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Facts
The Assessing Officer (AO) reopened assessment under section 147 based on information from a search on 'Omaxe Group', alleging the assessee paid Rs. 4,35,000 in cash for a property, which was treated as unexplained investment. The AO issued notice under section 148 without strictly following the mandatory procedure of section 148A.
Held
The Tribunal held that the mandatory procedure under section 148A was not followed, which vitiates the reassessment proceedings. Additionally, the seized material cited by the AO was found to be illegible and did not directly implicate the assessee.
Key Issues
Whether the reassessment proceedings are valid when the mandatory procedure under section 148A was not followed and the basis of reopening was illegible and did not implicate the assessee?
Sections Cited
147, 148, 148A, 143(2), 142(1), 139, 69, 115BBE
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 04.07.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 24.03.2024 passed by learned ITO-2(1), Indore [“AO”] u/s 147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2019-20, the assessee has filed this appeal.
The background facts leading to present appeal are such that the assessee filed his return of income of AY 2019-20 u/s 139 declaring a total income of Rs. 8,22,720/- which was assessed. Subsequently, on the basis of information in his possession received from material seized by departmental Page 1 of 6
Sharad Chhaiya ITA No. 677/Ind/2025 – AY 2019-20 authorities in a search conducted upon “Omaxe Group” of Indore, the AO
came to know that the assessee booked Unit No. DHBI/246 and paid cash
amounting to Rs. 4,35,000/- to the Omaxe/seller. Accordingly, the AO
formed a belief that the payment of Rs. 4,35,000/- represented undisclosed
income of assessee which had escaped assessment. On this basis, the AO
issued notice dated 31.03.2023 u/s 148 to re-open assessee’s case u/s 147.
In response to notice, the assessee filed return repeating the original income
of Rs. 8,22,720/-. Thereafter, the AO issued notices u/s 143(2)/142(1) in
response to which the assessee made submissions. The assessee denied
making any such payment as alleged by AO. However, the AO rejected
assessee’s submission and treated the alleged payment of Rs. 4,35,000/- as
unexplained investment u/s 69 r.w.s. 115BBE, accordingly made addition
and completed assessment. Aggrieved, the assessee went in first-appeal and
raised several objections challenging the legality of assessment framed by
AO as well as the merit of addition. However, the assessee did not get any
relief from CIT(A). Now, the assessee has come in next appeal before us.
During hearing before us, Ld. AR for assessee at first raised a
preliminary objection that the AO issued notice u/s 148 dated 31.03.2023
without first following the mandatory procedure of section 148A, therefore
the notice issued u/s 148 and consequent assessment-order passed u/s
147 are invalid and liable to be quashed. The assessee raised following
ground in first-appeal before CIT(A):
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Sharad Chhaiya ITA No. 677/Ind/2025 – AY 2019-20 “4. That the notice issued under section 148 of the Income Tax Act, 1961, dated 31.03.2023 is bad in law and liable to be quashed, as the mandatory procedure laid down under section 148A of the Act has not been followed. The notice so issued being illegal and wrong. The same require to be quashed.” However, the CIT(A) has not decided above ground of assessee, therefore the
order of CIT(A) deserves to be set aside.
Ld. AR next submitted that the AO has framed assessment/made
addition alleging the material found in the search of “Omaxe Group”. The AO
has re-produced the material alleged to have been found in search on Page 5
of assessment-order, which is basically an excel sheet containing the details
of cash collected by Omaxe/seller from different buyers of housing units,
but the said material extracted by AO is not readable. Further, just below
such excel sheet, the AO has quoted names of (i) Kartikey Singh, (ii) Ashok
Singh Yadav, and (iii) Rajneesh Jain, as the buyers whose names appear in
the excel sheet and notably, the assessee's name does not figure anywhere.
Ld. AR also drew our attention to a Certificate dated 15.04.2024 placed at
Page 57 of Paper-Book as an additional evidence. This certificate is issued
by Omaxe/seller confirming that no payment is cash was made by assessee.
It was accordingly submitted that the foundational premise of the re-
assessment that the seized material implicates present assessee, appears to
be without any basis.
Therefore, Ld. AR submitted, in the situation it would be most
appropriate to restore this case to the file of Jurisdictional Assessing Officer
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Sharad Chhaiya ITA No. 677/Ind/2025 – AY 2019-20 (JAO) for a fresh adjudication. He assured that the assessee shall extend full
co-operation to JAO and make an effective representation.
Ld. DR for revenue though dutifully supported the orders of lower
authorities but ultimately, considering the objections raised by Ld. AR, left
the matter to the wisdom of bench without raising any objection against
remand to JAO.
We have heard both sides and carefully perused the material available
on record. In so far as the preliminary legal issue is concerned, we note that
the mandatory nature of the procedure prescribed in section 148A,
introduced by the Finance Act, 2021 w.e.f. 01.04.2021, has been
consistently affirmed by various High Courts and by Tribunal. The scheme
of section 148A requires the AO to, inter alia, conduct enquiry with prior
approval of the specified authority; provide the assessee an opportunity to
be heard by way of a show-cause notice; and thereafter pass a reasoned
order u/s 148A(d) before issuing notice u/s 148. Non-observance of this
mandatory procedure ordinarily vitiates the entire re-assessment
proceedings. We note that the assessee had specifically raised this grievance
before Ld. CIT(A) but the Ld. CIT(A) has not given adjudication. This is a
lapse on the part of CIT(A). The order of the CIT(A) is, therefore,
unsustainable on this ground alone. Additionally, on merits, we find force in
submission of Ld. AR that the material allegedly seized from Omaxe/seller,
re-produced in assessment order, is not legible. Furthermore, the AO's own
enumeration of the buyers' names appearing in the seized excel sheet, does
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Sharad Chhaiya ITA No. 677/Ind/2025 – AY 2019-20 not include assessee's name. This raises a significant doubt about whether
the seized material actually implicates assessee at all and whether the
foundational "information" for re-opening the assessment satisfied the
threshold required u/s 148/148A of the Act. Considering the facts and
circumstances in their entirety, particularly the undecided legal ground
regarding non-compliance with section 148A; the illegibility of the seized
material as reproduced; the additional evidence filed by assessee; and given
that both sides are agreeable to a remand, we deem it appropriate to set
aside the orders of both the lower authorities and restore this matter to the
file of the Jurisdictional Assessing Officer (JAO) for a fresh consideration in
accordance with law. We direct the JAO to afford the assessee a fair and
reasonable opportunity of being heard and pass a reasoned order dealing
with all submissions made by assessee. The assessee is directed to extend
full and effective co-operation to the JAO and appear/respond promptly in
response to all notices issued by the JAO.
Resultantly, this appeal is allowed for statistical purposes.
Order pronounced in open court on 17/04/2026
Sd/- Sd/-
(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore
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Sharad Chhaiya ITA No. 677/Ind/2025 – AY 2019-20
िदनांक/Dated : 17/04/2026
Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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