KAILASH CHAND REGAR,JAIPUR vs. ITO, WARD 7(2), JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 677/JPR/2025 (Assessment Year:2007-08)

Kailash Chand Regar Vs. ITO 134, Kalyan Nagar, Ward 7(2) Rampura Road, Sanganer, Jaipur Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: AGXPR 8784 R Appellant .. Respondent Appellant by : Sh. Sanjay Godha, CA Respondent by : Sh. Gaurav Awasthi, JCIT Date of Hearing 02.06.2026 Date of Pronouncement 30.06.2026 O R D E R The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”) under Section 250 of the Income Tax Act, 1961, (hereinafter referred to as “the Act”) dated 03/03/2025. 2. The assessee in this appeal has taken following grounds of appeal:-

P a g e | 2 ITA No.677/JPR/2025 Kailash Chand Regar 1. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) grossly erred in confirming the order u/s 144 passed by AO which is bad in law. 2That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in upholding the reassessment proceedings initiated by the Ld. AO u/s 148 of the I.T Act, 1961 which are bad in law and void ab initio. The reassessment proceedings deserve to be quashed for the following reasons: i) Absence of Sanction under Section 151: That the ld. AO failed to obtain the mandatory sanction from the appropriate authority as required under section 151 of the Act before issuing notice u/s 148, rendering the reassessment proceedings invalid and without jurisdiction. ii) Non-Issuance of Notice under Section 143(2): That the ld. AO failed to issue a statutory notice u/s 143(2) of the Act after the assessee had, by way of written communication, confirmed the intention to file the return in response to notice under section 148. The omission to issue the notice u/s 143(2) is a jurisdictional defect which vitiates the reassessment proceedings entirely. 3. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) grossly erred in confirming the addition of Rs. 785000/-related to cash creditors as unexplained income done by the ld. AO as valid which is arbitrary and illegal, should be deleted.Ground 4That the appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal before or at the time of hearing. Ground 3. Briefly stated, the assessee had originally filed return declaring total income of Rs.1,18,390/-, u/s 44AF of the Act. Subsequently, the case of the assessee was reopened u/s 147 of the Act on the information in the possession of the AO that the assessee had borrowed in cash amount of Rs.7,85,000/-, from various persons which could not be verified by the assessee. Believing the same to be income of the assessee which had escaped assessment and accordingly, recording reasons, the case of the assessee was reopened, and notice issued u/s 148 of the Act. Thereafter ,on account of the assesses failure to comply with various notices issued, assessment was framed u/s 144 of the Act, making addition of the impugned amount of Rs.7,85,000/-, allegedly borrowed by the assessee from various persons, treating the same as income of the assessee from undisclosed sources. The matter was

P a g e | 3 ITA No.677/JPR/2025 Kailash Chand Regar carried in the appeal before Ld. CIT(A), who confirmed the order of the AO. 4. Before me, the ld. Counsel for the assessee has challenged the validity of the assessment framed u/s 147 of the Act, stating that the AO had not issued the mandatory notice u/s 143(2) of the Act to the assessee for assuming a valid jurisdiction to frame assessment in the present case. To substantiate his contention, he pointed out that in response to notice issued u/s 148 of the Act, the assessee had filed a letter ,which he pointed out is reproduced in the assessment order also ,stating that he had already submitted return of income u/s 44AF of the Act and had asked the AO to take the same on record. Copy of the said return was also filed to the AO. The contents of the same are reproduced hereunder from para 2 of page 2 of the assessment order :-

"I have filed my return of income for the assessment year 2007-08 vide acknowledgement no. 2721005052 declaring my true income for the above said assessment year. The return is submitted u/s. 44AF of the Income Tax Act, 1961. The photocopy of the same is enclosed. Kindly take the same on record and drop down the proceeding initiated u/s. 147 and oblige." The assessee did not file his return of income for the assessment year under consideration in response to the notice u/s. 148 of the Income Tax Act, 1961.

P a g e | 4 ITA No.677/JPR/2025 Kailash Chand Regar notice u/s 148 of the Act, therefore no return of income could be said to have been filed by the assessee, and hence there was no requirement for issuing notice u/s 143(2) of the Act. He drew my attention to the findings of Ld. CIT(A), in this regard, at para 6.1.3 of his order as under:- “6.1.3 The appellant further contended that though he had filed the return in response to notice no. 9347 dt.28/03/2014 u/s 148 the AO treated that no return has been filed in response to notice u/s 148 and did not issue notice u/s 143(2) and therefore, the assessment is bad in law. However as seen from the assessment order, in response to notice u/s 148 the appellant had filed copy of acknowledgement of ITR filed for AY 2007-08 and requested to drop the proceedings u/s 147. As the appellant did not ask for the said return to be treated as return in response to notice u/s 148, the A.O correctly noted that the appellant did not file return in response to notice u./s 148. In view of the above, as no return was furnished u/s 148, no notice us/ 143(2) could have been issued by the A.O and consequently, the assessment order was passed u/s 144 in the absence of any return filed in response to notice u/s 148. Accordingly, the appellant's grounds are found to be without merit and are hence dismissed.”

P a g e | 5 ITA No.677/JPR/2025 Kailash Chand Regar passed, dropping the penalty so initiated. Ld. Counsel for the assessee placed a copy of the said order, before me, and pointed out from the office note recorded therein, that the AO had acknowledged the fact from the records that the assessee had filed return both u/s 139(1) of the Act, and also in response to notice u/s 148 of the Act. My attention was drawn to the office note as under:-

djnkrk ds ekeys esa fu/kkZj.k fjdkMZ dk voyksdu djus ij ik;k x;k fd djnkrk ds }kjk /kkjk 139 ¼1½ ds rgr fu;fer ,oa /kkjk 148 ds rgr tkjh uksfVl ds tckc esa vk;dj fooj.kh Hkjh x;h gSA djnkrk ds ekeys esa izkIr tokc dks Lohd`r djrs gq, 'kkfLr fujLr dh tkrh gSA 8. Ld. Counsel for the assessee contended that, in penalty proceedings, when the AO had himself acknowledged the fact that the assessee had filed return in response to notice u/s 148 of the Act, and dropped the penalty initiated on the assessee for late filing of return u/s 271(f) of the Act, the findings of the Ld. CIT(A), that no return of income had been filed by the assessee was grossly incorrect on facts. 9. Ld. DR before me, though vehemently supported the order of Ld. CIT(A), contended that the letter filed by the assessee in response to notice u/s 148 of the Act could not be construed as stating that, the assessee had asked the return filed u/s 139(1) of the Act to be treated as that filed in response to notice u/s 148 of the Act. However, at the same time, he was unable to controvert the fact pointed out by the ld. Counsel for the assessee before me, that the AO in collateral proceedings initiated penalty u/s 271F of the Act, had noted the fact of the assessee having filed return in response to notice u/s 148 of the Act.

P a g e | 6 ITA No.677/JPR/2025 Kailash Chand Regar 10. Having heard both the parties as above, I find merit in the contention of the ld. Counsel for the assessee that the assessment in the present case was invalidly framed without issuing the mandatory notice u/s 143(2) of the Act. It is settled law that, jurisdiction to frame assessment can be validly assumed only on issuance of notice u/s 143(2) of the Act for scrutiny of the return filed by the assessee. There is no dispute, with the said proposition of law. The only dispute is with regards to the fact, whether the assessee had filed return, in response to, notice u/s 148 of the Act or no. Facts on record demonstrate that the the AO himself in collateral proceedings for the impugned year, u/s 271 F of the Act, which pertains to levy of penalty for failure to furnish return of income, has noted the assessee to have filed return in response to notice u/s 148 of the Act and dropped the penalty proceedings initiated. There remains therefore no dispute vis-a-vis the fact that the assessee did file return of income in response to notice u/s 148 of the Act. 11. Even otherwise, I find that the Ld. CIT(A) has misunderstood the letter filed by the assessee in response to notice u/s 148 of the Act categorically asking the AO to take on record the return filed by him u/s 139(1) of the Act. There is no other meaning which can be given to the submission of the assessee, I hold, other than that the assessee had asked the return filed u/s 139(1) of the Act to be treated as return filed in response to notice u/s 148 of the Act. 12. The fact being established that the assessee had filed return in response to notice u/s 148 of the Act, and admittedly, no notice u/s

P a g e | 7 ITA No.677/JPR/2025 Kailash Chand Regar 143(2) having been issued in the facts of the present case, and the law in this regard being settled, it is an open and shut case therefore that the assessment framed in the present case was without valid jurisdiction. 13. The assessment order, therefore, I hold is not sustainable in law and I quash the same. Ground of appeal No.2(ii) raised by the assessee is therefore allowed. 14. Since, I have quashed the assessment order passed treating it as invalid the other grounds raised by the assessee need no adjudication, since they are mere academic in nature. 15. In effect, the appeal of the assessee is allowed in above terms. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur