Mohammed Aijaz Shaikh Vs ITO (ITAT, Jodhpur Bench)
A Later Hearing Cannot Cure an Earlier Jurisdictional Hole—ITAT Sends Reassessment, Donation & Cash Deposits Back for a Speaking Order u/s 250(6)
Reassessment Brings Two Additions
The Assessee, a retired employee of Hindustan Zinc Ltd., filed his original return declaring income of ₹16,29,460, later revised to ₹16,35,490.
Notice u/s 148A(b) was issued on 29.03.2023. After receiving the Assessee’s reply, the AO passed an order u/s 148A(d) & issued notice u/s 148 on 10.04.2023.
The reopening arose from information concerning a political donation of ₹3 lakh made to Rashtriya Samajwadi Party (Secular). The information allegedly emerged from searches conducted against certain Registered Unrecognised Political Parties & intermediary entities in Ahmedabad.
During reassessment, the AO also noticed cash deposits aggregating to ₹8.68 lakh in the Assessee’s SBI account.
Donation Disallowed & Cash Deposits Added
For the political donation, the Assessee furnished the donation receipt & bank statement showing payment through banking channels. The AO nevertheless held that the genuineness of the donation had not been established & disallowed deduction u/s 80GGC.
Regarding cash deposits, the Assessee explained that the amounts were deposited by his son out of income earned over the years. Copies of the son’s returns for AYs 2017-18 & 2018-19, certain bank records & subsequently an affidavit were produced.
The AO rejected the explanation because the son’s complete bank statement was not furnished & his creditworthiness was allegedly unproved. The sum of ₹8.68 lakh was added as unexplained money u/s 69A.
The reassessment consequently determined total income at ₹28,03,490.
CIT(A) Rejects Everything Together
Before the CIT(A), the Assessee challenged the validity of proceedings u/ss 148A & 148, the authority of the jurisdictional AO to issue the notice, the disallowance u/s 80GGC & the addition u/s 69A.
He also requested cross-examination of the political party’s representatives & relied upon his son’s affidavit as additional evidence explaining the cash deposits.
The CIT(A) rejected the jurisdictional objections by observing that adequate opportunities had been provided during assessment. The objection concerning issuance of notice by the jurisdictional AO was also dismissed.
The political-donation disallowance was sustained by relying upon the Investigation Wing’s general findings. Cross-examination was refused on the reasoning that it formed part of procedural justice & was not invariably required by natural justice.
The son’s affidavit was branded self-serving & his creditworthiness was held unproved. Both additions were therefore confirmed.
A Subsequent Opportunity Does Not Answer an Anterior Defect
The ITAT found that the Assessee had raised distinct jurisdictional challenges concerning compliance u/s 148A, validity of notice u/s 148, time granted for filing the return & the authority competent to issue the reassessment notice.
The CIT(A) had answered these objections substantially by referring to opportunities granted during the later assessment proceedings. According to the Tribunal, this reasoning missed the point.
An opportunity granted during assessment cannot automatically cure or answer an objection concerning the legality of anterior jurisdictional proceedings u/ss 148A & 148. Each objection had to be identified & decided independently by examining the statutory provisions, applicable notifications & law prevailing on the date of notice.
Divergent Views Are No Excuse for No Decision
On whether the jurisdictional AO could issue notice u/s 148, the CIT(A) noticed divergent judicial views & observed that the eventual Supreme Court decision would bind the parties. However, he still dismissed the ground without recording a conclusive finding.
The Tribunal held that merely noting conflicting decisions did not discharge the appellate obligation. The CIT(A) was required to decide the ground according to the statutory scheme & binding legal position existing on the date of his order. An appellate authority cannot place a ground in judicial cold storage while simultaneously dismissing it.
Cross-Examination Cannot Be Rejected by Label
Regarding deduction u/s 80GGC, the Assessee relied upon receipts, banking transactions & the recipient political party’s registration. The disallowance rested on general investigation findings, but the appellate order did not identify any material specifically connecting the Assessee’s contribution with an accommodation-entry arrangement or showing that the donation was returned.
The request for cross-examination could not be rejected merely by describing it as procedural justice. The CIT(A) first had to ascertain whether any third-party statement formed the basis of the adverse conclusion. If it did, the requirement of cross-examination had to be examined in accordance with law & principles of fair hearing.
Affidavit Required Rule 46A Treatment
For the cash deposits, the Assessee produced his son’s affidavit, income-tax returns & banking material. However, the CIT(A) neither clearly admitted nor rejected this additional evidence u/s Rule 46A.
If admitted, the AO had to be allowed to examine it & furnish a remand report. If rejected, the CIT(A) was required to record reasons. Simply calling an affidavit self-serving without transaction-wise verification did not constitute proper appellate adjudication.
Section 250(6) Demands Reasons
Section 250(6) requires the CIT(A)’s order to state the points for determination, decisions thereon & reasons for those decisions. This obligation becomes more significant where an appeal combines jurisdictional objections, third-party evidence, cross-examination requests & additional documentary evidence.
The ITAT therefore set aside the entire appellate order & restored all grounds to the CIT(A) for fresh adjudication. The Assessee was directed to furnish relevant evidence & cooperate fully. The Tribunal expressly refrained from expressing any view on merits.
The appeal was allowed for statistical purposes.
A CIT(A) cannot cure an earlier jurisdictional objection by pointing to a later hearing, dismiss a ground while waiting for future law, or reject cross-examination merely by calling it procedural. Section 250(6) demands a speaking order-not a speaking detour.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, JODHPUR BENCH
This appeal by the assessee is directed against the order dated 12.09.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as “the CIT(A)”], under section 250 of the Income-tax Act, 1961[hereinafter referred to as “the Act”]4, for the assessment year 2019-20. The impugned appellate order arises from the assessment order dated 07.02.2025 passed under section 147 read with section 144B of the Act.
2. The assessee has raised the following grounds of appeal:
1. The order of the Ld. Commissioner of Income Tax(Appeal)(Ld. CIT(A)), National Faceless Appeal Centre in so far as it is prejudicial to the appellant is opposed to the law, facts and circumstances of the case.
2. It is respectfully submitted that the Ld. CIT(A) has erred in law and acted prejudicially to the interests of the Appellant by upholding the Ld. AO’s denial of the opportunity of being heard as mandated under Section 148A and by overlooking the statutory time period prescribed under Section 148. The Ld. CIT(A) has failed to appreciate the significance of the principles of natural justice and the legislative intent behind the insertion of these provisions in the Income-tax Act, 1961. Accordingly, the dismissal of Grounds No. 2, 3, and 4 of the appeal is illegal, and the impugned order deserves to be quashed.
3. It is respectfully submitted that the Ld. CIT(A) has failed to consider the grounds raised by the Appellant in Grounds No. 12, 13, and 14. It is well-settled law that the Ld. CIT(A) is obligated to examine all grounds raised in an appeal and provide reasoned decisions for any dismissal thereof.
4. It is respectfully submitted that the Ld. CIT(A) has erred in law in dismissing Ground No. 6 of the appeal. Notification No. 18/2022 clearly provides that in cases of search and seizure, the assessment shall not be conducted by the National Faceless Assessment Centre but by the Jurisdictional Assessing Officer. Accordingly, the decision of the Ld. CIT(A) in this regard is unsustainable and without merit.
5. It is respectfully submitted that the Ld. CIT(A) has erred in law by erroneously upholding the AO’s findings and the allegations made by the Investigation Wing concerning the Appellant’s claim for donation under Section 80GGC, despite the evidence and submissions furnished by the Appellant. The Ld. CIT(A) failed to independently verify the facts, which was essential for determining the genuineness of the donation, and summarily dismissed Ground No. 7 of the appeal. Such failure to undertake an independent examination amounts to a violation of the principles of natural justice.
6. It is respectfully submitted that the Appellant has also donates towards other charitable organisation in the past and has submitted the proof of such donation during the Assessment proceedings. However, The Ld. AO rejected the same stating that the Appellant has not submitted any new facts to prove genuineness of donation of Rs. 3,00,000/- in the assessment order. The Appellant in order to seek for justice submit the same facts before The Ld. CIT(A) as a written submission to the ground no. 7 to the grounds of Appeal raised before the Ld. CIT(A). However, the Ld. CIT(A) also failed to consider the same and dismissed the said ground. Thus, the Ld AO. And Ld. CIT(A) have acted against the interest of the prejudicial. The Appellant once again submits the receipt of donation of Rs. 10,00,000/- paid to Daiee Halima Maternity and general hospital Trust as Annexure A.
7. It is respectfully submitted that the Ld. CIT(A) has failed to consider the grounds raised by the Appellant in Grounds No. 12, 13, and 14. It is well-settled law that the Ld. CIT(A) is obligated to examine all grounds raised in an appeal and provide reasoned decisions for any dismissal thereof.
8. It is respectfully submitted that the Ld. CIT(A) has erred in law and on facts by denying the Appellant’s request for examination/cross-examination in Grounds No. 8 and 9. The Ld. CIT(A) arbitrarily rejected the same on the ground that it pertains only to procedural justice and, therefore, need not be provided. The Ld. CIT(A) failed to appreciate the importance of examining the facts, particularly as the Appellant has furnished documentary evidence demonstrating that the donation was made through proper banking channels to the Rashtriya Samajvadi Party and that the said donation was never returned. Furthermore, the concerned official from the political party has neither stated that the donation was returned nor is there any evidence of such a transaction. Consequently, the conclusions drawn by the Ld. AO and upheld by the Ld. CIT(A) are manifestly prejudicial to the interests of the Appellant.
9. It is respectfully submitted that the Ld. CIT(A) erred in law by rejecting the affidavit filed by the Appellant’s son, which affirmed that the Appellant made cash deposits into his father’s account. An affidavit is a formal sworn statement and must be treated as valid evidence unless there exists compelling reason to question its authenticity. The Appellant respectfully submits that the Ld. CIT(A) ought to have considered this affidavit in conjunction with other supporting documents, rather than dismissing it without providing sufficient justification.
10. For amongst the other grounds that may be raised and evidence adduced at the time of. hearing it is prayed that justice be done to the appellant by quashing the impugned order or modifying the impugned order of appeal.
3. Briefly stated, the assessee is an individual and a retired employee of Hindustan Zinc Limited. The record shows that the assessee originally filed his return of income on 08.08.2019 declaring a total income of Rs.16,29,460/-. A revised return was filed on 26.08.2019 declaring a total income of Rs.16,35,490/-.As recorded in the impugned order, a notice under section 148A(b) of the Act was issued on 29.03.2023, in response to which the assessee furnished his reply on 02.04.2023. An order under section 148A(d) was thereafter passed on 10.04.2023 and notice under section 148 was issued on the same date. In response thereto, the assessee filed his return of income on 16.06.2023 declaring a total income of Rs.16,35,490/
4. The reassessment was initiated on the basis of information concerning a donation of Rs.3,00,000/- made by the assessee to Rashtriya Samajwadi Party (Secular) during the financial year 2018-19. The information was stated to have emanated from search proceedings conducted in the cases of certain registered unrecognised political parties and intermediary entities at Ahmedabad. During the reassessment proceedings, the Assessing Officer also noticed aggregate cash deposits of Rs.8,68,000/- in the assessee’s State Bank of India account.
5. In respect of the donation, the assessee furnished the donation receipts and the relevant bank statement and contended that the donation had been made through banking channels. The Assessing Officer, however, concluded that the assessee had failed to establish the genuineness of the donation. The deduction of Rs.3,00,000/- claimed under section 80GGC of the Act was consequently disallowed.
6. As regards the cash deposits of Rs.8,68,000/-, the assessee explained that the amounts had been deposited by his son out of income earned by him over the years. The assessee also produced copies of the returns of income of his son for assessment years 2017-18 and 2018-19 and certain bank records. The Assessing Officer was not satisfied with the explanation, principally on the ground that the complete bank statement of the assessee’s son had not been furnished and that his creditworthiness had not been established. The amount of Rs.8,68,000/- was accordingly treated as unexplained money under section 69A of the Act. The Assessing Officer thus determined the total income at Rs.28,03,490/-.
7. Before the learned CIT(A), the assessee challenged the validity of the reassessment proceedings as well as both the additions on merits. The assessee also sought an opportunity to cross-examine the representatives of the political party and filed an affidavit of his son in support of the explanation concerning the cash deposits. The learned CIT(A) dismissed the objections concerning the proceedings under sections 148A and 148 by observing that adequate opportunities had been provided during the assessment proceedings. The objection concerning issuance of notice by the Jurisdictional Assessing Officer was also rejected. On the claim under section 80GGC, the learned CIT(A) relied upon the findings of the Investigation Wing and the conclusions recorded by the Assessing Officer. The request for cross-examination was rejected by observing that formal cross-examination was part of procedural justice and not an invariable requirement of natural justice. The disallowance of Rs.3,00,000/- was accordingly confirmed as regards the cash deposits, the learned CIT(A) held that the creditworthiness of the assessee’s son had not been established. The affidavit filed by the son was regarded as a self-serving document unsupported by sufficient documentary evidence. The addition of Rs.8,68,000/- under section 69A was, therefore, confirmed and the appeal was dismissed.
8. Before us, the learned Authorised Representative reiterated the contentions raised in the grounds of appeal. It was submitted that the distinct jurisdictional objections raised by the assessee had not been adjudicated by the learned CIT(A) after considering their precise legal basis. On merits, it was submitted that the documentary evidence concerning the donation and the request for cross-examination had not been properly considered. It was further submitted that the affidavit of the assessee’s son and the supporting material concerning the source of the cash deposits required proper examination. The learned AR accordingly prayed that the impugned order be set aside and the matter be restored to the learned CIT(A) for fresh adjudication.
9. The learned Departmental Representative relied upon the assessment order and the impugned appellate order. However, considering the nature of the grounds and the material requiring examination, the learned DR raised no objection to restoration of the matter to the learned CIT(A) for deciding the appeal afresh.
10. We have considered the rival submissions and carefully perused the material available on record. Although the learned DR has raised no objection to restoration, the appeal cannot be restored merely on the basis of consent of the parties. The necessity and scope of remand are required to be determined on an independent examination of the impugned order and the issues arising from the record.
11. The assessee had raised separate legal objections concerning the proceedings under section 148A, the validity of the notice under section 148, the period allowed for furnishing the return, and the authority competent to issue the reassessment notice. The learned CIT(A), while disposing of these grounds, referred substantially to the opportunities provided during the subsequent assessment proceedings. However, an opportunity granted during the assessment proceedings does not, by itself, answer an objection concerning compliance with the requirements governing the anterior proceedings under sections 148A and 148. Each jurisdictional objection was required to be identified and adjudicated independently with reference to the statutory provisions, the relevant notifications and the law applicable on the date of issuance of the notice.
12. On the question as to whether the notice under section 148 could have been issued by the Jurisdictional Assessing Officer, the learned CIT(A) noticed the existence of divergent judicial views and observed that the eventual decision of the Hon’ble Supreme Court would be binding upon the parties. The ground was nevertheless dismissed without recording a conclusive finding based upon the law applicable to the assessee’s case. Such an observation did not dispense with the obligation to adjudicate the ground on the basis of the statutory scheme and the binding legal position prevailing on the date of the appellate order.
13. As regards the deduction under section 80GGC, the assessee had relied upon the donation receipts, the banking transactions and the asserted registration and existence of the recipient political party. The disallowance was sustained principally by reference to the general findings of the Investigation Wing concerning the alleged activities of the political party. The impugned order does not clearly identify the particular material connecting the assessee’s transaction with the alleged accommodation-entry arrangement, the material furnished to the assessee, or the evidence establishing that the amount donated by the assessee had been returned to him in any form.
14. The assessee had also requested an opportunity to cross-examine the representatives of the political party. The necessity of cross-examination depends upon the nature of the material proposed to be used and the extent to which any third-party statement constitutes the basis of the adverse conclusion. The request could not have been rejected merely by characterising cross-examination as a matter of procedural justice. The learned CIT(A) was required first to ascertain whether any third-party statement or other adverse material was being relied upon and thereafter decide the request in accordance with law and the requirements of a fair hearing.
15. In relation to the cash deposits of Rs.8,68,000/-, the assessee had furnished an affidavit of his son as additional evidence and relied upon the returns of income, bank entries and the explanation concerning the movement of funds between the respective accounts. The learned CIT(A) rejected the affidavit as a self-serving document. However, the impugned order does not record a clear decision on the admission of the additional evidence under Rule 46A of the Income-tax Rules, 1962, nor does it show that the affidavit and the supporting banking transactions were subjected to a transaction-wise verification. If the additional evidence was admitted, the Assessing Officer was required to be afforded an opportunity to examine it and submit a remand report. If its admission was declined, reasons for such refusal were required to be recorded.
16. Section 250(6) requires the first appellate order to state the points for determination, the decision thereon and the reasons for the decision. This statutory requirement assumes greater significance where the appeal contains jurisdictional challenges as well as factual disputes involving third-party material, additional evidence and banking transactions. In the present case, these issues require a fresh and comprehensive examination at the first appellate stage. We are, therefore, satisfied that restoration is necessary for effective adjudication of the entire appeal.
17. Accordingly, without expressing any opinion on the merits of the jurisdictional objections or the additions, we set aside the impugned order dated 12.09.2025 and restore all the grounds raised by the assessee to the file of the learned CIT(A) for adjudication afresh.
18. The assessee shall furnish the relevant documentary evidence and shall extend due cooperation in the fresh appellate proceedings. The learned CIT(A) shall decide the appeal in accordance with law without being influenced by any observation in this order, since our observations are confined solely to the necessity of fresh adjudication.
19. In view of the restoration of the entire appeal, all the substantive grounds are allowed for statistical purposes. Ground Nos.1 and 10, being general in nature, require no separate adjudication.
20. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 03.09.2026.
