Gharthoon Agricultural Services Society Vs ITO (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal disposed of four appeals filed by the assessee for Assessment Year 2015-16. ITA No.925/CHD/2025 arose from the quantum assessment, ITA No.927/CHD/2025 from penalty proceedings under Section 271(1)(b), ITA No.926/CHD/2025 from penalty proceedings under Section 271(1)(c), and ITA No.928/CHD/2025 from penalty proceedings under Section 271F.
In the quantum appeal, the Assessing Officer had issued a notice under Section 148 on 01.04.2022 for AY 2015-16. The assessee did not appear in response to the notice and an ex-parte assessment order was subsequently passed on 05.01.2024 under Sections 147, 144 and 144B. The assessee’s appeal before the CIT(A) was dismissed because it was filed 120 days late. Although the assessee sought condonation of delay, the CIT(A) declined to condone it.
Before the Tribunal, the assessee relied upon the Supreme Court’s decision in Union of India Vs Rajeev Bansal, reported in 167 taxmann.com 70. The assessee submitted that, for AY 2015-16, a notice under Section 148 could not have been issued with the benefit of TOLA after 01.04.2021. The assessee also relied upon an earlier order of the same Chandigarh Bench in ITA No.505/CHD/2024, where reopening for AY 2015-16 pursuant to a notice dated 28.07.2022 had been quashed as being without jurisdiction.
The Revenue opposed the appeal on the ground that the assessee had neither appeared before the AO nor furnished details and had also failed to file the appeal before the CIT(A) within the prescribed time.
The Tribunal held that the notice under Section 148 issued by the AO on 01.04.2022 was itself without jurisdiction. It further held that the CIT(A) ought to have appreciated this position and condoned the delay attributable to the assessee’s bona fide error. The Tribunal observed that an illegality could not be legalised on account of a minor irregularity on the assessee’s part. It therefore condoned the delay in filing the appeal before the CIT(A).
The Tribunal considered whether the matter should be sent back to the CIT(A) for adjudication on merits after condonation of delay. It declined to do so, observing that this would unnecessarily multiply litigation. Once the assumption of jurisdiction by the AO was found invalid and the action was time-barred, there was no need to relegate the matter to the CIT(A).
After examining the copy of the notice available in the Paper Book and the facts recorded by the AO in paragraph 1.3 of the assessment order, the Tribunal concluded that the notice issued on 01.04.2022 was without jurisdiction and that no assessment proceeding could validly take place pursuant to the time-barred notice. The assessment order was consequently quashed and ITA No.925/CHD/2025 was allowed.
The Tribunal thereafter dealt with ITA No.927/CHD/2025 concerning penalty under Section 271(1)(b). The penalty had been imposed for non-compliance with a statutory notice under Section 142(1). Since the assessment order itself had been quashed and the reopening notice was without jurisdiction, the Tribunal held that no notice was required to be complied with by the assessee. The penalty was therefore quashed and the appeal was allowed.
ITA No.926/CHD/2025 concerned penalty under Section 271(1)(c) for concealment of income. The Tribunal again condoned the 138-day delay in filing the appeal before the CIT(A). Since the assessment order had already been quashed and there was no income assessable in the hands of the assessee, the Tribunal held that no penalty under Section 271(1)(c) was imposable. The penalty was consequently quashed and the appeal was allowed.
ITA No.928/CHD/2025 concerned penalty of Rs.5,000 imposed under Section 271F for non-filing of the return within the due date. The Tribunal condoned the 138-day delay in filing the appeal before the CIT(A), following its approach in the quantum appeal. However, it found that the assessee had no plausible explanation for not filing the return within time. The appeal against the Section 271F penalty was therefore dismissed.
Accordingly, ITA Nos.925, 926 and 927/CHD/2025 were allowed, whereas ITA No.928/CHD/2025 was dismissed.
Cases Discussed
- Union of India Vs Rajeev Bansal, 167 taxmann.com 70.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present four appeals are directed at the instance of the assessee against separate orders of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 01.07.2025 passed in assessment year 2015-16.
2. ITA No.925/CHD/2025 emerges out of a quantum proceeding against an assessment order dated 05.01.2024 passed u/s 147 read withSection 144/144B of the Income Tax Act, ITA No. 927/CHD/2025 emerges out of a penalty proceeding u/s 271(1)(b) and ITA No.926/CHD/2025 emerges out from a penalty proceeding u/s 271(1)(c) of the Income Tax Act, whereas ITA No.928/CHD/2025 emerges out from penalty proceeding u/s271F of the Income Tax Act.
3. First, we take the quantum appeal. The brief facts of the case are that a notice u/s 148 of the Income Tax Act was issued on 01.04.2022 in assessment year 2015-16. The assessee did not appear in response to the notice issued by the AO, accordingly, an ex-parte assessment order was passed on 05.01.2024. The copy of this notice u/s 148 is available on page No. 36 of the Paper Book.
4. Dissatisfied with the assessment order, assessee carried the matter in appeal before the ld.CIT (Appeals) who has dismissed the appeal on the ground that it was time barred by 120 days. The assessee has filed an application for condonation of delay but ld.CIT (Appeals) did not condone the delay.
5. Before us, ld. counsel for the assessee, at the very outset submitted that Hon’ble Supreme Court in the case of Union of India Vs Rajeev Bansalreported in 167 taxmann.com 70 has held that notice u/s 148 in assessment year 2015-16 could have not been issued with the help of TOLA after 01.04.2021, rather Revenue has conceded before the Hon’ble Supreme Court that such notices would be dropped as they will not fall within the legal jurisdiction of time limit prescribed under TOLA. He placed on record copy of an order passed by ITAT Chandigarh in ITA No. 505/CHD/2024. In this case, both of us have quashed the re-opening of an assessment in assessment year 2015-16 on the ground that notice u/s 148 was issued on 28.07.2022. It was issued after 01.04.2021 and as per the judgement of Hon’ble Supreme Court in the case of Rajeev Bansal (supra), this notice is without jurisdiction. 5.1 Ld. DR, on the other hand submitted that assessee did not appear before the AO and did not submit any detail before the AO. It did not file its appeal well in time before the CIT (Appeals), hence, merit cannot be entertained.
6. We have duly considered the rival contentions and gone through the record carefully. The very notice issued u/s 148 of the Income Tax Act by the AO on 01.04.2022 is without jurisdiction. The ld.CIT (Appeals) ought to have appreciated this fact and in this situation ought to have condoned the delay, if any, happened on account of bonafide error of the assessee. We cannot legalize the illegality on account of minor irregularity, if any, at the end of the assessee. Therefore, we condone the delay in filing the appeal before the CIT (Appeals). The one angle to look to the situation could be to set aside the issues to the file of CIT (Appeals) for fresh adjudication after condonation of delay because CIT (Appeals) has not adjudicated the issue on merit but that would unnecessarily multiply the litigation. Once it is observed that assumption of jurisdiction by the AO is not valid and his action is time barred, then there is no need to relegate the issues to the file of CIT (Appeals) and enhance the multiplicity of the litigation. Accordingly, following the judgement of Hon’ble Supreme Court and looking to the copy of notice available on page No. 36 of the Paper Book as well as the facts mentioned by the AO in paragraph No. 1.3 of the assessment order, we observe that notice issued on 01.04.2022 is without jurisdiction, hence no assessment proceeding could have taken place on this time barred notice. Accordingly, we quash the assessment order and allow the appeal of the assessee.
7. Now we take ITA No. 927/CHD/2025. The appeal is time barred by 138 days before the ld.CIT (Appeals). Since we have condoned the delay in filing appeal before CIT (Appeals) in the quantum appeal, i.e. ITA 925/CHD/2025, therefore, following our finding in that appeal, we condone the delay in the present appeal also.
8. As observed earlier, this appeal arises out of a penalty proceedings initiated u/s 271(1)(b) of the Income Tax Act. In other words, penalty has been levied by the AO on account of non compliance of the statutory notice u/s 142(1) of the Act. Since we have quashed the assessment order, therefore, it is to be construed that no notice was required to be complied with by the assessee. The simple reason for this is that notice issued for re-opening of the assessment was without jurisdiction, as held above. Accordingly, we allow this appeal and quash the penalty imposed upon the assessee.
9. In the result, appeal is allowed.
10. This appeal emerges out from levy of penalty u/s 271(1)(c) of the Income Tax Act on account of concealment of income.
11. The appeal is time barred by 138 days before the ld.CIT (Appeals). Since we have condoned the delay in filing appeal before CIT (Appeals) in the quantum appeal, i.e. ITA 925/CHD/2025, therefore, following our finding in that appeal, we condone the delay in the present appeal also.
12. There is no income assessable in the hands of the assessee. We have already quashed the assessment order. Consequently, no penalty is imposable upon the assessee u/s 271(1)(c) of the Act. Accordingly, we allow this appeal of the assessee and quash levy of penalty imposed u/s 271(1)(c) of the Income Tax Act.
13. In the result, appeal is allowed. ITA No. 928/CHD/2025
14. This appeal is directed at the instance of the assessee against the order of ld.CIT (Appeals) dated 01.07.2025 in assessment year 2015-16. It arises from a penalty proceeding u/s 271F of the Income Tax Act. The AO has imposed a penalty of Rs.5000/- on account of non-filing of the return within due date. This order of the penalty dated 19.06.2024 has been challenged by the assessee before the ld.CIT (Appeals) which has been upheld by the First Appellate Authority by not condoning the delay in filing the appeal.
15. We have condoned similar delay in the quantum appeal, therefore, following our observation in the quantum appeal, we condone the delay in filing the appeal against the penalty order before the CIT (Appeals). However, we find that there is no plausible explanation with the assessee for not filing the return well in time. Accordingly, we do not find any merit in this appeal. It is dismissed.
16. In the result, ITA Nos. 925, 926 and 927/CHD /2025 are allowed whereas ITA No.928/CHD/2025 is dismissed.
Order pronounced on 13t h November,2025.
