APALA BANERJEE,KOLKATA vs. ITO, WARD 44(2), , KOLKATA

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 14.02.2025 for the AY 2017-18.

“1. FOR THAT in the facts and circumstances of the ease. the CIT(A) Face Less New Delhi erred in not appreciating that the preconditions were to be strictly followed by the ITO Wd 44(2) Kol for framing the assessment order u/s 144 of the IT Act dated 23/12/2010. in the present case against a valid notice u/s 143(2) of IT Act 1961 issued in contravention of the CBDT Instruction F No-225/157/2017/ΓΤΑ-11 Dated 23-06- 2017 necordingly failure to maintain the mandates resultsorder framed and passed subsequently/consequently void ab initon, bad in law, manifest error, ultra vires and unsustainable in the eyes of law and justice.

3.2. In the appellate proceedings also the ld. CIT (A) confirmed the order of the ld. AO when there is no compliance made on the part of the assessee.

3.3. After hearing the rival contentions and perusing the materials available on record, we find that the notice was issued u/s 143(2) of the Act, a copy of which is available in the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:-

“आयकर नियम 1962 के नियम 12 इ कैसाथ पहिि आयकर अधिनियम 1961 की िारा 143 (2) के अिीि मोहिय Notice under section 143(2) of the Income-tax Act. 1961 read with Rule 12 E of Income Tax Bules, 1962 संवीक्षा (जांच) (कंप्यूिर आिाररत संवीक्षा चयि) Scrutiny (Computer Aided Scrutiny Selection) त्रिय करदाता, Dear Taxpayer,

आपके द्वारा नििाारण वर्ा 2017-18 के लिए हदिांक 11/09/2018 को पावती सं. 289556331110918 के तित आयकर वववरा दाखिि करिे के लिए आपको िन्यवाद । Thank you for filing your return of income for Assessment Year 2017-18 vide Ack no 289556331110918 on 11/09/2018. 2. वववरखणका को तैयार करिे में आपके ध्याि एवं पररश्रम को स्वीकार करते िुए. कुछ मुद्दों पर और स्पष्िीकरण की आवश्यकता जजिके कारण आपकी आय वववरखणका को संवीक्षा (जांच) के लिए चुिा गया िै, ये मुद्दे प्रारंभ में निम्िािुसार िै। 2. While acknowledging the care and diligence you may have taken in preparing the return, there are certain issues which need further clarification, for which your return of Income has been selected for scrutiny and such issues initially are as under: S. No. Issues i. Cash Deposit (Demonetization) 3. उपरोक्त को ध्याि में रिते िुए उल्िेखित मुद्दो के उिर आप संबंधित दस्तावेजो (यहद कोई िो) सहित नििाारण अधिकारी को कायावािी' सुवविा में अपिे ई-फाइलिंग येबसाइि, िाते में जररए (www.incometaxindiaefiling.gov.in) अपिी सुवविािुमााः हदिांक 07/10/2019 तक या उससे पििे इिेक्रोनिक माध्यम से प्रस्तुत कर दें। 3. In view of the above, you may submit your response with supporting documents (if any) on the above-mentioned issues to the Assessing Officer electronically in 'e- Proceedings' facility through youraccount in e-Filing website (www.incometaxindiaefiling.gov.in) at your convenience on or before 07/10/2019. 4. नििाारण प्रक्रिया के दौराि यहद आवश्यक िुआ तो सूचिा/कागजात के लिए ववस्तृत प्रश्िाविी या मांग पि बाद में जारी क्रकया जाएगा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document may be issued subsequently. 5. आप के संदभा के लिए 'ई-कायावािी' पर एक संक्षक्षप्त िोि संिग्ि िै। यहद आपको अपिा उत्तर दजा करिे में क्रकसी भी सिायता क आवश्यकता िै तो आप िोि फ्री कॉि सेंिर िं 1800 103 4215 पर संपका कर सकते िैं। 5. A brief note on 'e-Proceeding' is enclosed for your kind reference. In case you require any assistance in filing your response, you may contact toll free Call Centre number 1800 103 4215.

भवदीय/ Yours faithfully

सिायक आयकर आयुक्त (ई-सत्यापि) Assistant Commissioner of Income-tax (e-Verification) आयकर अधिनियम 1961 की िारा 143 (2) के अिीि ववहित आयकर प्राधिकारी Prescribed Income-tax Authority u/s 143(2) of the Income Tax Act. 1961” 3.3.1. In our opinion, the notice issued u/s 143(2) of the Act which is not in the prescribed format as provided under the Act is an invalid notice and accordingly, all the subsequent proceedings thereto would also be invalid and void ab initio. The case of the assessee find support from the decision of Shib Nath Ghosh Vs. ITO in ITA No. 1812/KOL/2024 for A.Y. 2018-19 vide order dated 29.11.2024, wherein the co-ordinate Bench has held as under:-

“10. After hearing both the sides and the materials available on record, we find that the notice issued u/s 143(2) dated 9th August, 2017 was not in any of the formats as provided in the CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017. We have examined the notice, copy of which is available at page no.1 of the Paper Book and find that the same is not as per the format of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017 as stated above. In our opinion, the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. Hon'ble Apex Court in case of UCO Bank (supra) held that the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under:- “The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to

4.1. In the appellate proceedings, before Ld. CIT (A), the assessee made submission and filed evidences, however, the Ld. CIT (A) restored the issue back to the file of the Ld. AO for denovo adjudication. We note that all these documents/evidences such as audited trading account, Profit and Loss account, audited Balance sheet, audited report were available before the Ld. AO as well as the ld. CIT(A).

4.2. We have also examined the copy of cash flow statement, statementshowing month wise sales of petrol and others for A.Y. 2016-17, month wise statement of sales for A.Y. 2015-16, which are available from page no. 9 to 52 and a copy of bank statement in respect of SBI, which is available at page no.53 to 84. We find that the assessee had sufficient cash balance out of cash sales available in the books of accounts of the assessee. The assessee has also furnished the cash flow statement from 01.04.2016 to 31.03.2017 which is extracted below for ready refence:

i) Joginder Kaur vs ITO (2024) 169 taxmann.com 90(Amritsar) ii) Jaspal Singh Sehgal vs ITO, 47 ITR (T) 193 (Mum) iii) Ajaya Data vs ACIT (2025) 171 taxmann.com 308 (Jaipur)

“12. We have heard both the counsels at length and considered all the materials on record including the paper book and synopsis filed by the assessee and the various judicial citations referred to by the assessee. 12.1 We proceed to decide the issue on the merits of the case as contained in ground no 6 of the memorandum. 12.2 We find that the dispute regarding sale of land vide an agreement of sale dated 10/04/2008 , executed by the assessee and her family members and consequent receipt of sale proceeds by cash and cheque, on various dates during the FY 2008-09 as narrated by the AO in the assessment order ( page -2 and 3 / para - 2 ), and also narrated by the Ld. CIT (A) in his appeal order, are factual events that has occurred in the FY 2008-09 ( relevant to the A.Y. 2009- 10 ) , andare issues to which we are not concerned at the moment, because it does not relate to the year under appeal . 12.3 We only focus on the financial transactions in the bank account of the assessee in PNB Gramin Bank , for the financial year 2009-10 ( Asst year 2010-11 ) the relevant year under appeal. We find on reading of the bank statement, that the opening balance brought forward on 1st April 2009 is 20. 30 lakhs , and there has been subsequent credit in the said account vide bank transfers ( other than cash ), to which neither the AO nor the Ld CIT(A) has raised any queries at any stage. Subsequently, the assessee has withdrawn cash from the said bank account on various dates within the financial year, as date wise reflected in the cash flow statement furnished by the assessee, and it is seen that sufficient cash balance are available with the assessee on the date of deposit of cash in the bank account in the month of March 2010 and as per contention of the assessee it is the same cash that has been redeposited. We also agree with the argument of the Ld AR, that it is not the case of the department that cash withdrawn by the assessee from PNB Gramin bank, during the period April 2009 till January 2010, (as reflected in bank account ) has been invested or spent somewhere else or has been utilized elsewhere . In absence of any such adverse finding, the benefit of cash availability cannot be denied to the assessee.

4.2.5. Similarly, we find that the Ld. AO has made disallowance of expenses of ₹2,44,820/-, in respect of pump office expenses, oil tankers repairs by comparing the current year’s net profit with the preceding year net profit. Similarly, the AO disallowed 10% of the expenses namely bank interest, accounting salary,loading and

Order pronounced in the open court on 28.04.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 28.04.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata