rightly treated it as unexplained income. Therefore, the order of Ld. AO be restored and CIT(A)’s order be set aside.
6. On the other hand, learned counsel for the assessee submitted that as per section 151A of the Act and the E-Assessment of Income Escaping Assessment Scheme, 2022, all notices u/s 148 are mandatorily required to be issued through the Faceless Assessing Officer (FAO). The use of the word “shall” makes the provision mandatory. He submitted that in the present case, notice u/s 148 dated 30.03.2022 has been issued by the JAO and not by Faceless Assessing Officer (FAO). Therefore, notice is void ab initio and the entire reassessment proceedings are liable to be quashed. The Hon’ble Bombay High Court in Hexaware Technologies Ltd. (supra), wherein it has been held that notice u/s 148 can be issued only by FAO. He further submitted that the facts of the present case are identical; hence, the issue is squarely covered by the decision of Hon’ble Jurisdictional High Court. He further submitted that Revenue has not raised any specific ground challenging the jurisdictional defect, therefore, the relief granted by Ld.CIT(A) on technical ground has attained finality. On merits of the case, he submitted that assessee is engaged in retail trading of Patanjali products, where sales are predominantly in cash. Cash deposits represent sale proceeds duly recorded and deposited in bank. No adverse material has been brought by Ld. AO, hence, addition u/s 69A is unjustified. He further submitted that payments were made through banking channel to M/s. Samco Securities Ltd. All bank statements were available with the Ld. AO and the addition u/s 68 is factually incorrect and rightly deleted by the CIT(A). Therefore, the order passed by the Ld. CIT(A) be upheld and the Revenue’s appeal be dismissed.
7. We have heard rival submissions of both the parties and perused the material placed before us. At present, the Hon’ble Apex Court is seized of the matter concerning the judgment in the case of Hexaware Technologies Ltd. (supra) along with other connected petitions. In such circumstances, it would not be judicious to grant relief to the assessee on this ground alone. Accordingly, we deem it appropriate to remit the issue to the file of the Ld. CIT(A) to adjudicate the matter afresh by taking a holistic view and by passing a reasoned and speaking order in accordance with law, after duly considering the merits of the case. The grounds raised by the Department are allowed for statistical purposes.
8. In the result, appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced on 10.04.2026 under Rule 34 of Income Tax (Appellate Tribunal) rules 1963
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