JITENDRA SAINI,JAIPUR vs. I.T.O. WARD 7(1), JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 226/JPR/2026 (Assessment Year:2020-21)

Jitendra Saini Vs. ITO C/o. G. Mehta & Co. Ward 7(1) Paras, 127, Hari Marg, Jaipur Civil Lines, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:HBDPS 1472 K Appellant .. Respondent Appellant by : Sh. G.M. Mehta, CA Respondent by : Mrs. Aarti Rawat, JCIT Date of Hearing 22.07.2026 Date of Pronouncement 30.07.2026 O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi(hereinafter referred to as “Ld. CIT(A)”), dated 01.12.2025under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

P a g e | 2 ITA No.226/JPR/2026 Jitendra Saini 2. The grounds raised by the assessee read as under:- 1. Ld. CIT(A) has erred in law in sustaining legality of reopening of assessments: which was initiated and completed by I.T.O. Ward 7(2), Jaipur without following mandatory provisions of Faceless assessment as per provisions of section 144B/151A of I.T. Act. so also the decision of Hon'ble Supreme Court {481 ITR 332 (SC)} 2. Ld. CIT(A) was not justified in sustaining disallowance of Rs.17,70,685/- which was not subject matter of reasons recorded for reassessment proceedings whereas no disallowance/addition was made for such reason. 3. Without prejudice to ground No. (1) and (2), ld. CIT (A) has erred in law and on facts denying to admit the fact of taxing the disallowance of Rs. 17,70,685/- at special rate under section 115BBE of Act as per tax computation sheet submitted to him during course of Appellate proceedings. 3. In ground No.1, the assessee has challenged the validity of the assessment framed u/s 147 of the Act, on the ground that since no addition was made to the income of the assessee on account of the income believed to have escaped assessment by the AO, the assessment order passed making addition to the income of the assessee for other reasons and other counts is impermissible in law. Reliance has been placed on various decisions of the Hon’ble High Courts including the Jurisdictional High Court as under:- i) Hon’ble Bombay High Court in the case of CIT vs Jet airways Ltd 331 ITR 236 (Bom). ii) Hon’ble Delhi High Court in the case of CIT vs Ranbaxy Laboratories 336 ITR 136 (Delhi) iii) Hon’ble Rajasthan High Court in the case of CIT Vs. Shri Ram Singh [306 ITR 343]

P a g e | 3 ITA No.226/JPR/2026 Jitendra Saini 4. The relevant para of the order of the Hon’ble Jurisdictional High court was pointed out to us, holding as under: …………………. 24. Reverting back to language of Section 147, this much is clear, that the sine- qua-non for conferment of jurisdiction on the Assessing Officer, to initiate proceedings under that Section is, that he should have "reason to believe" that "any income chargeable to tax has escaped assessment for any assessment year" and that, being that situation, being available, i.e. the Assessing Officer having entertained a "reason to believe", obviously on valid grounds, he acquires the jurisdiction to assess or reassess "such income", which obviously means, the income, which was chargeable to tax, and had escaped assessment for any assessment year, according to his "reason to believe", and while so assessing or reassessing, he can also, in addition, assess or reassess "any other income chargeable to tax which has escaped assessment and which may come to his notice subsequently in the course of proceedings under Section 147". 25. The precise question, thus requiring to be considered is, as to whether, the conjunctive word used, being "and", used between the expression "such income" and "also any other income chargeable to tax, which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under Section 147" is required to be given its due, or is required to be ignored, or is required to be interpreted as "or". Obviously because, if it is to be interpreted as "or", then the language would read as under: 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income or also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year) 26. But then if it were to be so read, the word "also" becomes redundant, and to make sense of the sentence, the Section would be required to be read by ignoring the words "also", as well, in which event, the Section would read as under:

P a g e | 4 ITA No.226/JPR/2026 Jitendra Saini 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income or any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re- compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year) 27. It is established principle of interpretation of statutes, that the parliament is presumed to be not extravagant, in using the words, and therefore, every word used in the Section, is required to be given its due meaning. 28. If considered on that principle, leaving apart for the moment, the aspect of interpretation of the word "and" as "or", the existence of the word "also" is of a great significance, being of conjunctive nature, and leaves no manner of doubt in our opinion, that it is only when, in proceedings under Section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under Section 147. 29. To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under Section 147, the Assessing Officer were to come to conclusion, that any income chargeable to tax, which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the Assessing Officer entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the Assessing Officer may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under Section 147. 30. It is a different story that for such other income, the Assessing Officer may have recourse to such other remedies, as may be available to him under law, but then, once it is found, that the income, regarding which he had "reason to believe" to have escaped assessment, is not found to have escaped assessment, the Assessing Officer is required to withhold his hands, at that only. 31. To this extent, we agree with the view expressed by the Punjab and Haryana High Court, in Atlas Cycle Industries' case.

P a g e | 5 ITA No.226/JPR/2026 Jitendra Saini 32. The result of the aforesaid discussion is, that the question framed, in the order dated 23.5.2006, is required to be, and is, answered in the manner, that the Tribunal was not justified in holding, that the proceedings for reassessment under Section 148/147 were initiated by the Assessing Officer, on non-existing facts, because ultimately the assessee has been able to explain the income, which was believed to have been escaped assessment, was explainable. It is further held, that the Assessing Officer was justified in initiating the proceedings under Section 147/148, but then, once he came to the conclusion, that the income, with respect to which he had entertained "reason to believe" to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of the proceedings, which were found by him, to have escaped assessment. 33. Consequently, the result is, that the appeal is dismissed. …………………….. 5. The facts, it was pointed out to us, from the orders of Authorities below was that the reopening was resorted to on the basis of information in the possession of the AO received from the Insight Portal under High Risk CRIU/VRU that the assessee had deposited huge cash in bank in the impugned year amounting in all to Rs.82,74,989/-. This fact is noted at page 1 and 2 of the assessment order and we find at page 3 of the assessment order the AO has recorded the fact of issuing notice to the assessee to verify the source of cash deposit of Rs.82,74,989/-. However, subsequently addition was made to the income of the assessee on account of expenses incurred in his business of liquor sale being disallowed to the tune of Rs.17,70,685/-. No addition on account of the cash deposited in the Bank account of the assessee was made to the income of the assessee. This facts also emanate from the assessment order wherein at page 6 of

P a g e | 6 ITA No.226/JPR/2026 Jitendra Saini the assessment order, the AO held that no adverse inference is drawn on the ground of the cash found deposited in the Bank account of the assessee to the tune of Rs.82,74,989/- after considering the reply furnished by the assessee. 6. It is abundantly clear therefore, that the AO in the assessment framed u/s 147 of the Act made no addition on account of the income which he believed to have escaped assessment. The ld. Counsel for the assessee has drawn our attention to various decisions of the Hon’ble High Courts as noted above holding that the AO loses jurisdiction to frame assessment if the reason for which the case of the assessee was reopened was found to not exist. 7. Ld. DR was unable to draw our attention to any contrary decision either of the Jurisdictional High Court or the Hon’ble Apex Court in this regard. 8. In the light of the above, the law as laid down by the Jurisdictional High Court in the case of Shri Ram Singh (Supra) as also Hon’ble Delhi High Court in the case of Ranbaxy Laboratories (Supra) and the Hon’ble Bombay High Court in the case of Jet Airways Ltd. (Supra) will squarely apply to the facts of the present case following which we hold the assessment order passed in the present case u/s 147 of the Act, to have been invalidly passed without valid jurisdiction. The order passed as a consequence u/s 147 of the Act is quashed. 9. Since the assessment order has been quashed as above, the rest of the grounds raised by the assessee are not being dealt with by us. The

P a g e | 7 ITA No.226/JPR/2026 Jitendra Saini other legal grounds raised are kept open for the assessee to be taken up, if required, at a later stage in accordance with law. 10. In effect, the appeal of the assessee is allowed in the above terms. Order pronounced in the Open Court on 30.07.2026

Sd/- Sd/- (T.R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 30.07.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

By Order, Asst. Registrar ITAT, Jaipur