M/S ROYAL CART,BANGALORE vs. INCOME TAX OFFICER ,WARD 4(3)(2) ,BANGALORE, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER

ITA No.761/Bang/2026 Assessment Year: 2020-21 M/s Royal Cart, Vs. The Income Tax Officer, No.110/A, 2nd C Main Road, Ward – 4(3)(2), 8th Block, Koramangala, Bengaluru. Bengaluru. – 560 095. PAN – AAYFR 9537 R APPELLANT RESPONDENT Assessee by : Ms. Ema Bindu, Advocate Revenue by : Shri Ganesh R Ghale, Advocate – Standing Counsel for Revenue Date of hearing : 02.06.2026 Date of Pronouncement : 05.06.2026 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

The present appeal filed by the assessee pertaining to A.Y. 2020- 21 is directed against the order of the learned Commissioner of Income Tax (Appeal) (hereafter- the learned CIT(A)) under section 250 of the Income Tax Act, 1961 (hereafter- the Act) vide order dated 09/09/2025.

ITA No.761/Bang/2026 Page 2 of 12 for condonation of delay supported by a duly sworn affidavit explaining the reasons for the delay.

.

ITA No.761/Bang/2026 Page 3 of 12 5. We have carefully considered the explanation furnished by the assessee and perused the materials available on record. It is a settled proposition of law that while considering an application for condonation of delay, a liberal and justice-oriented approach is required to be adopted where the explanation offered is bona fide and does not indicate any deliberate negligence or mala-fide conduct. The Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Others [167 ITR 471 (SC)] has held that substantial justice deserves to be preferred over technical considerations and that a litigant ordinarily does not stand to benefit by lodging an appeal belatedly.

5.1 In the present case, we find that the delay has been explained with reference to the health condition of the partner, the bona fide belief that the tax practitioner was attending to the matter, the subsequent discovery of the ex parte order of the learned CIT(A), and the time consumed in engaging a new counsel and preparing the appeal. The Revenue has not brought on record any material to suggest that the delay was deliberate, intentional or motivated by any ulterior purpose. In our considered opinion, the reasons furnished by the assessee constitute sufficient cause for not presenting the appeal within the prescribed period. Considering the totality of facts and circumstances of the case, and in the interest of substantial justice, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within time. Accordingly, the delay of 87 days in filing the present appeal is condoned and the appeal is admitted for adjudication on merits.

5.2 The assessee has raised following grounds of appeal: 1. The order passed by the learned Addl. Commissioner of Income Tax (A), NFAC, under section 250 of the Act is so far as it is against the Appellant is opposed to

.

ITA No.761/Bang/2026 Page 4 of 12 law, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. The appellant denies itself to be assessed at Rs. 23,26,076/- for the assessment year 2020-21 on the facts and circumstances of the case. 3. The learned CIT(A) ought to have provided sufficient opportunity of hearing to the appellant and the order passed is in violation of principles of natural justice, on the facts and circumstances of the case. 4. The learned CIT(A) erred in upholding the addition of Rs. 23,26,076/- as income of the appellant, without appreciating that the profits does not reflect the actual profitability, which is evident from the financial statements available on record, on the facts and circumstances of the case. 5. The learned CIT(A) erred in upholding the additions, of 8% of turnover as net profit without appreciating that the appellant was earning much less profits on the facts and circumstances of the case. 6. The learned CIT(A) failed to appreciate the severe financial distress faced by the appellant due to the pandemic, which affected the ability to comply with statutory requirements, on the facts and circumstances of the case. 7. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 8. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.

5.3 During the course of hearing, the learned Authorised Representative for the assessee filed an application seeking admission of additional grounds of appeal which reads as under: 1. The notice u/s 148A(b) of the Act dt:15.03.2024 is bad in law on the facts and circumstances of the case. 2. The notice u/s 148A(b) of the Act dt:19.03.2024 is bad in law on the facts and circumstances of the case. 3. The notices issued under section 148A(b) of the Act is below the mandatory limit of "not less than seven days" and thus is contrary to the requirement of the Act and the notices are required to be set aside as bad in law. 4. The sanction issued under section 151 of the Act is bad in law on the facts and circumstances of the case. 5. The notice issued under section 148 of the Act dt. 30.03.2024 by the learned Income Tax Officer, Ward 4(3)(2), Bangalore is without jurisdiction subsequent to the introduction of the "Faceless Scheme" on the facts and circumstances of the case.

.

ITA No.761/Bang/2026 Page 5 of 12 6. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned Assessing Officer. Without prejudice, the rate, period and the quantum on which the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserve to be cancelled on the facts and circumstances of the case. 7. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 8. In view of the above and other grounds that may be urged at the time of hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.

5.4 The learned AR submitted that the additional ground challenges the jurisdictional validity of the reassessment proceedings and involve pure questions of law arising from the materials already available on record. It was contended that no fresh evidence is required to adjudicate the issues raised and the same can be decided on the basis of documents already forming part of the assessment records. The learned AR further submitted that the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT reported in 229 ITR 383 has held that a pure question of law arising from facts already on record can be raised at any stage of appellate proceedings. Reliance was also placed on the decision of the Hon'ble Karnataka High Court in the case of Gundathur Thimmappa & Sons vs. CIT reported in 70 ITR 70 for the proposition that legal grounds going to the root of the matter deserve to be admitted in the interest of substantial justice. The assessee accordingly prayed that the additional grounds be admitted and adjudicated on merits.

.

ITA No.761/Bang/2026 Page 6 of 12 7. We have carefully considered the submissions of the learned AR and perused the additional grounds sought to be raised by the assessee. We find that the additional grounds challenge the very validity and jurisdiction of the reassessment proceedings initiated against the assessee. The issues raised relate to the legality of notices issued u/s 148A(b) of the Act, validity of sanction accorded u/s 151, jurisdiction for issuance of notice u/s 148 and consequential levy of statutory interest. These grounds arise from the assessment records themselves and do not require investigation into any new or disputed facts.

7.1 It is well settled by the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (229 ITR 383) that the Tribunal has jurisdiction to examine a question of law arising from facts which are already on record, even though such question was not raised before the lower authorities. The object of appellate proceedings is to correctly determine the tax liability in accordance with law and not to shut out a legitimate legal contention on technical considerations. Since the additional grounds raised by the assessee are purely legal in nature, go to the root of the assessment proceedings and can be adjudicated on the basis of material already available on record, we are satisfied that no prejudice would be caused to the Revenue by admitting the same. Accordingly, in the interest of substantial justice and following the ratio laid down by the Hon'ble Supreme Court in National Thermal Power Co. Ltd. (supra), we admit the additional ground of appeal for adjudication on merits.

.

ITA No.761/Bang/2026 Page 7 of 12 7.2 As the issue raised in the additional ground is legal issue and goes to the root of the validity of the assessment, we proceed to adjudicate the additional ground of appeal first.

7.3 The issue raised by the assessee in the Additional Ground of Appeal Nos. 1 to 5 are interconnected and pertains to validity of the notice issued under section 148A(b) of the Act and consequently validity of the notice issued under section 148 of the Act.

7.4 The necessary facts are that the assessee is partnership firm and engaged in retail trading business. The assessee for the A.Y. 2020-21 did not file return of income as per the provisions of section 139 of the Act despite the fact that the assessee had huge cash withdrawal and deposit, substantial sale as reported in GST Return in Form-GSTR-1 & GSTR-3B. Accordingly, a notice under section 148A(b) of the Act dated 15-03-2024, signed on 16-03-2024 was issued for the first time requiring the assessee to furnish necessary details and explanation on or before 20-03-2024.

7.5 Thus, giving opportunity to the assessee for less than 7 days. Subsequently, another notice under section 148A(b) dated 19-03-2024 was issued giving opportunity to reply on or before 25th March 2024. Thus, again opportunity provided to the assessee for making reply was less than 7 days.

7.6 Based on the above-mentioned notices issued under section 148A(b) of the Act, an order under section 148A(d) was passed and notice under section 148 of the Act was issued as on 30-03-2024. Finally, the assessment under section 147 r.w.s. 144 of the Act came to be completed

.

ITA No.761/Bang/2026 Page 8 of 12 vide order dated 11-02-2025 by assessing the income at Rs. 23,26,076/- only. The assessment made by the AO was confirmed by the learned CIT(A) vide order dated 09-09-2025.

.

ITA No.761/Bang/2026 Page 9 of 12 performed, the same has to be performed in that manner alone and any deviation therefrom renders the action invalid in law.

11.1 For ready reference, section 148A(b) of the Act provides that the AO shall provide an opportunity of being heard to the assessee by serving upon him a notice to show cause within such time as may be specified in the notice, "being not less than seven days and but not exceeding thirty days" from the date on which such notice is issued. Thus, the legislature in its wisdom has consciously prescribed a minimum period of seven days which must necessarily be made available to the assessee for furnishing its explanation before a decision is taken regarding issuance of notice u/s 148 of the Act.

.

ITA No.761/Bang/2026 Page 10 of 12 11.2 On perusal of the materials available on record, we notice that the first notice issued u/s 148A(b) of the Act is dated 15.03.2024 and was digitally signed on 16.03.2024. The assessee was required to furnish its reply on or before 20.03.2024. Thus, even if the date of issuance is reckoned as 15.03.2024, the time granted to the assessee was only five days. If the date of digital signing i.e., 16.03.2024 is considered, the effective opportunity available to the assessee becomes still shorter. Likewise, the second notice issued u/s 148A(b) dated 19.03.2024 required compliance on or before 25.03.2024. Thus, the period granted therein was only six days. Therefore, in both notices, the minimum statutory period of seven days contemplated under section 148A(b) of the Act was admittedly not provided to the assessee.

11.3 In our considered view, the requirement prescribed under section 148A(b) of the Act cannot be regarded as a mere procedural formality. The provision has been introduced by the legislature as an important safeguard before reopening a completed assessment. The opportunity contemplated therein is intended to enable the assessee to effectively explain the information relied upon by the Revenue and demonstrate why notice u/s 148 ought not to be issued. Once the legislature itself has prescribed a minimum period of seven days, the Revenue authorities cannot curtail the same on administrative considerations. The expression "not less than seven days" employed by the statute is mandatory in nature and leaves no discretion with the AO to grant a shorter period.

11.4 We are unable to accept the contention of the Revenue that no prejudice has been caused to the assessee. Where a statutory safeguard expressly provided by Parliament is violated, prejudice is inherent. The

.

ITA No.761/Bang/2026 Page 11 of 12 doctrine of prejudice cannot be invoked to dilute a mandatory statutory requirement. The validity of jurisdictional proceedings has to be tested with reference to the statutory conditions prescribed for assumption of jurisdiction. If such conditions are not fulfilled, the proceedings cannot be sustained.

11.5 The Hon'ble Supreme Court and various High Courts have consistently held that where the law requires a particular procedure to be followed before assumption of jurisdiction, strict compliance with such procedure is mandatory. In the present case, the AO assumed jurisdiction for reopening the assessment on the basis of notices which themselves were issued in violation of the express mandate contained in section 148A(b) of the Act. Consequently, the foundation on which the reassessment proceedings rest becomes legally unsustainable. In holding so we draw support and guidance from the judgment of Hon’ble Delhi High Court in the case of Nidhi Bindal vs. Income-tax Officer [2022] 144 taxmann.com 122 (Delhi)/[2023] 290 Taxman 306 (Delhi)[26-08-2022] wherein it was held as under: 5. This Court is of the view that since the impugned show cause notice required the Petitioner to file the reply by 25th March 2022 i.e. within six days despite the fact that section 148A(b) mandatorily requires to give a minimum time of seven days to the assessee to file its reply, the Respondents failed to fulfil the criterion of 'not less than seven days' as provided in clause (b) of section 148A of the Act.

11.6 Considering the totality of facts and circumstances of the case, we hold that both the notices issued u/s 148A(b) of the Act dated 15.03.2024 and 19.03.2024 are contrary to the mandatory requirement of section 148A(b) of the Act as the assessee was not granted the minimum statutory period of seven days for furnishing its reply. Consequently, the order passed u/s 148A(d), the notice issued u/s 148 dated 30.03.2024 and the

.

ITA No.761/Bang/2026 Page 12 of 12 assessment framed pursuant thereto u/s 147 r.w.s. 144 of the Act are liable to be quashed. We accordingly set aside the reassessment proceedings and quash the assessment order passed by the AO. Since we have quashed the reassessment proceedings on this legal ground, the remaining grounds raised on merits have become academic and are not adjudicated.

Order pronounced in court on 5th day of June, 2026

Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 5th June, 2026 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order

Asst. Registrar, ITAT, Bangalore

.