GRACY INCORPORATION ,TIRUPUR vs. ITO, WARD 2 (1), TIRUPPUR

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ITA 3314/CHNY/2025Status: DisposedITAT Chennai27 April 2026AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the impugned order and restored the matter to the Assessing Officer for a de novo assessment. This was done considering the assessment proceedings were conducted during the Covid-19 pandemic, leading to inadequate opportunity for the assessee.

What were the facts?

The CIT(A) initially allowed the assessee's appeal by quashing a notice under Section 148 due to limitation. This order was later rectified under Section 154, as the notice was issued before the relevant date for the Supreme Court decisions relied upon.

What were the issues?

The primary issue was the validity of a notice issued under Section 148, and whether the assessment proceedings conducted during the Covid-19 pandemic prejudiced the assessee.

Which sections of the Income-tax Act were involved?

Section 148,Section 149,Section 154,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: MS. PADMAVATHY S & SHRI MANU KUMAR GIRI

Hearing: 26.03.2026

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned appeal by the assessee is arising out of the

order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi

dated 09.10.2025 passed u/s.154 r.w.s. 250 of the Income Tax Act,

1961 (‘Act’) for AY 2015-16.

2.

Brief facts of the case are that original order u/s 250 of the Act,

for A.Y. 2015-16 was passed in this case on 09.10.2025 in which

the appeal was treated as allowed on the ground that the notice u/s

148 issued on 27.03.2021 is to be quashed as being beyond the

ITA 3314 Chny 2025 (AY 2015-16) Gracy Incorporation Vs ITO W 2(1) :: 2 ::

time limit permissible u/s 149(1) of the IT Act, 1961. The notice was

quashed on the ground that the case fell within the ambit of the

Hon'ble Supreme Court decisions in the cases of Union of India v/s

Ashish Agarwal [2022] 444 ITR 1 (SC) and Union of India v/s

Rajeev Bansal [2024] 469 ITR 46 (SC). Subsequently, it is revealed

from the record that the judgment in the case of Union of India v/s

Rajeev Bansal [2024] is not applicable as the notice u/s.148 has

been issued prior to 31.03.2021. Hence, proceedings for

rectification u/s 154 of the IT Act, 1961 was initiated by the

Ld.CIT(A) as the notice u/s 148 issued in this case was wrongly

quashed. He noted that the quashing of the notice is a mistake

apparent from record due to the following reason: -

As is evident from the excerpt of the judgement quoted above, that the ratio decidendi in these cases is applicable only to cases where the notice u/s 148 of the IT Act, 1961 has been issued on or after 1/4/2021. In the case under consideration the notice was issued prior to 1/4/2021 and hence is outside the ambit of the judgement mentioned above. Consequently, ld.CIT(A) passed the impugned order u/s.154 r.w.s. 250 of the Act. 3. The ld.AR for the assessee submitted that the ld.CIT(A) has

decided the appeal on the legal ground and also before the AO

assessment has been conducted during Covid-19 pandemic which

culminated into inadequate representation and lack of evidence,

ITA 3314 Chny 2025 (AY 2015-16) Gracy Incorporation Vs ITO W 2(1) :: 3 ::

therefore the matter may be remand back to AO for denovo

assessment on merit of additions.

4.

Per contra, ld.DR for the revenue did not opposed to the prayer

of the assessee seeing the Covid-19 pandemic during assessment

proceedings. However, she pleaded that no legal issue to be recked

up again in the denovo assessment proceedings.

5.

We have heard the rival submissions and perused the material

available on record. It is observed that the Ld. CIT(A) originally

allowed the appeal of the assessee by quashing the notice issued

u/s 148 of the Act on the ground of limitation by relying upon

judicial precedents. Subsequently, the said order was rectified u/s

154 of the Act on the premise that reliance placed on the decision

was not applicable to the facts of the present case, as the notice u/s

148 had been issued prior to 01.04.2021. In this case notice

u/s.148 is dated 27.03.2021.

6.

At the time of hearing, the Ld. AR submitted that the assessment

proceedings were carried out during the Covid-19 pandemic period,

resulting in inadequate opportunity and inability on the part of the

assessee to furnish necessary details and evidences in support of its

case. It was, therefore, pleaded that the matter may be restored to

ITA 3314 Chny 2025 (AY 2015-16) Gracy Incorporation Vs ITO W 2(1) :: 4 ::

the file of the Assessing Officer for fresh adjudication on merits. The

Ld. DR, though supporting the order of the Ld. CIT(A), fairly did not

object to the restoration of the matter to the file of the Assessing

Officer in view of the peculiar circumstances prevailing during the

pandemic period.

7.

Considering the entirety of facts and circumstances of the case,

and in the interest of substantial justice, we deem it appropriate to

set aside the impugned order and restore the matter to the file of

the Assessing Officer for de novo assessment. The Assessing Officer

is directed to re-adjudicate the issues afresh on merits after

providing reasonable and effective opportunity of being heard to the

assessee and after considering all relevant evidences that the

assessee may choose to file in support of its contentions.

8.

It is made clear that the assessee shall cooperate in the fresh

assessment proceedings and shall not seek unnecessary

adjournments. Further, since the legal issue regarding validity of

notice u/s 148 has already been adjudicated in rectification

proceedings, the same shall not be agitated again during the de

novo proceedings.

ITA 3314 Chny 2025 (AY 2015-16) Gracy Incorporation Vs ITO W 2(1) :: 5 :: 9. In the result, the appeal of the assessee is allowed for statistical

purposes. Order pronounced on the 27th day of April, 2026, in Chennai.

Sd/- Sd/- (प�ावती एस) (मनु कुमार िग�र) (PADMAVATHY S) (MANU KUMAR GIRI) &या�यक सद%य/JUDICIAL MEMBER लेखा सद%या/ACCOUNTANT MEMBER चे&नई/Chennai, (दनांक/Dated: 27th April, 2026.

SNDP, Sr. PS आदेश क� ��त)ल*प अ+े*षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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