VIKASH KUMAR,SONBHADRA vs. INCOME TAX OFFICER, WARD 3 (4), SONBHADRA

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.18/VNS/2025 Assessment Year:2009-10 Vikas Kumar v. Income Tax Officer Ailahi, Khairahi Ward 3(4) Sonhbadra (U.P) Sonbhadra TAN/PAN:BAFPK3623R (Applicant) (Respondent) Applicant by: CA Pragati Jaisawal Respondent by: Shri Deepak Yadav, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 30.11.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2009-10.

2.0 The brief facts of the case are that the assessee was engaged in the business of trading in fertilizers. The assessee filed his return of income for the year under consideration on 26.03.2010 declaring a total income of Rs.1,48,580/-. The Assessing Officer (AO) initiated reassessment proceedings in the case of the assessee on the basis of information available with the Income Tax Department regarding cash deposits of Rs.19,45,500/- in his Saving Bank Account and issued notice under section 148 of the Act to the assessee. However, the assessee neither filed the return of income nor responded to the

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notice under section 148 of the Act. Thereafter, the AO issued statutory notices, requiring the assessee to furnish the copy of return of income, copy of Bank statement and details of source of deposits in Saving Bank account. However, there was still no response from the side of the assessee. The AO, subsequently, issued a show cause notice to the assessee for completion of assessment under section 144 of the Act, vide which the assessee was required to explain the source of cash deposits. Since again there was no response from the side of the assessee, the AO treated the cash deposits of Rs.19,45,580/- as unexplained income of the assessee and added the same to the total income of the assessee. The AO completed the assessment under section 144 read with section 147 of the Act, assessing the total income of the assessee at Rs.20,94,080/-.

2.1 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.

2.2 Now, the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

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Facts & Grounds of Appeal mentioned by the appellant before CIT(A) Prayagraj. Grounds of Appeal as mention in From 35 were as under: 1) BECAUSE, the reassessment proceeding under section 147 has neither been validly initiated nor concluded, therefore whole of reassessment proceeding is vitiated. 2) BECAUSE, the notice under section 148 has never been served upon the appellant therefore consequential assessment proceeding is invalid and without jurisdiction. 3) BECAUSE, the learned assessing officer has erred in law and on facts in framing the ex-party order under section 144 without giving adequate opportunity of being heard. 4) BECAUSE, the learned assessing officer has erred in law and on facts in making an addition of Rs.19,45,500 on account of deposit in his bank account as unexplained income of the assessee. 5) BECAUSE, the appellant is engaged in business of trading of fertilizers and source of deposit in the bank of account is fully explained out of trading receipts. 6) BECAUSE, the appellant is regularly filing his return of income and income earned from fertilizer trading is fully and truly disclosed in his income tax return filed originally. 7) BECAUSE, the appellant denies for levy of interest under section 234A, 224B and 234C of the Income Tax Act, 1961.

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8) BECAUSE, order appealed against is contrary to the facts, law and principle of natural justice. 2. BECAUSE the learned Assessing Officer has erred in treating the total Cash deposits in the bank account as unexplained income as it relates to daily sales which are carried on in the day to day business by the appellant. 3. BECAUSE the order passed by the Assessing Officer & CIT(A) is contrary to the facts and law applicable thereto and principles of natural justice and same is liable to quashed. 4. Because the assessment made by the Assessing Officer under section 144 r.w.s 147 is liable to be quashed on the ground that no communication of notice issued under section 148 as the notices were issued at the wrong address which was never the address of the appellant. 5. BECAUSE the order passed by the Assessing officer & CIT(A) is null & void on the basis of following points: 5.1 Notice under section 148 has never been served upon the appellant therefore consequential assessment proceeding is invalid. As it is clearly evident in the case: "Commissioner Of Income Tax (Central)-1 vs Chetan Gupta on 15 September, 2015" were Delhi High Court is held that: i. Under Section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements.

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ii. For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC iii. The onus is on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. iv. The mere fact that an Assessee or some other person on his behalf not duly authorized participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee under Section 148 of the Act v. Reassessment proceedings finalized by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid and liable to be quashed. 5.2 That reassessment under Section 148 cannot be validly completed without issuing a notice under Section 143(2). The absence of such a notice is considered a significant procedural lapse, leading to the reassessment being deemed invalid.

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"It can be seen in the case of Pr. CIT Vs Kamla Devi Sharma, the Rajasthan High Court held that the failure to issue a notice under Section 143(2) before finalizing the reassessment order cannot be condoned even if notice under Section 148 was properly served. Similarly, in the case of Ram Niwas Jain Vs ITO, the ITAT Delhi quashed the reassessment proceedings due to the absence of a notice under Section 143(2) before completing the assessment." 6. BECAUSE in relation to the "grounds of appeal" taken here in force, the appellant begs to refer and rely upon the averments made in the Statement of Facts accompanying the Memo of appeal marked as Annexure - I to the Memo of appeal 7. BECAUSE the Appellant craves leave to add/alter any of the Grounds of Appeal on or before the date of hearing of appeal. 3.0 At the outset, the Ld. Authorized Representative for the Assessee (Ld. A.R.) stated at the Bar that she does not wish to press the legal grounds, viz. grounds No.5, 5,1 and 5.2. Grounds No.5, 5.1 and 5.2 are, accordingly, rejected as not pressed.

3.1 The Ld. A.R. further submitted that the cash deposits made by the assessee in his Bank Account are duly included in the return of income. She submitted that given a fair opportunity before the AO, the assessee will conclusively demonstrate, through full reconciliation and documentary

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evidence, that the cash deposits made in the bank account are fully accounted for and included in the Income Tax Return filed by the assessee under Section 139 of the Act. The Ld. A.R. prayed that in the interest of natural justice, equity, and fair play, the matter may kindly be restored to the file of the AO to enable the assessee to produce the reconciliation and supporting documents to prove that the deposits are duly included in the return of income.

4.0 Per contra, the Ld. Sr. D.R. submitted that during the assessment proceedings under section 144/147 of the Act, the assessee was provided adequate opportunity to demonstrate the source of cash deposits and their inclusion in the return of income. However, the assessee had failed to furnish any details at that stage. He submitted that the order of the NFAC, upholding the addition, be sustained, as the assessee had failed to prove the source before the lower authorities. Alternatively, if the matter was to be restored to the file of the AO for fresh verification, necessary directions may be given to the assessee to produce complete details to substantiate that the exact cash deposits form part of the returned income.

5.0 I have heard both the parties and have also perused the material on record. The submission of the Ld. A.R. is that the

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cash deposits made by the assessee in his Bank Account are duly included in the return of income. The prayer of the Ld. A.R. is that given a fair opportunity before the AO, the assessee will conclusively demonstrate, through full reconciliation and documentary evidence, that the cash deposits made in the bank account are fully accounted for and included in the Income Tax Return filed by the assessee under Section 139 of the Act. Looking into the peculiar facts of this case, I am of the considered view that the assessee deserves one more opportunity to present his case and, therefore, I set aside the order of the NFAC and restore this file to the Office of the AO with the direction to provide one more opportunity to the assessee to present his case. I also caution the assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the assessee.

6.0 In the result, the appeal of the assessee stands partly allowed for statistical purposes.

Order pronounced in the open Court on 25/08/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER

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DATED:25/08/2026 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order

Assistant Registrar/DDO