PADMAVATHI JEGADEESAN,TRICHY vs. INCOME TAX OFFICER, WARD 2(1), TRICHY

The Assessee raised the following grounds of appeal : “1. The Learned CIT(A) has erred in law and on facts by failing to pass a speaking and reasoned order as mandated under section 250(6) of the Act. The appellate authority did not discharge the statutory obligation to independently examine each contention of the appellant and record specific reasons for rejecting the explanations furnished. The Learned CIT(A) dismissed the 1 appeal mechanically, without addressing the documentary evidence supporting the sources explained by the appellant, such as recovery of hand loans, husband's cash withdrawals from bank joint account, marriage gifts, and accumulated household savings. In the absence of a reasoned, issue-wise adjudication, the order is non-speaking and arbitrary.”

Briefly the facts of the case are that the appellant is an Individual. No regular return of income under the provisions of section 139 of the Income Tax Act, 1961 was filed by the appellant for the Assessment Year 2020-21. Based on the information that the appellant made cash deposits of Rs.81,11,790/- in the bank account during the previous year relevant to assessment year under consideration 2020-21, the Assessing Officer formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.148 of the Act was issued on 30.03.2024 calling upon the appellant to file the return of income after duly complying with the procedure laid down u/s.148A of the Act. The appellant filed the return of income in response to notice issued u/s.148 of the Act on 22.06.2024 disclosing total income of Rs.12,47,930/-. Against the said return of income, the assessment was completed by the Assessment Unit of the Department(hereinafter called ‘AO’) passed u/s.147 r.w.s 144B of the Act at a total income of Rs.52,71,220/-. While doing so, the Assessing Officer made addition of cash deposits of Rs.40,23,290/- in the bank account being the amount of excess of cash deposits over withdrawal from the bank account, rejecting the explanation of the appellant that amount of Rs.11,93,000/- received as gift from the husband Mr.A. Bhaskar, who in turn gifted the amount of withdrawals from his bank account. The Assessing Officer also rejected the following explanation offered in support of the source of the cash deposits as under :

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A) contending that the Assessing Officer ought not have made the addition of cash deposits in bank account as unexplained money, in as much as, the appellant had offered an explanation as to the source of the cash deposits made in the bank account. However, the ld.CIT(A) confirmed the action of the Assessing Officer by holding that the appellant had failed to adduce or produce corroborative evidence in support of the explanation offered.

Being aggrieved, the appellant is in appeal before us in the present appeal. The ld.AR contends that the Assessment Order is void ab initio, as the Jurisdictional Assessing Officer(JAO) had no jurisdiction to issue notice u/s.148 of the Act, in view of the provisions of section 151A of the Income Tax Act, 1961.

During the course of hearing of the appeal, the appellant raised the additional ground of appeal challenging the very jurisdiction of the Jurisdictional Assessing Officer to issue notice u/s.148 of the Act. The ground reads as under : “The Appellant respectfully prays for leave to raise the following additional ground in the appeal e-filed on 04.12.2025. As this ground is purely legal in nature and goes to the root of the matter, it is requested that the Hon'ble Tribunal admit and adjudicate upon the same in the interest of natural justice.

On the other hand, the Learned CIT-DR had opposed the submissions made on behalf of the respondent and relied on the order of ld.CIT(A).

We shall take up this Ground of appeal No.15 (a),(b) and (c) at first instance as it goes to very root of the matter. In this case, we find that the appellant raised jurisdictional issue that the Jurisdictional Assessing Officer(JAO) had no jurisdiction to issue notice u/s.148 of the Act. The Jurisdiction to issue the above notice vests with the Faceless Assessing Officer(FAO) in accordance with the provisions of explanation inserted to Section 151A read with CBDT Notification dated 29.03.2022. The appellant cooperative society relied on the following decisions of Hon’ble Bombay High Court in Hexaware Technologies Ltd. Vs. ACIT [2023] 149 taxmann.com 451, Hon’ble Madras High Court in TVS Credit Services Ltd. vs. DCIT in WP No.14255 of 2023, 22.04.2025 and Hon’ble Telangana High Court in Kings Pride Infra Projects Pvt. Ltd. vs. DCIT [2024] 157 taxmann.com 134, wherein, it was held that the issuing notice u/s.148 by the Jurisdictional Assessing Officer(JAO) is ultra vires the notification no.18 of 2022 of CBDT and the consequently held that the notice issued u/s.148A(b) and 148A(d) and 148 are null and void.

In view of the amendment brought by Finance Act, 2026, and in the light of orders passed by the Hon’ble Supreme Court in bunch of cases involving identical issue in Special Leave Petition (Civil) Diary No(s).57403/2025 vide order dated 03.02.2026 setting aside the orders passed by the Hon’ble Bombay High Court and Hon’ble Telangana High Court for fresh consideration before the Hon’ble High Courts, the matter requires remand to the file of ld.CIT(A)[NFAC] for fresh consideration and disposal in accordance with law after affording opportunity of being heard to the assessee.

In view of the above circumstances, we are of the considered opinion that in order to meet the ends of justice, the matter requires remand to the file of ld.CIT(A)[NFAC] for denovo disposal of appeal keeping in view of the Finance Act 2026. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

Accordingly, the appeal filed by the Assessee stands Partly Allowed for statistical purpose. Order pronounced in the open Court on 13th August, 2026.