BEVOOR LINGAIAH SIDDARAMU,MANDYA vs. INCOME TAX OFFICER, WARD 1 AND TPS, MANDYA

PER KESHAV DUBEY, JUDICIAL MEMBER:

These appeals at the instance of the assessee are directed against the separate orders of the ld. CIT(A)/NFAC one dated 25.11.2025 vide DIN & Order No: ITBA/NFAC/S/250/2025- 26/1082964569 (1) and another dated 15.12.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1083685747(1) both passed u/s. 250 of the Income-Tax Act, 1961 (in short “the Act”) for the AY 2018- 19. Since the issues in both these appeals are inter-related, these are clubbed together, heard together and disposed of by this common order for the sake of convenience.

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3.1 We have heard both the parties on admission of additional grounds. The Lucknow bench of the Hon’ble Allahabad High Court in the case of CIT Vs. Sahara India (2012) 347 ITR 331 held that a legal issue can be raised at any stage but there shall be good reason for admitting the additional ground. In our Opinion all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of the adjudication of above grounds. Further we are also of the opinion that the additional grounds raised in the present case are purely legal in nature & therefore these are

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 4 of 15 critical for a fair adjudication of the matter. The Hon’ble Madras High Court in the case of CIT Vs Indian Bank (2015) 230 Taxman 635 (Madras) held that Rule 11 of the I.T. Rules makes it clear that the assessee has the right to raise additional grounds and if the same is beneficial to the assessee, the same should be considered by the Tribunal.

3.2 Further, the Hon’ble Karnataka High Court in the case of Gundathur Thimmappa & Sons vs. CIT, Mysore, reported in (1968) 70 ITR 70 held that when the point raised by the assessee is a point which went to the root of the matter and affected not merely his liability to pay tax but also jurisdiction of the Tribunals and Authorities themselves to subject the amount concerned to tax, the Appellate Tribunal had the discretion to permit point of law to be raised for the first time in appeal because the question went to the root of the case. The Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383 held that undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Accordingly, we are inclined to admit the additional legal grounds for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and these are critical for a fair adjudication of the matter.

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 5 of 15 the financial year 2017-18. Accordingly, a notice u/s 148A (b) of the Act dated 20.3.2022 was issued to the assessee to show cause as to why a notice u/s 148 of the Act should not be issued and also directed the assessee to submit his reply along with supporting documents on or before 25.3.2022. The AO subsequently passed order u/s 148A(d) of the Act and accordingly issued notice u/s 148 of the Act on 27.4.2022 requiring the assessee to furnish a return of income for the AY 2018-19 within 30 days from the service of the notice. During the entire course of reassessment proceeding, the assessee did not respond to any of the statutory notices issued calling for requisite details and documents with regard to cash deposit amounting to Rs.5,84,71,554/- and accordingly the AO treated the entire cash deposit of Rs.5,84,71,554/- as unexplained money u/s 69A of the Act chargeable to tax u/s 115BBE of the Act and added to the total income for AY 2018-19. Thus, the AO completed the assessment proceeding on a total assessed income of Rs.5,84,71,554/-.

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 6 of 15 7. Again, aggrieved by the order of ld. CIT(A)/NFAC dated 15.12.2025, the assessee has filed the present appeal before this Tribunal.

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 7 of 15 AO. The ld. DR on the other hand contended that no prejudice was demonstrated by the assessee and in fact the assessee not only during the assessment proceedings but also during the Appellate proceedings did not respond to any of the notices issued and therefore the assessee is precluded from taking such grounds at this stage.

10.1 Now before proceeding further, it is apposite here to take note of section 148A of the Act for the purposes of adjudicating the legal issue as raised by the assessee which reads as under-

22[Conducting inquiry, providing opportunity before issue of notice under section 148. 148A. The Assessing Officer shall, before issuing any notice under section 148,— (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, 23[***] by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,— (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 8 of 15 under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 24[relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.] Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.]

10.2 On plain reading of the above provision of the section 148A(b) of the Act reveal that the AO shall, before issuing any notice under section 148, provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a). Undoubtedly, as per the mandate of Section 148A(b) of the Act, it is obligatory on the part of the AO to grant to the assessee a time period of not less than 7 days from the date of issue of the notice to explain as to why based on the information shared with him a notice u/s.148 of the Act shall not be issued to him.

10.3 We have also taken a note that even the guidelines for issuance of notice u/s 148 of the Act issued by the CBDT vide F.No.299/10/2022-Dir(lnv.III)/611 Dated: 01/08/2022 also provide that if the result of an enquiry/information available suggests that income chargeable to tax has escaped assessment, the AO shall provide an opportunity of being heard by issuing the show cause

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 9 of 15 notice and the notice shall provide between seven to thirty days time for the assessee to submit their reply. The relevant para are reproduced below for ease of reference & convenience-

“vii. If the result of enquiry/information available suggests that the income chargeable to tax has escaped assessment, the AO shall provide an opportunity of being heard to the assessee by issuing a show cause notice u/s 148A(b) of the Act. The said notice shall provide between 7 to 30 days’ time to the assessee for submitting the reply. A template of show cause notice is enclosed at Annexure-Al”

10.4 However, in the present case, the A.O vide notice u/s 148A(b) of the Act, dated 20/03/2022 by calling upon the assessee to show cause on or before 25.03.2022 had effectively allowed a time period of only 5 days to file his explanation which we not found to be in conformity with the mandate of law. Further we are of the opinion that there is a clear violation of the principles of natural justice by providing inadequate opportunity of being heard to the assessee. We are also of the considered opinion that minimum statutory requirement of 7 days to submit the response to show cause is not merely a procedural formality as contended by the ld. D.R. but an essential aspect of due process of law. It ensures the legal process remains fair & just. Further, the Court have held that while computing 7 days period to give response to show cause notice, the date of receiving the notice and the holidays are to be excluded. In view of the above, as the minimum seven days requirement are mandatory requirement and failure to comply with would render a notice itself invalid. Therefore, on this ground alone, the notice would be vitiated resulting in quashment of not only the notice but also the subsequent assessment orders, penalty orders etc.

10.5 Thus, we are of the considered opinion that there is a clear violation of the principles of natural justice by providing inadequate opportunity of being heard to the assessee. Further, in holding so, we also take a guidance & support from the judgment of Hon’ble

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 10 of 15 jurisdictional High Court of Karnataka in the case of Panjos Builders (P) Ltd. V. Income Tax Officer [2024] 161 taxmann.com 573 (Karnataka) wherein the Hon’ble High Court following the judgment of the Hon’ble High Court of Bombay in the case of Mukesh J. Ruparel v. ITO [2023] 153 taxmann.com 70/ 295 Taxman 475 [ W.P. No. 15268 of 2023 dated 25/07/2023 held that if notice under section 148A(b) of the Act prescribes a period lesser than a period of seven days as contemplated in the said provision, the said notice would be vitiated resulting in quashment of not only the notice but also the subsequent assessment orders, penalty notices, orders etc. The relevant paragraph of the judgment is reproduced below for ease of reference & convenience-

“7. So also, having regard to the minimum period of seven days prescribed under section 148A(b) of the IT Act as held by the High Court of Bombay in the case of Mukesh J. Ruparel v. ITO [2023] 153 taxmann.com 70/295 Taxman 475 [W.P.No.15268 of 2023 dated 25-7-2023], that if notice under section 148A(b) prescribes a period lesser than a period of seven days as contemplated in the said provision, the said notice would be vitiated resulting in quashment of not only the notice but also the subsequent assessment orders, penalty notices, orders, etc. In the aforesaid judgment of the Bombay High Court, it is held as under: "Petitioner is impugning a notice dated 15th March 2023 issued under section 148A(b) of the Income-tax Act, 1961 (the Act), the order dated 31st March 2023 passed under section 148-A(d) of the Act and notice dated 31st March 2023 issued under section 148 of the Act. 2. Petitioner is an individual who did not file return of income for Assessment Year 2016-17 because his income was less than taxable limit. 3. Petitioner received a notice dated 15th March 2023 under clause 148A(b) of the Act from Respondent No. 1, stating that Respondent No. 1 has information which suggests that income chargeable to tax for Assessment Year 2016-17 has escaped assessment within the meaning of Section 147 of the Act. Petitioner was provided with information/enquiry on which reliance was placed in the form of annexure to the notice and Petitioner was called upon to show cause on or before 28th March 2023 as to why a notice under section 148 of the Act should not be issued. The information which suggested that there has been an escapement of income from assessment provided details of a property that Petitioner had purchased. Petitioner was directed to provide head-wise computation of income, details of purchase of immovable property during Financial Year 2015-16 supported with copy of registered agreement with annexure II, details of payment made and source of acquisition of said immovable property.

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 11 of 15 4. Petitioner submitted an elaborate reply on 18th March 2023 and also raised certain objections. The main objection raised was that under the provision of Section 148A(b) of the Act, the assessee should be provided an opportunity of being heard by serving upon the assessee a notice to show cause within such time as may be specified in the notice being not less than seven days but not exceeding thirty days from the date on which said notice has been issued. Since the notice dated 15th March 2023 provides only for five days when the law requires minimum seven days to be given, the notice itself was bad-in-law. 5. Along with reply, Petitioner also provided a photo copy of the notarised affidavit of Petitioner's brother affirmed on 18th March 2023, in which the brother has confirmed of giving gift of Rs. 75 lakhs to Petitioner on 26th March 2019, which is much beyond the relevant Assessment Year. 6. Respondent No. 1 has passed the impugned order dated 31st March 2023 under clause D of Section 148A of the Act. In the order, Respondent No. 1 states that from the statement issued by HDFC Bank for the period 1st April 2018 to 31st March 2019 of the brother, it is seen that there is a credit entry of Rs. 1 Crore on 19th March 2019, out of which Rs. 75 lakhs has been paid to Petitioner on 26th March 2019. Respondent No. 1 also states that the gift deed submitted by Petitioner from the brother has not been notarised. 7. Moreover, Respondent No. 1 states that income chargeable to tax has escaped assessment without mentioning what is the amount of income that has escaped assessment. Further, the approval under section 151 of the Act which is annexed to the impugned order is of one Poonam Vijay Chhabria whose PAN number is also entirely different from the PAN number of Petitioner. Respondent No.1 is totally silent about the objections raised by Petitioner of minimum seven days notice required. Mr. Gandhi states that on each of these grounds not only the impugned order dated 31st March 2023 but also the notice dated 31st March 2023 itself should be quashed and set aside. 8. No reply has been filed though Petition was served more than a month ago. We have, therefore, decided to go ahead and consider the matter and dispose it since we were, prima facie, satisfied that there was merit in Petitioner's submissions. Section 148-A(B) of the Act reads as under:- "provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a)." 9. The notice dated 15th March 2023 gives time only up to 20th March 2023 to show cause. We have to note that even the guidelines dated 1st August 2022 for issuing of notice under section 148 of the Act also provide that if the result of an enquiry/information available suggests that income chargeable to tax has escaped assessment, the Assessing Officer shall provide an opportunity of being heard by

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 12 of 15 assessee by issuing the show cause notice under section 148A(b) of the Act and the notice shall provide between seven to thirty days time for the assessee to submit their reply. A template of the show cause notice is also annexed to the guidelines. Therefore, in view of the guidelines, we would also read that the minimum seven days required to be made as a mandatory requirement and failure to comply with would render a notice itself invalid. Therefore, on this ground alone, the notice requires to be quashed and set aside. Perhaps, being aware of this position, Respondent No. 1 has chosen not to deal with these objections raised by Petitioner in the reply to the show cause notice. 10. We also found in the said guidelines a provision that the order under section 148A(d) of the Act shall be sent to assessee along with the approval of the specified authority for such order under section 148A(d) of the Act. In the case at hand, the approval that has been sent is of some other assessee and not Petitioner. This also indicates non-application of mind by Respondent No. 1. On this ground also, the order dated 31st March 2023 impugned in the Petition is required to be quashed and set aside. 11. Further, in the guidelines to which is annexed a template of the order to be passed under section 148A(d) of the Act provides for mentioning of amount escaped based on the information and how this amount is represented in the form of assets. It also provides that the Assessing Officer will specify the quantum of income/assets/expenditure/entry which has escaped assessment. This not stated in the order under clause D of Section 148 of the Act. On this ground also, the said order dated 31st March 2023 is required to be quashed and set aside. 12. Further, there is a factually incorrect statement made in the order that the affidavit of Petitioner's brother that was submitted was not notarised when it was factually a notarised affidavit. 13. Further, in the impugned order, it is stated that the HDFC statement/document do not substantiate the credit worthiness and genuineness of the lender of the gift, i.e., brother of Petitioner. Mr. Gandhi states that if only Petitioner was called upon to submit, Petitioner would have submitted evidence towards credit worthiness of the brother because in the show cause notice issued, Petitioner was only directed to call upon to disclose the source from which he got money to pay for the flat. In over view, therefore,, on this ground also, the impugned order dated 31st March 2023 is required to be quashed and set aside. 14. Accordingly, we hereby quash and set aside the notice dated 15th March 2023 issued under clause (b) of Section 148-A of the Act, the impugned order dated 31st March 2023 issued under clause (d) of Section 148A of the Act and consequent notice dated 31st March 2023 issued under section 148 of the Act. 15. Petition disposed. There shall be no order as to costs." 8. In the instant case, it is an undisputed fact that the Notice at Annexure - A dated 21-3-2022 is not signed either physically or digitally but the impugned notice also prescribes a period of six days, which is lesser than the minimum prescribed period

ITA Nos.405 & 406/Bang/2026 Bevoor Lingaiah Siddaramu, Mandya Page 13 of 15 of seven days as contemplated under section 148A(b) of the IT Act. Under these circumstances, in the light of the judgment of this Court in Begur's case and the judgment of the Bombay High Court in Mukesh's case supra, I am of the considered opinion that the impugned notice at Annexure - A and also consequential proceedings, orders, notices, etc., deserves to be quashed by reserving liberty in favour of the respondents to take recourse to such remedies as available in law.”

10.6 Further, the Hon’ble jurisdictional High Court of Karnataka in the case of Principal Chief Commissioner of Income-tax V. Smt. Komarla Yogendra Keertana reported in (2025) 307 Taxman 106 again reiterated as under-

“4. Petitioner approached the learned Single Judge questioning, Section 148A(b), notice dated 24.03.2022, mainly urging that the notice would not provide seven days' time to respond to the said notice. The learned Single Judge under the impugned order quashed the said notice, accepting the contention of the petitioner and reserving liberty to the respondent-revenue to initiate appropriate proceedings against the petitioner in accordance with law. 5. Learned counsel for the appellant-revenue, in addition to the grounds urged in the memorandum of appeal submits that the time provided under Section 148A(b) is not mandatory and it is directory. 6. We have given our thoughtful consideration to the contentions urged by the appellant-revenue. However, we are not in a position to accept the contention of the appellant revenue in view of the decision of the Co-ordinate Bench dated 05.08.2025 in W.A. No.612/2025. 7. Admittedly, in the instant case, Section 148A(b) notice is dated 24.03.2022, which is placed on record as Anneuxre-A, calling upon the petitioner to reply on or before 29.03.2022. Section 148A requires providing of minimum seven days' notice to the assessee to respond to the said notice. The Co-ordinate Bench in the decision (supra), considering identical contention at paragraph No.5, has held as follows: " 5. It is clear from the plain reading of Clause (b) of Section 148A of the Act, that a notice under Section 148A(b) of the Act is required to provide an opportunity to the assessee to respond to the information which may suggests that the assessee's income has escaped assessment. The minimum period of such notice is stipulated as "not less than seven days". In the present case, the impugned notice was issued on 20.03.2022 and the Assessee was called upon to furnish a reply on or before 25.03.2022. Indisputably, the impugned notice did not comply with the requirement of providing a minimum period of seven days to respond to the said notice."

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10.7 Thus, respectfully following the decisions of the Jurisdictional High Court of Karnataka, we have no hesitation in holding that the show cause notice issued u/s 148A(b) of the Act on 20/03/2022 granting just 5 day’s time is against the requirement of minimum period of seven days as prescribed under the Act and accordingly illegal, bad in law. We are of the considered opinion that the impugned notice and also consequential proceedings, orders, notices, etc., deserves to be quashed & accordingly quashed.

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Order pronounced in the open court on 21st July, 2026

Sd/- Sd/- (Prashant Maharishi) (Keshav Dubey) Vice President Judicial Member

Bangalore, Dated 21st July, 2026. VG/SPS

Copy to:

Asst. Registrar, ITAT, Bangalore.