NARESH CHANDRA AGARWAL,MORENA vs. INCOME TAX OFFICER, WARD 1, MORENA, MORENA

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH “DB”, AGRA BEFORE SHRI S.RIFAUR RAHMAN,ACCOUNTANT MEMBER and SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITANo.460/AGR/2014 (AssessmentYear:2018-19) Naresh Chandra Agarwal, vs. ITO, Ward 1, Prop. Jindal Trading Co., Morena. Ambah Road, Prosa, Morena – 476 115 (Madhya Pradesh). (PAN: AEQPA5451D) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Deependra Mohan, CA REVENUE BY : Shri Anil Kumar, Sr. DR. Date of Hearing : 19.02.2026 Date of Order : 20.04.2026 O R D E R PER S. RIFAUR RAHMAN, AM : 1. This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”, for short] dated 15.07.2025 for the Assessment Year 2018-19. 2. We find that there was a delay of 3 days in filng the appeal. The assessee has filed application for condonation stating that the delay of 3 days due to

2 ITA No.460/Agr/2025 technical error in respect of non-receipt of OTP in email from the site and there is no delay in filing the appeal attributable to the assessee which is a reasonable cause for delay in filing the appeal and accordingly pleaded to condone the same. The assessee also filed affidavit in support of the same. After considering the submissions of both the parties, we are of the considered opinion that reasonable cause has been attributed to the assessee in filing the belated appeal, therefore, we condone the delay in filing the appeal before the Tribunal. 3. The assessee has filed the following grounds of appeal :- “1. That, on the facts and circumstances of the case and in law, and in any view of the matter, the Ld. Assessing Officer (JAO) has erred in initiating proceeding U/S 147 by issuing notice U/S 148 of the Act, without jurisdiction, which ought to have been initiated by Faceless Assessing Officer (FAO). Therefore, the impugned assessment framed pursuant thereto is vitiated. 2. That, on the facts and circumstances of the case and in law, and in any view of the matter, the Ld. Assessing Officer (JAO) has erred in issuing notice U/S 143(2) of the Income Tax Act, 1961 on 28.09.2022 not in accordance with and in violation of provisions of section 143(2) of the Income Tax Act, 1961 and CBDT instruction F. No. 225/157/2017/ITA-11 dated 23.06.2017. Therefore, the impugned notice U/S 143(2) is invalid and assessment framed pursuant thereto is vitiated in law. 3. That, on the facts and circumstances of the case and in law, and in any view of the matter, the Ld. Authorities below have erred in making and upholding the addition of Rs.50,00,000/- u/s 69D in respect of alleged unexplained cash loan taken on hundi from Shri Narayan Hari Gupta, whereas no such loan was taken by the assessee. 4. That, on the facts and circumstances of the case and in law, and in any view of the matter, the Ld. Commissioner of Income Tax (Appeals) has erred in deciding the appeal as dismissed mentioning that appellant has not filed any written submission in support of grounds of appeal,

3 ITA No.460/Agr/2025 whereas the reasonable and proper opportunity of hearing not allowed to the appellant. 5. That, on the facts and circumstances of the case and in law, and in any view of the matter, the Ld. authorities below have erred in completing and upholding the assessment without providing the reasonable and proper opportunity of hearing by way of opportunity of personal hearing to substantiate the contents prior to drawing adverse inference while passing the impugned appeal order.” 4. Assessee also filed additional grounds of appeal as under :- “1. That, on the facts and circumstances of the case and in law and in any view of the matter, the Ld. Assessing Officer has erred in initiating proceeding u/s 147, 148A(b), 148A(d) and issuing notice u/s 148 of the Income Tax Act, 1961 in the case where the information related to the appellant was received by the Ld. Assessing Officer only on 20.02.2020 from the Ld. Assistant Commissioner of Income Tax, Central Circle Gwalior of Mr. Narayan Hari Gupta, person searched only on 20.02.2020. 2. That, on the facts and circumstances of the case and in law and in any view of the matter, the Ld. Assessing Officer has erred in initiating proceedings u/s 147, 148A(b), 148A(d) and issuing notice u/s 148. of the Income Tax Act, 1961 in place of proceeding u/s 153C of the Income Tax Act, 1961 in the case' where the information related to the appellant was received by the Ld. Assessing Officer only on 20;02.2020 from the Ld. Assistant Commissioner of Income Tax, Central Circle Gwalior of Mr. Narayan Hari Gupta, person searched only on 20.02.2020. 3. That, on the facts and circumstances of the case and in law and in any view of the matter, the impugned assessment order passed by the Ld. Assessing Officer u/s 147 read with section 144B of the Income Tax Act, 1961 vide order dated 20.03.202.1 is barred by limitation.” 5. With regard to additional grounds of appeal nos.1, 2 & 3, the ld. AR submitted as under :-

Sr. Particulars Relevant Dates Source No. 1 Date of search in the case of Narayan Hari 22.02.2018 Annexure to show cause Gupta notice u/s 148A(b) – Third line below the table at page 2 of the notice – Placed at P-2 of paper book

4 ITA No.460/Agr/2025 2 Date of receiving information by the ld. 20.02.2020 Letter dated 17.12.2025 Assessing Officer of the appellant from issued by the Ld. the Ld. Assistant Commissioner of Assessing Officer (JAO) Income Tax, Central Circle, Gwalior i.e. of the appellant – Placed Ld. Assessing Officer of person searched at P-17 of paper book 2. 3 Date of completion of the assessment u/s 153B of the Income Tax Act, 1961 – 21 months from the end of the financial year in which the last of the authorization for search u/s 132 was executed i.e. 21 months from 01.04.2018 31.12.2019 Provision to section 153B(1) Or nine months from the end of the financial year in which books of account or documents are handed over u/s 153C of 31.12.2020 Provision to section the Ld. A.O. having jurisdiction over such 153B(1) other person i.e. the appellant in this case. Whichever is later

31.12.2020 Provision to section 153B(1) 4 Date of issue of show cause notice u/s 16.03.2022 SCN u/s 148A(b) placed 148A(b) at P-1 of paper book 5 Date of order u/s 148A(d) 29.03.2022 Order u/s 148A(d) placed at P-5-10 of paper book 6 Copy of notice u/s 148 of the Income Tax 29.03.2022 Notice u/s 148 placed at Act, 1961 P-11 of the paper book 7 No notice u/s 153C of the Income Tax Act, 1961 was issued 8 Notice u/s 143(2) dated 28.09.2022 not in 23.06.2017 Notice u/s 143(2) placed accordance with CBDT Instruction at P-16 of the paper No.F.No.225/157/2017/ ITA-II dated book

Gupta issued a letter to the AO of the assessee sharing the certified copy of

information which is placed at pages 17 & 18 of the paper book. In the

abovesaid letter, he submitted that there was no satisfaction received from

the AO of the searched person. He submitted that as per provisions of

section 153(1), the assessment should have been done on or before

5 ITA No.460/Agr/2025 31.03.2020. However, the assessment was completed by invoking the provisions of section 148A and 148 of the Act. In this regard, he brought to our notice decision of Hon’ble Rajasthan High Court in the case of Tirupati Construction Company vs. ITO (2024) 465 ITR 611 dated 21.03.2024 wherein it was held that search was carried out in the year 2016 and respondent had the authority to reopen the assessment by invoking the provisions of section 153C of the Act and reassessment proceedings u/s 153A of the Act. It was not done within the period of limitation prescribed u/s 153B of the Act. The AO was fully aware of the fact that proceedings u/s 153C would be barred by limitation; therefore, recourse was taken to the provisions contained in section 148 and 148A of the Act which has non- application in the present case. He submitted that issue under consideration is exactly similar to the facts and circumstances of the case and pleaded relief accordingly. 7. On the other hand, ld. DR of the Revenue submitted that the order passed by the ld. CIT (A) is ex-parte for non-compliance, therefore, the matter be remitted back to ld. CIT (A). 8. Considered the rival submissions and material placed on record. We observed that assessee has taken a legal ground i.e. additional ground, this ground can be raised at any stage of proceedings. Therefore, we proceeded

6 ITA No.460/Agr/2025 to adjudicate the issue raised by the assessee in additional ground of appeal. We observed that the issue under consideration is that the AO of the assessee has received information from AO of the searched person i.e. Narayan Hari Gupta and the information was supplied to the AO along with written note found during the search on 22.02.2018 and the information was received by the AO on 20.02.2020. The period of limitation for completion of the assessment u/s 153C is 21 months from the end of the financial year in which the authorization for search u/s 132 was executed i.e. 21 months from 01.04.2018 or 9 months from the end of the financial year in which books of account or documents are handed over to AO of the other person whichever is later. In this case, notice was issued u/s 148A (b) on 16.03.2022. Considering the detailed chart submitted by the assessee which is reproduced at para 5 above, the facts are exactly similar to the facts in the decision of Hon’ble Delhi High Court in the case of Tirupati Construction Company (supra) and the relevant findings are as under :- “14. In view of above, it is clear that the entire basis for reopening the assessment is nothing but the material and information collected during search conducted in the premises of another assessee. Collection of details relating to sea h would not mean collection of new incriminating material and information, independent of the incriminating material and information collected during search proceedings. 15. Learned counsel for the petitioner is correct in submitting that in fact, search was carried out in the year 2016 and the respondents had the authority to reopen the assessment by invoking the powers under section 153C of the Act of 1961 and draw reassessment proceedings under section 153A of the Act of 1961. That was not done within the period of limitation prescribed under section 153B

7 ITA No.460/Agr/2025 of the Act of 1961. The respondent- authority was fully aware of the fact that proceedings under section 153C of the Act of 1961 would be barred by limitation, therefore, recourse was taken to the provisions contained in Section 148 and Section 148A of the Act of 1961 which has no application in the present cases. 16. Learned counsel for the revenue does not dispute the legal position that where the basis for reassessment is incriminating material and information collected during search, the only legally permissible course of action is the one provided under section 153C of the Act of 1961 and not under section 148 of the Act of 1961. Admittedly, present are not the cases where search was carried out after 1-4-2021, i.e., after coming into force the Finance Act, 2021. Present are the cases of search of prior period.” 9. Respectfully following the above decision, we are inclined to set aside the assessment order passed u/s 148 of the Act. Accordingly, additional grounds are allowed. 10. Since we have quashed the assessment order on the legal issue, the other grounds raised by the assessee were not adjudicated at this stage and the same are kept open. 11. In the result, the appeal filed by the assessee is allowed in the above terms Order pronounced in the open court on this day 20th of April, 2026.

Sd/- sd/- (SUNIL KUMAR SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 20.04.2026 TS

8 ITA No.460/Agr/2025