SATYAPUR STEEL,MUMBAI vs. WARD 19(3)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 169/Mum/2026 (Assessment Year: 2016-17) Satyapur Steel ITO Ward 19(3)(1) 119/121, Opp C. P. Piramal Chamber, Tank Road, Near Vs. Mumbai-400 012 Madhav Baug, Girgaon SO, Mumbai-400 004 PAN/GIR No. ACCFS4872Q (Applicant) (Respondent) Assessee by Shri Mansvi Singh, Ld. AR Revenue by Shree Kumar C., Ld. DR Date of Hearing 24.06.2026 Date of Pronouncement 08.07.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 04.11.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [hereinafter referred to as "the CIT(A)"] under section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"], for

2 ITA No. 169/Mum/2026 Satyapur Steel A.Y. 2016-17. The said first appellate order arises from the assessment order dated 08.05.2023 passed by the Assessing Officer under section 147 read with section 144 and section 144B of the Act. Condonation of Delay 2. At the outset, it is noted that the present appeal filed by the assessee is delayed by 4 days. The assessee has filed a petition seeking condonation of delay along with an affidavit in support thereof. In the said petition, it has been stated that the order of the learned CIT(A) dated 04.11.2025 escaped attention due to the reasons mentioned in the affidavit, resulting in delay of approximately 4 days, and that there was no mala fide intention attributable to the delay in filing the appeal. The assessee has, therefore, prayed for condonation of the unintentional delay and admission of the appeal for hearing. 3. In the affidavit filed in support of the petition, the assessee has stated that the present appeal before the Tribunal was filed on 07.01.2026, resulting in delay of approximately 4 days. It has further been stated that the delay in filing the appeal was neither intentional nor deliberate, but occurred due to bona fide reasons. The assessee has explained that it was under a bona fide belief that since the assessment was set aside for fresh examination, the jurisdictional issue would be addressed by the Assessing Officer, which was later realized to be legally untenable. It has also been stated that time was consumed in obtaining

3 ITA No. 169/Mum/2026 Satyapur Steel professional advice, examining the legal implications of non- adjudication of jurisdictional grounds, and collecting relevant records. The assessee has further stated that no prejudice would be caused to the Revenue if the delay is condoned, whereas grave injustice would be caused to the assessee if the appeal is dismissed on technical grounds. 4. Considering the shortness of delay of 4 days, the reasons stated in the petition and affidavit filed by the assessee, and the fact that the learned DR did not raise any serious objection to the condonation of delay, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed period. In the interest of substantial justice, the delay of 4 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits. Facts of the Case 5. The assessee is a partnership firm. The reassessment proceedings were initiated on the basis of information arising from search action under section 132 in the case of Shri Shripal Vora. The Assessing Officer recorded that Shri Shripal Vora was allegedly managing 44 concerns for providing accommodation entries and was charging commission at the rate of 2.75%. On the basis of the bank statement of Shri Shripal Vora maintained with Kotak Mahindra Bank, the Assessing Officer treated the assessee as one of the beneficiaries of alleged accommodation entries to the extent of Rs. 3,74,00,000/-.

4 ITA No. 169/Mum/2026 Satyapur Steel 6. The assessee had originally filed its return for A.Y. 2016-17 on 11.10.2016 declaring total income of Rs. 10,44,920/-, which was processed under section 143(1). Pursuant to the judgment of the Hon’ble Supreme Court in Union of India & Ors. v. Ashish Agarwal, the reassessment proceedings were continued under the amended reassessment scheme. Notice under section 148 was issued on 29.07.2022 and the assessee filed return in response thereto on 20.01.2023. Thereafter, notices under section 142(1), reminder letter and show cause notice were issued. The assessee filed replies denying any transaction with Shri Shripal Vora and submitted that Shri Shripal Vora had named the assessee with mala fide intention. 7. The Assessing Officer did not accept the assessee’s denial. He held that the assessee failed to furnish evidencing documents in respect of the alleged accommodation entries. Relying upon the statement of Shri Shripal Vora, bank statement, loose papers, diaries, computer hard drive and digital data backup, the Assessing Officer concluded that the assessee had obtained accommodation entry of Rs. 3,74,00,000/- in lieu of unaccounted cash. Accordingly, the said amount was added under section 68 as unexplained cash credit, and the total income was assessed at Rs. 3,84,44,920/- as against the returned income of Rs. 10,44,920/-. Penalty proceedings under section 271(1)(c) were also initiated. 8. Before the learned CIT(A), the assessee challenged the assessment primarily on the ground that no notice under section

5 ITA No. 169/Mum/2026 Satyapur Steel 143(2) was issued, and therefore the assessment was void ab initio. The assessee also challenged the addition under section 68 on the ground that it was made merely on the basis of a generalized statement of Shri Shripal Vora, without identifying the alleged parties, without showing that the alleged entries were found in the assessee’s books, and without providing material or opportunity to prove identity, genuineness and creditworthiness. 9. The assessee further submitted before the learned CIT(A) that it was engaged in the business of trading in ferrous and non- ferrous metals and that, after verification of its books, there was no transaction with Shri Shripal Vora. It requested specific details such as the name of the party, date of transaction, seized material, bank statement and opportunity for cross-examination of Shri Shripal Vora. According to the assessee, except the broad allegation that search was conducted on Shri Shripal Vora and that accommodation entries of Rs. 3,74,00,000/- were allegedly received, no specific material was supplied to it. 10. The learned CIT(A) noted that the assessment had been passed ex parte under section 147 read with section 144 and section 144B, and that the assessee had claimed that proper opportunity was not granted and relevant facts were not considered. Instead of deciding the legal ground relating to non- issuance of notice under section 143(2), the learned CIT(A) set aside the assessment order dated 08.05.2023 to the file of the Assessing Officer for fresh assessment, with direction to grant reasonable opportunity to the assessee.

6 ITA No. 169/Mum/2026 Satyapur Steel 11. The assessee is now in appeal before us mainly on the legal ground that the learned CIT(A) failed to adjudicate the jurisdictional issue of non-issuance of notice under section 143(2). The assessee also challenges the action of the learned CIT(A) in setting aside the assessment without first deciding the legal validity of the assessment, and alleges violation of principles of natural justice on account of non-adjudication of the crucial legal ground. The specific grounds are –

7 ITA No. 169/Mum/2026 Satyapur Steel instead of remanding the matter, which is contrary to the provisions of section 250 and settled judicial principles. 3. Violation of principles of natural justice 3.1 The impugned appellate order is bad in law as it violates the principles of natural justice, inasmuch as a crucial legal ground raised by the Appellant has been ignored. 4. General ground 4.1 The Appellant craves leave to add, amend, alter or withdraw any ground of appeal at or before the time of hearing. 12. During the course of hearing before us, the learned Authorised Representative (AR) submitted that the reassessment order passed under section 147 read with section 144 and section 144B of the Act suffers from a foundational jurisdictional defect, inasmuch as no notice under section 143(2) of the Act was issued to the assessee after filing of the return in response to notice under section 148. It was submitted that the assessee had filed its return of income on 20.01.2023 in response to notice under section 148 dated 29.07.2022. Thereafter, the assessment order records issuance of notice under section 142(1), reminder letter and show cause notice, but the learned AR submitted that no valid notice under section 143(2) was ever issued before completion of reassessment. The learned AR, therefore, contended that the reassessment framed thereafter is without jurisdiction and liable to be quashed.

8 ITA No. 169/Mum/2026 Satyapur Steel but a mandatory jurisdictional condition. In support, reliance was placed on the judgment of the Hon’ble Delhi High Court in Pr. CIT v. Staunch Marketing (P.) Ltd. [2017] 81 taxmann.com 482 (Delhi), wherein the Hon’ble Court held that, “Once a return is filed notice under Section 143 (2) of the Act to the Assessee is mandatory prior to framing an assessment.” The learned AR submitted that the Hon’ble High Court in the said decision has further held that assessment framed without issuing notice under section 143(2) is void ab initio. 14. The learned AR also relied upon the judgment of the Hon’ble Delhi High Court in Pr. CIT v. Dart Infrabuild (P.) Ltd. [2024] 166 taxmann.com 4 (Delhi), wherein the Hon’ble Court, while considering assessment framed under section 147/144, held that where the return filed by the assessee was available on record and was considered while framing assessment, the Assessing Officer ought to have issued notice under section 143(2) before passing the assessment order. The Hon’ble Court observed that, “The absence of notice, under Section 143(2), impregnates the proceedings with a jurisdictional defect”. The learned AR submitted that this ratio squarely applies to the present case, since the return filed by the assessee in response to notice under section 148 was available on record and was acted upon by the Assessing Officer while completing the assessment. 15. The learned AR further submitted that such defect is not curable under section 292BB of the Act, as the said provision may cure defects relating to service of notice, but it cannot cure

9 ITA No. 169/Mum/2026 Satyapur Steel complete absence of issuance of a mandatory jurisdictional notice. Reliance in this regard was again placed on Dart Infrabuild (P.) Ltd., wherein the Hon’ble Delhi High Court, following earlier judicial precedents, held that failure to issue notice under section 143(2) in reassessment proceedings cannot be condoned by referring to section 292BB. 16. It was thus submitted that the learned CIT(A), despite a specific jurisdictional ground raised by the assessee regarding non-issuance of notice under section 143(2), failed to adjudicate the same and merely set aside the assessment for fresh examination. According to the learned AR, once the jurisdiction of the Assessing Officer itself was under challenge, the learned CIT(A) ought to have first decided the legal ground. It was therefore prayed that the impugned appellate order, to the extent it failed to adjudicate the jurisdictional issue, be set aside and the reassessment order be held as bad in law and unsustainable for want of mandatory notice under section 143(2). 17. The learned Departmental Representative (DR), on the other hand, placed reliance on the factual report received from the Assessing Officer. Referring to the said report, the learned DR submitted that notice under section 148 of the Act was issued on 29.07.2022 and the assessee was required to file its return of income within 30 days. It was pointed out that the assessee filed its return only on 20.01.2023 in response to the said notice under section 148. The learned DR submitted that, as per the report of the Assessing Officer, the return filed on 20.01.2023

10 ITA No. 169/Mum/2026 Satyapur Steel was treated as time-barred and non-est, and therefore notice under section 143(2) of the Act was not issued. 18. The learned DR further submitted that the assessment order was thereafter passed on 08.05.2023 under section 147 read with section 144 and section 144B of the Act. It was submitted that the Assessing Officer proceeded to complete the reassessment on the basis that the return filed by the assessee in response to notice under section 148 was beyond the time prescribed in the said notice and, consequently, there was no requirement to issue notice under section 143(2). The learned DR, therefore, supported the action of the Assessing Officer by relying upon the factual report submitted by the Assessing Officer. 19. We have considered the rival submissions and perused the material available on record. The short jurisdictional issue arising for our consideration is whether the reassessment order passed under section 147 read with section 144 and section 144B of the Act can be sustained when no notice under section 143(2) was issued after the assessee filed return of income in response to notice under section 148. 20. It is an admitted position, as also borne out from the factual report of the Assessing Officer relied upon by the learned DR, that notice under section 148 of the Act was issued on 29.07.2022 and the assessee filed return of income on 20.01.2023 in response thereto. It is also not in dispute that no notice under section 143(2) of the Act was issued. The

11 ITA No. 169/Mum/2026 Satyapur Steel explanation of the Assessing Officer, as relied upon by the learned DR, is that the return filed on 20.01.2023 was treated as time-barred and non-est, and therefore notice under section 143(2) was not issued. 21. The aforesaid stand of the Revenue, in our considered view, cannot be accepted on the facts of the present case. Firstly, the assessment order itself has been passed under section 147 read with section 144 and section 144B of the Act. Section 144(1)(c) provides for best judgment assessment where the assessee, “having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143”. Thus, where the Department seeks to proceed on the footing that section 144(1)(c) is attracted, the statutory premise itself is that a return has been made and thereafter the assessee has failed to comply with notice under section 143(2). In the present case, admittedly, no notice under section 143(2) was issued at all. Therefore, the foundation for invoking section 144(1)(c), to the extent applicable, is absent. The official text of section 144 also shows that clause (c) is attracted only where a person, “having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143”. 22. The issue is squarely covered by the judgment of the Hon’ble Delhi High Court in Pr. CIT v. Staunch Marketing (P.) Ltd. [2017] 81 taxmann.com 482 (Delhi). In that case also, the assessee had filed return pursuant to notice under section 148

12 ITA No. 169/Mum/2026 Satyapur Steel and the assessment was framed without issuing notice under section 143(2). The Hon’ble High Court held as under:

“Once a return is filed notice under Section 143 (2) of the Act to the Assessee is mandatory prior to framing an assessment. The question of framing an assessment ex parte without even issuing a notice under Section 143(2) of the Act did not arise.” (para 14) 23. The Hon’ble High Court accordingly upheld the view that the assessment order framed without issuance of notice under section 143(2) was void ab initio.

“The submission advanced on behalf of the appellant/revenue that, while it could consider the invalid return while framing the assessment order, it was not obliged to issue a notice under Section 143(2) of the Act because it was not filed within the timeframe given in the Section 148 notice is untenable in law...” (para 15.1) 25. The Hon’ble High Court further held:

13 ITA No. 169/Mum/2026 Satyapur Steel “The absence of notice, under Section 143(2), impregnates the proceedings with a jurisdictional defect and, hence, renders it invalid in the eyes of the law.” (para 15.2) 26. The ratio of the aforesaid decisions applies to the facts of the present case. The assessee had filed return in response to notice under section 148. The Assessing Officer, however, admittedly did not issue notice under section 143(2). The reassessment order was thereafter framed under section 147 read with section 144 and section 144B. In view of the settled legal position, such reassessment is vitiated by a jurisdictional defect. 27. We also find merit in the grievance of the assessee that the learned CIT(A) failed to adjudicate the jurisdictional ground specifically raised before him. Once the assessee had challenged the validity of the assessment on the ground of non-issuance of notice under section 143(2), the learned CIT(A) was required to decide the said legal ground at the threshold. The learned CIT(A), instead of adjudicating the jurisdictional objection, set aside the assessment for fresh examination. Such course does not cure the defect of absence of jurisdictional notice nor does it answer the legal ground raised by the assessee. 28. In view of the admitted fact that no notice under section 143(2) was issued after the return filed by the assessee in response to notice under section 148, and respectfully following the judicial precedents discussed above, we hold that the reassessment order dated 08.05.2023 passed under section 147 read with section 144 and section 144B of the Act is bad in law

14 ITA No. 169/Mum/2026 Satyapur Steel and unsustainable. Accordingly, the jurisdictional ground raised by the assessee is allowed and the reassessment order is quashed. Consequently, the other grounds on merits of the addition of Rs. 3,74,00,000/- under section 68 are rendered academic and do not call for separate adjudication.

Order pronounced in the open court on 08.07.2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 08/07/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलार्थी / The Appellant 1. प्रत्यर्थी / The Respondent. 2. 3. संबंधित आयकर आयुक्त / The CIT(A) आयकर आयुक्त(अपील) / Concerned CIT 4. 5. धिभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण, मुम्बई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai