RUMANA LEATHER COMPANY,CHENNAI vs. ACIT, CENTRAL CRICLE-1(1), CHENNAI

Since identical facts and issues are involved in these four appeals, these appeals were heard together and disposed of by this common order. For the sake of clarity and convenience the facts relevant in the ITA No.3891/CHNY/2025 for the Assessment Year 2018-19 are stated herein:

The Assessee in ITA No.3891/CHNY/2025 raised Grounds of Appeal as under : “1. The order of the CIT (A), Chennai- 18 dated 11.12.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1083570255(1) for the above-mentioned Assessment Year is contrary to law, fact and in circumstances of the case.

The CIT (A), Chennai- 18 erred in dismissing the appeal filed against the re- assessment order dated 09.01.2025 by reckoning the appellant not being aggrieved by the passing of the said order within the ambit of the provisions Section 246A (1) read with 249(1) of the Act without assigning proper reasons and justification.

The CIT (A), Chennai- 18 failed to appreciate that the re-assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law, thereby establishing the appellant's aggrievement with passing of the re-assessment order under consideration within the ambit of the provisions in Section 246A (1) read with 249(1) of the Act.

The CIT (A), Chennai- 18 failed to appreciate that the return of income filed in response to notice under Section 148 of the Act under compelling circumstances was wrong and not sustainable in law in view of the fact the same being explicit froiwaleabsence of direct evidence in the survey records as well contradiction to the audited financial statements, there by vitiating the enhanced taxable income reported / accepted in the re-assessment order.

The CIT (A), Chennai- 18 failed to appreciate that return of income filed in response to notice under Section 148 of the Act, if at all to be reckoned as concession would not validate the re-assessment proceedings initiated in terms of Section 147 of the Act and ought to have appreciated that such concession would not automatically confer jurisdiction to assess the appellant under the provisions of Income Tax Act, 1961, there by vitiating the related findings.

The CIT (A), Chennai- 18 failed to appreciate that the filing of income of return based on the statements without supporting materials /evidences as opposed to the law laid down by the Supreme Court in the case reported in 325 ITR 480 was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The CIT (A), Chennai 18 erred in confirming the assumption of jurisdiction under Section 147 of the Act and consequently erred in confirming the passing of the re-assessment order under Section 147 of the Act without assigning proper reasons and justification.

The CIT (A), Chennai- 18 failed to appreciate that the assumption of jurisdiction under Section 147 of the Act was without sanction of law and ought to have appreciated that the consequential re-assessment order accordingly should be reckoned as bad in law.

The CIT (A), Chennai- 18 failed to appreciate that having not followed the prescription of law/procedure for framing the re-assessment, the consequential re-assessment order passed should be reckoned as nullity in law for want of jurisdiction.

The CIT (A), Chennai- 18 failed to appreciate that the issuance of the notice under Section 148 of the Act by the JAO as against the issuance of the such notice by the FAO would completely defy the prescription of law /procedure in relation there to and hence ought to have appreciated that in the absence of valid foundation for issuance of notice under Section 148 of the Act in view of issuance of such notice by JAO instead of FAO, the consequential re-assessment should be considered as nullity in law.

The CIT (A), Chennai- 18 failed to appreciate that having not conducting any further enquiry in the hands of other entities with respect to the purchases under consideration, mere emphasis placed on the statement obtained from the appellant during the course of the survey operations under Section 133A of the Act in support of assumption of jurisdiction under Section 147 of the Act should be reckoned as bad in law.

The CIT(Appeals) Chennai - 18 failed to appreciate that materials seized / statements recorded during the course of survey were not in accordance with procedure laid down in the Act / judge made law and ought to have appreciated that reliance upon such inadmissible evidences for the purpose of assuming jurisdiction in terms of Section 147 of the Act should be reckoned as bad in law.

The CIT(Appeals) Chennai 18 failed to appreciate that reliance placed on the loose sheet / dumb documents as well as the sworn statement(s) recorded during the time of survey for assuming jurisdiction in terms of Section 147 of the Act in the absence of any corroborative evidence would vitiate the re-assessment passed in terms of Section 147 of the Act.

The CIT(Appeals) Chennai 18 failed to appreciate that having not shared the information received during the proceedings conducted in the premises of the third party for validly coming to a conclusion that other entities had raised fake invoices, demonstrating non application of mind, there by vitiating the passing of the impugned order.

The CIT(Appeals) Chennai - 18 failed to appreciate that presumption of bogus purchases as well as under-valuation of stock was made on mere suspicion and surmises and further ought to have appreciated in the absence of material evidence in support of the same, the passing of the impugned order should accordingly be reckoned as bad in law.

The CIT(Appeals) Chennai - 18 failed to appreciate that in any event, the assessment of the entire receipts as income without quantifying 'income' component involved was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The CIT(Appeals) Chennai 18 failed to appreciate that the entire re- computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The CIT(Appeals) Chennai 18 failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.

The Appellant craves leave to file additional grounds/arguments at the time of hearing.”

Briefly the facts of the case are that the appellant is a Partnership Firm engaged in the business of manufacturing and sale of leather. The appellant filed the Return of Income for the Assessment Year 2018-19 on 28.09.2018 disclosing the income of Rs.37,82,74,310/-. Against the said Return of Income, no scrutiny assessment was made.

Subsequently, the survey operations u/s.133A of the Income Tax Act were carried out in the business premises of the appellant. During the course of survey proceedings, it was stated that certain incriminating documents were found and impounded. Based on this, the Assessing Officer formed an opinion that the income got escaped assessment from tax. Accordingly, a notice u/s.148 of the Act was issued on 31.03.2024 after duly complying with the procedure laid down u/s.148A of the Act. In response to notice u/s.148, the appellant filed Return of Income disclosing income of Rs.43,37,80,140/-. Against the said Return of Income, the assessment was completed by the ACIT, Central Circle-1(1), Chenai vide order dated 09.01.2025 passed u/s.147 of the Income Tax Act, 1961 accepting the returned income.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order dismissed the appeal of the assessee.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal.

On the other hand, the ld. Sr. DR had opposed the submissions made on behalf of the appellant and relied on the order of ld.CIT(A).

We shall take up this Ground No.10 at first instance as it goes to very root of the matter. In this case, we find that the appellant raised jurisdictional issue that the Jurisdictional Assessing Officer(JAO) have no jurisdiction to issue notice u/s.148 of the Act. The Jurisdiction to issue the above notice vests with the Faceless Assessing Officer(FAO) in accordance with the provisions of explanation inserted to Section 151A read with CBDT Notification dated 29.03.2022. The appellant cooperative society relied on the following decisions of Hon’ble Bombay High Court in Hexaware Technologies Ltd. Vs. ACIT [2023] 149 taxmann.com 451, Hon’ble Madras High Court in TVS Credit Services Ltd. vs. DCIT in WP No.14255 of 2023, 22.04.2025 and Hon’ble Telangana High Court in Kings Pride Infra Projects Pvt. Ltd. vs. DCIT [2024] 157 taxmann.com 134, wherein, it was held that the issuing notice u/s.148 by the Jurisdictional Assessing Officer(JAO) is ultra vires the notification no.18 of 2022 of CBDT and the consequently held that the notice issued u/s.148A(b) and 148A(d) and 148 are null and void.

In view of the amendment brought by Finance Act, 2026, in the light of orders passed by the Hon’ble Supreme Court in bunch of cases involving identical issue in Special Leave Petition (Civil) Diary No(s).57403/2025 vide order dated 03.02.2026 setting aside the orders passed by the Hon’ble Bombay High Court and Hon’ble Telangana High Court for fresh consideration before the Hon’ble High Courts, the matter requires remand to the file of ld.CIT(A)[NFAC] for fresh consideration and disposal in accordance with law after affording opportunity of being heard to the assessee.

In view of the above circumstances, we are of the considered opinion that in order to meet the ends of justice, the matter requires remand to the file of ld.CIT(A)[NFAC] for denovo disposal of appeal keeping in view of the Finance Act 2026. All the contentions raised by the appellant are left open for consideration before the ld.CIT(Appeals).

Accordingly, the appeal filed by the Assessee stands Partly Allowed for statistical purpose.

To sum up, all four appeals filed by the assessee in ITA Nos.3891, 3892, 3893 & 3984/CHNY/2025 are partly allowed for statistical purpose. Order pronounced in the open Court on 27th May, 2026.