Alok Kumar Rungta Vs National Faceless Appeal Centre (ITAT Lucknow)
ITAT Lucknow Upholds Reopening Pursuant to CIT(A) Direction u/s 150, Deletes Unsecured Loan Addition
The Lucknow Bench (SMC) of the ITAT partly allowed the assessee’s appeal for AY 2014-15. The Tribunal upheld the validity of reassessment initiated under section 147 pursuant to a direction issued by the CIT(A) under section 150(1), holding that the Assessing Officer was empowered to issue notice under section 148 at any time to give effect to a finding or direction in an appellate order. The assessee’s challenge based on CBDT instructions and limited scrutiny norms was rejected, as such instructions cannot override statutory powers under section 150, and the assessee had not independently challenged the original CIT(A) order containing the reopening direction.
On merits, the ITAT deleted the addition of ₹14.08 lakh towards unsecured loans after noting that the assessee had furnished confirmations and bank details establishing identity, genuineness, and creditworthiness, which the Revenue failed to controvert. However, the disallowance of ₹1.16 lakh on account of commission income was sustained due to the assessee’s failure to reconcile the discrepancy. Accordingly, the appeal was partly allowed
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 21.07.2025, pertaining to the assessment year 2014-15. The assessee has raised the following grounds of appeal: –
“1. That the notice issued by the Learned Assessing Officer u/s 148 in contradiction of CBDT instruction NO. 225 dt. 04/03/21 is bad in law and is liable to be quashed.
2.That the notice u/s 148 issued by the Learned Assessing Officer on the basis of direction of Learned CIT (Appeal) is bad in law.
3. That the notice u/s 148 issued on the basis of reason to believe recorded by Learned CIT (Appeal) is bad in law.
4. That the notice u/s 148 has been issued by the Learned Assessing Officer for the same addition which were deleted by the CIT(A) against original assessment is bad in law.
5. That the notice issued u/s 148 issued by Learned Assessing Officer without bringing new tangible material on record after four years is bad in law.
6. That the appellant case was selected for limited scrutiny and the Learned Assessing Officer has not completed the original assessment as per law an as per instruction of CBDT and the notice issued u/s 148 to cover up the lapses (against instruction of CBDT for limited scrutiny) in original assessment is bad in law and is liable to be quashed.
7. That the learned lower authorities has not justified in making and retaining the addition of Rs 14,08,400/- for unsecured loan.
8. That the learned assessing officer has not justified in making and retaining the addition of Rs.1,16,417/- for expenses claimed from commission income.
9. That the assessment order is against the merit, circumstances and legal aspects of the case.”
2. The facts in brief are that, in this case, the assessee had filed his return of income on 05.06.2015, declaring total income at Rs.3,95,260/-. Thereafter, the case was taken up for limited scrutiny under Computer Assisted Scrutiny System (CASS) and thereafter the assessment was framed u/s 143(3) of the Income Tax Act, 1961 (“Act”, for short). Thereby, the Assessing Officer (“AO”, for short) assessed income at Rs.19,20,080/-. It is noteworthy that in the original assessment, the Assessing Officer made additions on account of unsecured loans obtained from seven persons and a further addition of Rs.1,16,417/- towards undisclosed commission income. Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). The primary objection raised by the assessee before the Ld. CIT(A) was that the case was selected for limited scrutiny, whereas the AO conducted complete scrutiny and made additions on issues beyond the scope of limited scrutiny, which was in utter violation of the CBDT Instructions. While adjudicating the appeal, the Ld. CIT(A), directed deletion of the additions so made by the AO; however, at the same time, he further directed the AO to reopen the assessment by exercising the power u/s 150(1) of the Act. In pursuance of the directions of the Ld. CIT(A), the AO proceeded to reopen the assessment by issuing notice u/s 148 of the Act on the same issues which were the subject matter of the original assessment, namely, unsecured loans amounting to Rs.14,08,400/- and commission income of Rs.1,16,417/-. Thereafter, the AO, after issuing a draft assessment order, passed the impugned assessment order, thereby repeating the very same additions which were originally made in the assessment order passed u/s 143(3) of the Act. Aggrieved, the assessee preferred in appeal before the Ld. CIT(A) who sustained the additions and dismissed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.
