Nihal Projects Vs ITO (ITAT Rajkot)
The appeal concerned the assessee’s challenge to an order dated 17 October 2024 passed by the CIT(A) for AY 2017-18, upholding various additions and disallowances under sections 43B, 2(24)(x) r.w.s. 36(1)(va), 68, and on account of interest, differences in receipts, and unexplained cash deposits. The assessee also contested the application of section 115BBE, initiation of penalty proceedings, and charging of interest under sections 234A to 234D. In addition, an additional legal ground was raised contending that the notice issued under section 143(2) on 23 August 2018 violated CBDT Instruction F.No.225/157/2017/ITA-II dated 23 June 2017.
The Tribunal admitted the additional ground, noting that it was legal in nature, went to the root of the matter, and all relevant facts were already on record. Reliance was placed on judicial precedents to support admission of such legal issues at the appellate stage. The facts showed that the assessee, engaged in excavation and civil contract work, filed the return on 3 November 2017 and received scrutiny notices under section 143(2) dated 17 August 2018 and 23 August 2018. The final assessment under section 143(3) dated 24 December 2019 made several additions.
The assessee argued that the scrutiny notices failed to specify whether the case was selected for limited scrutiny, complete scrutiny, or compulsory manual scrutiny, contrary to the prescribed formats in the CBDT circular. Copies of the notices and circular were placed on record. The assessee relied on decisions of ITAT Kolkata, ITAT Delhi, and the Calcutta High Court to assert that omission to follow the mandatory formats rendered the notice invalid.
