INCOME TAX OFFICER, ANAKAPALLI vs. THE SRUNGAVARAM PRIMARY AGRICULTURE CO OPERATIVE SOCIETY, GANNAVARAM VILLAGE

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ITA 24/VIZ/2026Status: DisposedITAT Visakhapatnam29 May 2026AY 2018-1910 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, stating that the penalty, being consequential to the annulled assessment, had no independent existence. The Tribunal noted that the High Court's decision was binding until modified.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting a penalty levied under Section 271AAC(1). The CIT(A) had quashed the reassessment proceedings based on a High Court judgment that invalidated the notice issued under Section 148.

What were the issues?

Whether a penalty under Section 271AAC(1) can survive if the underlying reassessment proceedings are quashed due to an invalid notice under Section 148.

Which sections of the Income-tax Act were involved?

Section 271AAC(1),Section 148,Section 148A,Section 147,Section 144B,Section 251(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM “DB” BENCH : VISAKHAPATNAM AT HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI OMKARESHWAR CHIDARA

For Respondent: Smt A Aruna (HYBRID)
Hearing: 13.05.2026

PER VIJAY PAL RAO, VICE PRESIDENT:

This appeal by the Revenue and Cross Objection by the Assessee are directed against the Order dated 05.12.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, arising from penalty Order passed u/sec.271AAC of the Income Tax Act [in short "the Act"], 1961 for the assessment year 2018-2019.

2.

The Revenue has raised the following grounds of appeal:

1.

“The order of the Ld.CIT(A), National Faceless Appeal Centre (NFAC) is erroneous both on facts and in law. 2. The Ld.CIT(A) has erred both in law and on facts in allowing the appeal of the assessee and in quashing the reassessment proceedings initiated under section 148 of the Income Tax Act, 1961, without properly appreciating the facts and legal position involved. 3. The Ld.CIT(A) has erred in quashing the notice issued under section 148 of the Act, by the Jurisdictional Assessing Officer (JAO), when in fact the said notice had been issued strictly in accordance with the provisions of the Finance Act, 2021 w.e.f. 01.04.2021 and after due compliance with the procedure prescribed under section 148A of the Act including providing opportunity could not have been held to be invalid.

3 ITA.No.24/Viz./2026 4. The Ld.CIT(A) has failed to appreciate that as per the provisions of section 148 read with section 148A of the Act, it is the jurisdictional assessing officer, who is required to satisfy himself, based on information in his possession, suggesting that income chargeable to tax has escaped assessment and thereafter to issue notice under section 148. The action of the JAO is the instant case being in conformity with law, the order of the CIT(A) in quashing such notice is erroneous and unsustainable. 5. The Ld.CIT(A) erred in ignoring the provisions of Section 124(5) of the Act read with directions issued under section 120(1) & 102(2) of the Act by which the JAO is expressly vested with authority over the assessees situated within the relevant territorial area. The Ld.CIT(A) is not justified in holding otherwise as the initiation of proceedings and issuance of notice u/s. 148 of the Act by the jurisdictional Assessing Officer is valid, competent and in accordance with the statutory scheme. 6. The Ld.CIT(A) ignored the provisions of Section 124(3)(a) and Section 124(3)(b) of the Act. The assessee ought to raise any objections with respect to jurisdiction of the JAO within the stipulated time of one month from the date of service of notice u/s.143(2) or u/s.142(1) of the Act where a return of income was filed otherwise before the completion of assessment in case no return of income was filed, but not after completion of reassessment proceedings. Hence, the Ld.CIT(A) is not justified in entertaining a belated jurisdictional objection contrary to the express mandate of section 124(3) nor in invalidating a notice that was otherwise validly issued by the competent JAO. 7. The order of the Ld.CIT(A) is contrary to the facts, provisions of law and judicial precedents applicable to the case and hence deserves to be set aside.

4 ITA.No.24/Viz./2026 8. The Ld.CIT(A) failed to appreciate that the department has filed a SLP against the order of the Hon'ble High Court of Telangana in the case of Kankanala Ravindra Reddy vs Income Tax Officer [2023] before the Hon'ble Supreme Court vide SLP (civil) No.3574/2024 on the same issues involved. 9. The Hon'ble High Court of Andhra Pradesh vide writ petition in No.14142/2024 has set aside the notice u/s.148A(b), 148A(d) and 148 of the Income Tax Act, 1961. The Chief Commissioner of Income Tax, Hyderabad has accorded approval for filing of SLP against the order of the Hon'ble High Court of Andhra Pradesh before the Hon'ble Supreme Court. 10. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and/or at the time of hearing of appeal. 11. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that all these above additions be restored.” 3. We have heard the learned DR as well as the learned Authorised Representative of the Assessee and carefully perused the impugned order passed by the learned CIT(A). The learned CIT(A) has deleted the penalty in Para nos.8.1 to 8.5 as under:

“Decision:

8.1. The appellant has challenged the imposition of penalty of Rs.28,52,736/-levied u/s. 271AAC(1) of the

5 ITA.No.24/Viz./2026 Income-tax Act, 1961. Since all the grounds of appeal relate to this single issue, they are being adjudicated together.

8.2. I have carefully considered the penalty order passed u/s. 271AAC(1), the grounds of appeal, the submissions of the appellant, and the material available on record including information accessible through the ITBA portal. It is noted that in the quantum appeal proceedings, vide order dated 25.11 2025 u/s. 250 of the Act [DIN No. ITBA/NFAC/S/250/2025-26/ 1082993245(1)] the Ld. CIT(A) held that in light of the binding judgment of the Hon'ble High Court of Andhra Pradesh in appellant's own case in WP. No. 14142 of 2024, the notice issued u/s 148 dated 04.04.2022, had been held to be invalid in law The Hon'ble High Court, in the case of the appellant, set aside the notice issued u/s 148A(b), 148A(d) and 148 of the Act as well as all consequential proceedings and orders emanating thereof. The relevant portion of the judgement of the Hon'ble Court is reproduced as under:

6 ITA.No.24/Viz./2026 (E). Considering the background in notifying the (E-Assessment Scheme of income Escaping Assessment Scheme 2022) notified by the Government of India on 29.03.2022, and in the light of the decisions of various High Courts stated supra and upon careful consideration of the contentions raised by the learned counsel appearing on either side, we hold that the impugned notices and orders which have been issued by the Jurisdictional Assessing Officer, or outside the faceless mechanism as provided under the provisions of Section 144(b) read with Section 151A and the E- Assessment Scheme of income Escaping Assessment Scheme, 2022 notified by the Government of India on 20.03.2022 under Section 151A is bad and illegal, It is made clear that the Jurisdictional Assessing Officer (JAO") had no jurisdiction to issue the impugned orders notices. (F) In view of the foregoing reasons, all these Writ Petitions are to be favour of the petitioners by setting aside the impugned allowed notices/orders Accordingly. 8. Accordingly, these Writ Petitions are allowed. (i) Consequently, the impugned notices orders issued under Sections 148-A(b), 148A(d) and 148 of the Income Tax Act 1961. in all these Writ Petitions, are hereby set aside. (ii) The consequential orders, if any, shall stand set- aside. 9. There shall be no order as to costs. 8.3. Consequently, as discussed in the above para 8.2, the assessment order was annulled and the grounds of appeal

7 ITA.No.24/Viz./2026 were rendered infructuous and were accordingly allowed by the Ld. CIT(A) vide order dated 25.11.2025. The relevant portion of the said order is reproduced as under: 8.6. In view of the above binding judicial pronouncement, the very foundation of the reassessment proceedings the notice issued u/s. 148 dated 04.04.2022 stands invalid in law. Consequently, the assessment order passed u/s. 147 r.w.s. and 144B dated 31.10 2023 is rendered void, without jurisdiction and liable to be annulled As the reassessment itself does not survive, the additions made therein also do not survive and the grounds raised in appeal rendered infructuous. 9. In the result, the grounds of appeal is allowed as infructuous 8.4. Accordingly, it is evident that the Ld. CIT (A), in terms of the proviso to section 251(1)(a) of the Act, has already annulled the original assessment order and accordingly allowed the appeal of the appellant. Since the penalty u/s. 271AAC(1) flows directly from the assessment so annulled, the impugned penalty order has no independent existence and is rendered infructuous. 8.5. In view of the above, the penalty of Rs. 28,52,736/- levied u/s. 271AAC(1) is directed to be deleted.”

4.

Thus, it is clear that in the quantum appeal the learned CIT(A) allowed the appeal of the assessee in view of Judgment of Hon’ble Jurisdictional High Court in WP.No.14142 of 2024 whereby the notice issued by the

8 ITA.No.24/Viz./2026 Assessing Officer u/sec.148 and consequential proceedings and orders emanating therefrom were set aside. Thus, once the Hon’ble Jurisdictional High Court has quashed the notice issued by the Assessing Officer u/sec.148 of the Act and consequently, the re-assessment order was also set aside then, the question of levy of penalty u/sec.271AAC does not arise.

5.

The learned DR has submitted that the Hon’ble Supreme Court has now remanded the matter to the Hon’ble High Courts for reconsideration of the issue in light of the amendment in the Income tax Act by Finance Act, 2026.

6.

Even if the matter is remanded by Hon’ble Supreme Court to the Hon’ble High Courts the decision of Hon’ble Jurisdictional High Court in assessee’s own case is binding until the same is reviewed or modified. Accordingly, we do not find any reason to interfere with the impugned order of the learned CIT(A). However, since the issue is pending adjudication before the Hon’ble Jurisdictional High Court as remanded by the Hon’ble Supreme Court therefore, the parties are at liberty to get this appeal revived if the

9 ITA.No.24/Viz./2026 outcome of the decision of Hon’ble Jurisdictional High Court on this issue necessitates so.

7.

In the result, appeal of the Revenue is dismissed.

8.

The assessee has raised the following grounds in its cross objection:

1.

“The appeal filed by the Revenue is not maintainable in as much as the case of the Respondent does not fall within the scope of exception laid out in para 3.1 (j) of CBDT Instruction No.5 of 2024. 2. The learned Commissioner of Income Tax (Appeals) is justified in giving effect to the order of the hon'ble High Court of Andhra Pradesh in WP No.14142/2024 and thereby allowing the appeal of the appellant on the ground that the assessment order passed on the basis of notice issued u/s 148 by the JAO is liable to be quashed as void ab initio. 3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) ought to have decided the appeal even on merits. 4. For any other ground of cross-objection that may be raised at the time of hearing.” 9. Since we have dismissed the appeal of the Revenue and the Assessee has not raised any new issue against the impugned order of the learned CIT(A) therefore, the cross objection filed by the assessee become infructuous and accordingly, the cross objection of the assessee is dismissed.

10 ITA.No.24/Viz./2026 10. In the result, Cross Objection of the Assessee is dismissed.

11.

To sum-up, appeal of the Revenue and Cross Objection of the Assessee are dismissed. A copy of this common order be placed in the respective case files.

Order pronounced in the open Court on 29.05.2026.

Sd/- Sd/- [OMKARESHWAR CHIDARA] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 29th May, 2026. VBP Copy to The Income Tax Officer, Ward-1, Income Tax Street, Gandhinagaram, ANAKAPALLE. 1. The Srungavaram Primary Agriculture Cooperative Society, GANNAVARAM (V), Y B Agraharam Post, 2. Nathavaram (M), Visakhapatnam. PIN – 531 115. State of Andhra Pradesh. 3. The Pr. CIT, VIJAYAWADA. State of Andhra Pradesh. 4. The DR ITAT “Visakhapatnam” DB-Bench, Visakhapatnam 5. Guard File //By Order// VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.06.03 RAO 17:01:19 +05'30'

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