RAMESH KODI ,WARANGAL vs. ITO, WARD-1, WARANGAL

Succinctly stated, the assessee who is engaged in the business of running a wine shop under the name & style viz., “Mahalakshmi Wines” had filed his return of income for the AY 2014-15, declaring an income of Rs.7,20,840/- on 19/09/2014. Subsequently, the case of the assessee was selected for scrutiny assessment under section 143(2) of the Act.

Thereafter, the AO, vide his order passed under section 143(3) of the Act, dated 17/05/2016, estimated the income of the assessee from sale of liquor at 5% of the aggregate amount of purchases, i.e., at Rs.16,12,388/-. Accordingly, the AO vide his order passed under section 143(3) of the Act, dated 17/05/2016, determined the income of the assessee at Rs.18,22,740/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), who, vide his order dated 28/07/2020, dismissed the appeal as barred by limitation.

The assessee, aggrieved with the CIT(A) order carried the matter in appeal before the Tribunal, which vide its order in ITA No. 1102/Hyd/2018, dated 16/12/2019 allowed the appeal of the assessee for statistical purposes and set aside the matter to the file of the CIT(A) with a specific direction to condone the delay and adjudicate the appeal on merits of the case afresh, after providing an opportunity of hearing to the assessee.

Thereafter, the CIT(A)-3, Hyderabad, vide his order dated 28/07/2020, giving effect to the directions of the Tribunal in ITA No.1102/Hyd/2018, dated 16/12/2019, partly allowed the appeal by scaling down the estimation of the income of the assessee as done by the AO at 5% of cost of goods sold by an estimate of 3%.

However, the assessee had thereafter received an order of the Additional/JCIT(A)-2, Chennai, wherein the said appellate authority after referring to the impugned order passed by the Tribunal in ITA No. 1102/Hyd/2018, dated 16/12/2019, wherein the order passed by the CIT(A) in the first round of litigation, dated 28/03/2018 was set aside with a direction to pass a fresh order, dismissed the assessee’s appeal.

The assessee, aggrieved with the impugned order passed by the Additional/JCIT(A)-2, Chennai, dated 08/12/2025, has carried the matter in appeal before us.

Smt. S Sandhya, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that though the CIT(A)-3, Hyderabad vide his order, dated 28/07/2020 had pursuant to the direction of the Tribunal in ITA No.1102/Hyd/2018, dated 16/12/2019 disposed of the appeal and by scaling down the income of the assessee as estimated by the AO at 5% of the cost of goods sold to 3% of the cost of the goods sold had partly allowed the same, but strangely the Additional/JCIT(A)-2, Chennai had thereafter despite the matter having been put to rest taken up the hearing of the appeal again and vide an ex-parte order, dated 08/12/2025 dismissed the appeal. The Ld.AR submitted that now, when the CIT(A)-3, Hyderabad, vide his order, dated 28/07/2020, had disposed of the appeal, there was no jurisdiction with the Additional/JCIT(A)-2, Chennai, to have thereafter once again taken up the matter and passed the impugned order, dated 08/12/2025.

Per contra, Shri Laxmi Kanth, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) on being queried about the aforesaid serious infirmity that had surfaced based on the multiple orders passed by the First Appellate Authorities on the same cause of action, viz., (i) CIT(A)-3, Hyderabad, order dated 28/07/2020, and (ii) Additional/JCIT(A)-2, Chennai, order dated 08/12/2026, wherein both had given effect to the directions of the Tribunal in ITA No.1102/Hyd/2018, dated 16/12/2019, failed to come forth with any explanation.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.

Admittedly, it is a matter of fact discernible from the record that pursuant to the matter having been set aside by the Tribunal vide its order passed in ITA No.1102/Hyd/2018, dated 16/12/2019 to the file of the CIT(A) for fresh adjudication, the same was taken up by the CIT(A)-3, Hyderabad who vide his order passed in Appel No.10377/2017-18/B2/CIT(A)-3, dated 28/07/2020 had partly allowed the appeal by scaling down the estimation of the assessee’s income from 5% to 3% of the cost of goods sold. We are unable to comprehend that now when the CIT(A)-3, Hyderabad vide his order, dated 28/07/2020 had given effect to the order passed by the Tribunal in ITA No.1102/Hyd/2018, dated 16/12/2019, then on what basis the Additional/JCIT(A)-2, Chennai had thereafter assumed jurisdiction and once again taken up the matter and disposed of the appeal vide his order passed in Appeal No. NFAC/2013-14/10029601, dated 08/12/2025. In our view, as pursuant to the order passed by the CIT(A)-3, Hyderabad, dated 28/07/2020, the First Appellate Authority was functus officio qua the issue in the hand, there was no jurisdiction with the Additional/JCIT(A)-2, Chennai, who had thereafter taken up the appeal once again and disposed of the same vide his impugned order, dated 08/12/2025.

Considering the aforesaid facts, we deprecate the manner in which the Additional/JCIT(A)-2, Chennai, had wrongly assumed jurisdiction and passed the impugned order in Appeal No. NFAC/2013-14/10029601, dated 08/12/2025.

We thus, in terms of our aforesaid deliberations quash the order passed by the Additional/JCIT(A)-2, Chennai, dated 08/12/2025 considering the fact that the CIT(A)- 3, Hyderabad had already disposed of the appeal giving effect to the order of the Tribunal in ITA No.1102/Hyd/2018, dated 16/12/2019 vide his order passed in Appeal No. 10377/2017-18/B2/CIT(A)-3, dated 28/07/2020.

In the result, the appeal filed by the assessee is allowed, and the impugned order passed by the Additional/JCIT(A)-2, Chennai, is quashed in terms of our aforesaid observations.