SHRI ANJANI KUMAR PANDEY ,HARYANA vs. ITO , WARD-1(1), FARIDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Sh. Brajesh Kumar Singh, Accountant Member ITA No. 7400/Del/2025 :Asstt. Year: 2012-13 Sh. Anjani Kumar Pandey, Vs Income Tax Officer, 141, Sector-7A, Faridabad, Ward-1(1), Haryana-121006 Faridabad, Haryana (APPELLANT) (RESPONDENT) PAN No. ACHPP9860A Assessee by: Sh. Lalit Mohan, CA & Sh. Ankit Kumar, Adv. Revenue by: Ms. Ankush Kalra, Sr. DR Date of Hearing: 24.03.2026 Date of Pronouncement: 14.05.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal is directed against the order dated 29.09.2025 of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as the “CIT(A)/NFAC”) passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made vide assessment order dated 23.12.2019 were confirmed and assessment order was upheld by dismissing the appeal of the assessee.

2 ITA No. 7400/Del/2025 Anjani Kumar Pandey Rs.47,00,680/-. Re-assessment was initiated on the basis of information regarding sale of immovable property and the case was selected for verification of capital gains and cash deposits. The appellant was allotted House No. 36/10, Faridabad under a duly executed family settlement. In June 2011, the assessee sold the said property for a total consideration of Rs.1,08,50,000/- of which Rs.25,00,000/- was reflected in the registered sale deal and balance was alleged to be received in cash. Out of the sale proceeds, the assessee purchased a new residential flat for Rs.41,86,568/- and invested Rs.47,00,000/- in purchase of shares, claiming exemption u/s 54 of the Act on the amount invested in the new house property. While framing the re-assessment, the ld. Assessing Officer accepted the capital gains computation, but treated the cash portion of the sale consideration as income from undisclosed sources and made an addition of Rs.83,35,000/- to the returned income, thereby assessing the total income as Rs.1,30,35,680/-.

3 ITA No. 7400/Del/2025 Anjani Kumar Pandey registered sale deed remains the primary legal document of transfer of property and therefore claim made by assessee was not accepted and addition of Rs.83,35,000/- was therefore confirmed.

4 ITA No. 7400/Del/2025 Anjani Kumar Pandey u/s 147/143(3) of the Act are invalid and deserve to be quashed as such. 4 That the learned National Faceless Appeal Centre (NFAC) has also erred both in law and on facts in sustaining an addition of Rs. 83,35,000/-representing alleged cash deposits in the bank account. 4.1 That the learned National Faceless Appeal Centre (NFAC) failed to appreciate that source of cash deposit is out of sale consideration of immovable property duly declared in return of income and even accepted in the order of assessment, therefore upholding the finding of learned Assessing officer that cash deposit was from undisclosed sources is misconceived. 4.2 That while confirming the above addition, the learned National Faceless Appeal Centre (NFAC) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so confirmed is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable. 4.3 That the learned National Faceless Appeal Centre (NFAC) has erred both in law and on facts in recording various adverse inferences which are contrary to the facts on record, material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained is absolutely unwarranted. 5 That the learned National Faceless Appeal Centre (NFAC) erred both in law and on facts in upholding addition u/s 68 and 69 of the Act, on the contrary provisions of section in absence of books of accounts are not applicable and provisions of section 69 in view of fact of disclosed source of cash deposit is also not applicable.” 5. The assessee has made an application seeking permission to raise an additional ground as under: “1. That the order of assessment under section 147/143(3) of the Act dated 23.12.2019 is illegal, bad in law and without prejudice as the same is passed in violation of CBDT instraction No. 1/2018 [F. No. 225/157/2017-ITA.II) dated 12.02.2018 and as such the said assessment order is liable to be quashed as such. 2. That the notice issued on 21.12.2019 u/s 143(2) of the Act is in violation of CBDT instruction 01/201 1 dated 31.01.2011, therefore such initiation of jurisdiction is

5 ITA No. 7400/Del/2025 Anjani Kumar Pandey bad in law and therefore the assessment is liable to be quashed as such.” 6. We have heard the ld. AR and the ld. DR on admission of the additional grounds. In support of his application seeking permission to raise additional grounds, it is argued that it is purely a legal ground and the necessary facts are already on record and therefore relying upon the case of National Thermal Power Company Ltd. Vs. CIT reported in 229 ITR 383(SC), it is submitted that additional grounds may be admitted and adjudicated in favour of the assessee.

6 ITA No. 7400/Del/2025 Anjani Kumar Pandey the e-proceedings extracts from the ITBA placed on record during arguments which shows that the proceedings in this scrutiny assessment has been actually conducted online through e-processing facility available through the website of the Income Tax department. The ld. AR further drew our attention to the assessment order to show that the assessment order dated 23.12.2019 has been signed and issued manually, which is in violation of CBDT Instruction No. 1/2018 [F.No. 225/157/2017-ITA.II) dated 12.2.2018. It is further submitted by the ld. AR on behalf of the assessee/appellant that the identical and similar issue has already dealt with and decided by the Co-ordinate bench in the case of Navyug Technologies Pvt. Ltd. Vs. ITO in ITA No. 4579/Del/2024, order dated 16.02.2026 wherein it has been held as under: “4. At the outset, Ld. Counsel for the assessee drew our attention towards the notice issued by the Assessing Officer u/s. 142(1) of the Act dated 26.8.2019 and pointed out that this scrutiny assessment was conducted via online in e-processing facility available through the website of the Income Tax Department. He further drew our attention to the assessment order and particularly pointed out that the assessment order dated 19.12.2019 has been signed and issued manually, which is in violation of CBDT Instruction No. 1/2018 [F.No. 225/157/2017-ITA.II) dated 12.2.2018. Ld. Counsel for the assessee further stated that exactly similar issue has been dealt by the Coordinate Bench of the Delhi Tribunal in the case of Out systems Singapore Pte. Ltd. vs. DCIT, Circle International Tax 2(2)(2), Delhi in ITA NO. 1601/Del/2025 (AY 2022-23) wherein, it has been held as under:- “7. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also considered the decisions on which respective sides have placed reliance in support of their

7 ITA No. 7400/Del/2025 Anjani Kumar Pandey arguments. Before proceeding to decide merits of the addition, the legal issue raised by the assessee in ground of appeal no.3 challenging validity of the Final Assessment Order in signing the order manually is taken up first for adjudication. A perusal of the impugned order reveals that the assessment order has been signed manually by the Assessing Officer. The assessment has been made under ‘E-Proceedings’. The Board vide Notification No. 01/2018 dated 12.02.2018 has notified that all assessment proceedings in scrutiny cases are to be conducted electronically. The said instructions are reproduced herein below: “SECTION 143, READ WITH SECTIONS 142 & 2(23C), OF THE INCOME-TAX ACT, 1961 - ASSESSMENT - CONDUCT OF ASSESSMENT PROCEEDINGS IN SCRUTINY CASES ELECTRONICALLY INSTRUCTION NO.1/2018 [F.NO.225/157/2017-ITA.II], DATED 12-2-2018 Sub-section (23C) of Section 2 of the Income-tax Act, 1961 (Act), applicable from 1-6-2016, provides that "hearing" includes communication of data and documents through electronic mode. Accordingly to facilitate conduct of assessment proceedings electronically, vide letter dated 23-6-2017, in file of even number, Board had issued a revised format of notice(s) under section 143(2) of the Act. Para 3 of these notice(s) provided that assessment proceedings in cases selected for scrutiny would be conducted electronically in 'E-Proceeding' facility through assessee's account in E-filing website of Income-tax Department. 2. In accordance with the procedure outlined in revised 143(2) notice(s) for conduct of assessment proceedings electronically, it is hereby directed that except for search related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the 'E-Proceeding' functionality in ITBA/E-filing. However, in cases where the concerned assessee objects to conduct of assessment proceedings electronically through the 'E- Proceeding' facility, such cases, for the time-being, may be kept on hold. 3. Further, considering the situation that some of the stations have limited bandwidth, being VSAT stations and stations with limited capacity where bandwidth is in the process of being upgraded, it has been decided that till 31-3-2018, such stations, in accordance with

8 ITA No. 7400/Del/2025 Anjani Kumar Pandey target stipulated in Central Action Plan for financial year 2017-18, may undertake and complete only ten percent scrutiny cases (which are getting barred by limitation on 31-12-2018) having the potential to effect recovery during the current year itself. The list of such stations shall be specified by the Pr. DGIT(Systems). Accordingly, at these stations, till 31- 3-2018, the assessment proceedings in cases to be completed as per Central Action Plan target, may be conducted manually if e-assessment is not possible. It is reiterated that at other stations covered under para 2 above, subject to exceptions mentioned therein, the assessments would be conducted electronically only. 4. Some of the important procedural aspects while conducting assessment proceedings through 'E- Proceeding' are as under: 4.1 Enquiry before assessment in electronic mode : For enquiries before assessment in terms of section 142(1)(ii) of the Act, notice shall be issued electronically and delivered upon the assessee in his 'E-Filing' account. While filing the response electronically in compliance with notice under section 142(1)(ii) of the Act, the concerned assessee shall verify it in the manner prescribed under rule 14 of Income-tax Rules, 1962. 4.2 Use of digital signature by Assessing Officer: All departmental orders/communications/notices being issued to the assessee through the 'e- Proceeding' facility are to be signed digitally by the Assessing Officer. 4.3 Time for compliance: Online submissions may be filed till the office hours on the date stipulated for compliance. 4.4 Availability of facility for electronic submission of documents in time barring situation or where case has been finally heard by the Assessing Officer: The facility for electronic submission of documents through 'E Proceeding' shall be automatically closed seven days before the time barring date. In other situations, upon completion of proceedings, before passing the final order, concerned Assessing Officer, on his volition, shall close the e-submission facility after mentioning in electronic order sheet that 'hearing has been concluded'. However, if required, in exceptional circumstances, the concerned Assessing Officer may enable further filing of submissions electronically under intimation to the Range Head in ITBA.

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4.5 In assessment proceedings being carried out through the 'E-Proceeding' facility, a particular proceeding may take place manually in following situation(s): i. where manual books of account or original documents have to be examined; ii. where Assessing Officer invokes provisions of section 131 of the Act or a notice is issued for carrying out third party enquiries/investigations; iii. where examination of witness is required to be made by the concerned assessee or the Department; iv. where a show-cause notice contemplating any adverse view is issued by the Assessing Officer and assessee requests for personal hearing to explain the matter. 4.6 Maintenance of 'Record' in the context of 'E- Proceeding': In cases being assessed through 'E- Proceeding', from now on, as far as possible, case- records as well as note sheet of proceedings shall be maintained electronically. 5. This instruction may be brought to the notice of all concerned for immediate compliance.” 8. A perusal of para 4.2 of the aforesaid instructions would show that communication of all documents including orders, notices, etc. issued to the assessee through ‘E-Proceeding’ facility are to be signed digitally by the Assessing Officer. No exception has been provided in the said instructions for signing the assessment orders manually. During the course of hearing, the ld. DR sought time to furnish copy of the exceptions, if any. The time sought by the DR was allowed. However, on the next date of hearing no such instructions were furnished and the ld. DR expressed her inability to lay hands on any such instructions carving out exceptions. In the absence of any exceptions, all assessment orders in ‘E-Proceedings’ have to be necessary signed digitally. The instructions dated 12.02.2018 issued by the Board would apply to all assessments made electronically. The ld. DR has placed on record the reasons given by the AO for signing the order manually. The relevant excerpts from the same are reproduced herein under: “In this regard, it is submitted that the date of limitation for passing the assessment order in this case was 31.01.2025 pursuant to the directions of the Hon'ble DRP. The assessment order for AY 2022-23 was

10 ITA No. 7400/Del/2025 Anjani Kumar Pandey passed and sent to CP for final accounting. However, CPC had not closed the accounting of the same and the assessment order along with computation sheet and demand notice had not come back from the CPC for being digitally signed and issued to the assessee grievance had been raised on the TBA Helpdesk for the same. Since the charge of Circle 2(2)(2) was being transferred with effect from 13.01.2025 on account of the undersigned proceeding on earned leave and since the new incumbent officer would not be able to sign the order on a later date, the assessment order in this case was passed and signed manually by the undersigned on 10.01.2025 and sent to the assessee on the same date.” 9. Since CBDT Instructions No. 1/2018 (supra) requires the Assessing Officer to sign assessment order digitally where the assessments are completed through ‘E-Proceedings’ facility, the assessment order would stand valid only if it is passed in accordance with the CBDT Instructions. No exception has been provided by the Board to the said conditions. 10. The Hon’ble Supreme Court of India in the case of Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh (2015) 13 SSC 722 has held that any deviation in the procedure prescribed by the statue renders the action illegal. The Hon’ble Apex Court in the case of Chandra Kishore Jha vs Mahavir Prasad (1999) 8 SCC 266 held that, if statue provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. The CBDT has laid down procedure for completing ‘E-Proceedings’ in a particular manner, the same are binding on the Department. The AO is thus mandatorily required to sign the assessment order digitally where the scrutiny assessments are conducted electronically. Since, in the instant case the assessment has been made under ‘E’- Proceedings and assessment order has been signed manually, the same suffers from incurable defect, if, the assessment order has been served on the assessee. The reliance placed by the Revenue on the decision in the case of Mytheenkunju Muhammed Kunju Kandathil Jewellers vs. DCIT (supra) does not support the cause of Revenue as the same was passed in peculiar set of facts and hence, is distinguishable. Thus, the assessment order is liable to be quashed on this ground alone.” 5. The aforesaid facts were confronted to Ld. Sr. DR, but he could not controvert the above fact situation.

11 ITA No. 7400/Del/2025 Anjani Kumar Pandey 6. After hearing the rival contentions and gone through the facts of the case, we noted that in terms of the e-proceedings procedure laid down by the CBDT, the Assessing Officer is manually required to sign the assessment order digitally where scrutiny assessment is conducted electronically. Since in the instant case the assessment has been made under e-proceedings facility, however, the assessment order has been signed manually, which vitiates the assessment on this ground. 7. In view of the aforesaid factual matrix and respectfully, following the aforesaid Coordinate Bench decision in the case of Outsystems Singapore Pte. Ltd. vs. DCIT, Circle International Tax 2(2)(2), Delhi in ITA NO. 1601/Del/2025 (AY 2022-23) dated 10.12.2025, we quash the assessment and allow the additional ground raised by the assessee. 8. Since we have already quashed the assessment on the legal ground, the other grounds have become academic, hence, need not be adjudicated. 9. In the result, the Assessee’s appeal is allowed in the above terms.” 8. We have also heard the ld. DR who has relied upon the assessment order as well as ld. CIT(A) order but could submit nothing in order to controvert the averments made on behalf of the assessee/appellant with regard to the additional grounds raised.

12 ITA No. 7400/Del/2025 Anjani Kumar Pandey proceeding facility but the assessment order has been signed manually which is contrary to the CBDT instructions noted above and thus vitiates the assessment on this ground.