NITIN VINAYK RAO GHUMDE, DURG, DURG vs. DCIT, CENTRAL CIRCLE-2, RAIPUR, RAIPUR

Following grounds, vide Form-36, have been raised by the assessee: “1. That, on the facts and in law, the assessment order passed u/s 147 r.w.s. 144 dt. 28/03/2025 is without jurisdiction, bad in law and hence invalid, as it has been passed without obtaining valid approval u/s 151 from Ld. PCIT (Central), Bhopal AT, Jaba. That, the impugned approval dt. 13/02/2024 is unsigned and therefore the approval is invalid and void ab initio, following the judgment of our Raipur Bench of ITAT in case of Manoj Kumar Sahu VS. ITO [ITA no. 474/Rpr/2025, order dt. 22/09/2025]. That, the assessment order dt. 28/03/2025 is liable to be quashed. 2. That, on the facts and in law, notice u/s 148 dt. 28/02/2024 has been issued by Ms. Tarannum Verma, ACIT, Central Circle-2, Raipur, i.e. by the Jurisdictional Assessing Officer (JAO), and not under "automated allocation system’ and therefore, the impugned notice is invalid and bad in law being issued by the JAO as the same is not in accordance with section 151A of the Income Tax Act. Therefore, the assessment order dt. 28/03/2025, pursuant to such invalid notice, is also invalid and bad in law and the order is liable to be quashed. 3. That, on the facts and circumstances of the case and in law, order passed u/s 147 rws 144 dt. 28/03/2025 is illegal and bad in law as the department did not provide the materials used against the assessee for framing the assessment and hence, the impugned order is liable to be quashed. 4. That, on the facts and in law, Ld. CIT(Appeals) Raipur-3, Raipur erred in dismissing the appeal ex parte as the assessee could not furnish any reply for want of the materials used against the assessee for framing assessment dt. 28/03/2025 and therefore, the order of Ld. CIT(Appeals), Raipur-3 is liable to be set aside. That no sufficient opportunity was given to the appellant and therefore, the impugned appellate order is liable to be set aside. 5. That, Ld. CIT(Appeals), Raipur-3 erred in confirming the following additions and/or denial of set off: i. Denial of set off of loss of Rs. 61,99,869.00; ii. Addition of Rs. 2,27,66,242.00 as unexplained expenditure u/s 69C; and iii. Addition of Rs. 1,77,90,075.00 as unexplained money u/s 69A. All these additions and/or denial of set off of loss, are liable to be deleted and/or allowed. 6. That the appellant reserves the right to add, alter or modify any ground of appeal.”

The assessee, proprietor of M/s. Vinayak Construction, is engaged in construction business. He filed his Income Tax Return (‘ITR’) of the relevant year on 04.10.2022 declaring ‘NIL’ income. Certain incriminating materials seized during the search & seizure operations under section 132 of the Act carried on N. C. Nahar Group of cases (Third Party) on 08.03.2022 revealed that the assessee, proprietor of M/s. Vinayak Construction, had entered into cash transactions (outgoing and incoming) aggregating to Rs.3,55,63,542/- (outgoing amount of Rs.2,27,66,242/- as tabulated in paragraph 8.9 of the assessment order and incoming amount of Rs.1,77,90,075/- as tabulated in paragraph 8.11 of the assessment order) during the relevant year. Therefore, the assessee’s case of relevant year was reopened under section 148 of the Act by invoking Explanation- 2(iv) of section 148 of the Act. However, the assessee had neither filed any ITR in response to the notice under section 148 of the Act nor ensured any compliance during the reopened assessment proceedings though the Ld. Assessing Officer (‘AO’) provided many opportunities of being heard as detailed in paragraph 4 of the assessment order. Therefore, the Ld. AO, having no option except to complete the assessment ex-parte, taxed not only the outgoing sum of Rs.2,27,66,242/- under section 69C of the Act but also the incoming sum of Rs.1,77,90,075/- under section 69A of the Act as these cash transactions did get reflected in the regular books of account. Further, the Ld. AO did not allow the set off of brought forward loss of Rs.61,99,869/-.

Aggrieved with the assessment order, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal ex-parte due to non-prosecution. The relevant finding of the Ld. CIT(A) is scanned hereunder:

Shri Ravi Agrawal, CA, Ld. Authorized Representative of the assessee emphasized on the jurisdictional issues raised vide grounds of appeal Nos. 1 to 3 and additional grounds of appeal No. 1 & 2. In nutshell, his contentions/ submissions/arguments of the Ld. AR are that the approval under section 151 of the Act given by the PCIT, Central, Bhopal was unsigned and therefore, the said approval was invalid. He therefore, prayed for quashing of the consequential assessment being void ab initio as the approval under section 151 of the Act was invalid. The Ld. AR also contended that the case should have been reopened by the Ld. AO in automatic allocation system rather than by the JAO. Further, he contended that the Ld. AO had not made available the seized documents during the assessment proceedings; therefore, the assessment completed based on such material was not justified as the principle of natural justice was not followed by the Ld. AO.

Vide 1st additional ground and assessee’s submission in this regard, it is evident that the assessee has raised the issue that the copy of approval under section 151 of the Act has not been provided along with the notice under section 148 of the Act thought the same is required to be made available as per the CBDT guidelines issued by the letter F. No. 299/10/2022-Dir (In. III/611) dated 01.08.2022; therefore, the assessment order should be quashed.

Vide 2nd additional ground and assessee’s submission in this regard, it is evident that the assessee has raised the issue that the Ld. AO has allowed only 19 days for filing of ITR instead of providing three months’ time, therefore, the notice issued under section 148 of the Act suffers from jurisdictional defect and therefore, consequential assessment should be cancelled. However, he prayed for remanding the case back to the file of the Ld. CIT(A) for fresh adjudication not only on all grounds of appeal raised before him but also the legal grounds raised before the Tribunal.

Dr. Priyanka Patel, Ld. Sr. DR, drawing our attention to the amendment made in section 282A(1) of the Act wef 01.06.2016, by which the expression “signed in manuscript by that authority" in section 282A(1) of the Act existed earlier was substituted by “signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed”, submitted that keeping in view the provisions of section 5 of the Information Technology Act, 2000 and provisions of section 282A(2) of the Act, any notice or other document issued, served or given for the purposes of the Act by any income- tax authority, had to be deemed to be authenticated if the name and office of a designated income-tax authority was printed, stamped or otherwise written thereon. In this case, the details of income-tax authority approving the reopening under section 151 of the Act was duly mentioned along with DIN; therefore, the approval under section 151 of the Act had to be deemed to be duly authenticated as per the provisions of section 282A(2) of the Act. Accordingly, the approval under section 151 of the Act was legally valid. On the issue of reopening the case by the Ld. AO in automatic allocation system rather than by the JAO; she contended that the case was assessed in Central Circle; where the assessments were done in physical mode; therefore, the question of reopening the case under section 148 of the Act in automatic allocation system did not arise at all. On 1st additional ground, she contended that section 148 of the Act provided that the notice under section 148 of the Act should be served along with the copy of the order under section 148A(d) of the Act. The approval under section 151 of the Act was not the part of the order under section 148A(d) of the Act. She further submitted that the CBDT instruction issued vide letter F. No. 299/10/2022-Dir (In. III/611) dated 01.08.2022; was not an instruction under section 119(2)(b) of the Act; therefore, it was in the nature of SoP. This instruction did not use the word ‘shall’. On the additional ground no. 2, she contended that the ITR had to be filed within the period of 90 days from the end of the month in which the notice under section 148 of the Act was issued. The phrase ‘not less than 90 days’ had not been used in section 148 of the Act; therefore, there was no anomaly in the notice under section 148 of the Act.

On our specific query that what prejudice would be caused to the Revenue when the Ld. AR had prayed for remanding the case back to the file of the Ld. CIT(A) for fresh adjudication not only on all grounds of appeal raised before him but also the legal grounds raised before the Tribunal, she reluctantly agreed for remanding the matter back to the file of the Ld. CIT(A) on all issues including the issues raised before the Tribunal.

We have heard both parties and have perused the material available on the record. We have taken note of the fact that the Ld. CIT(A) has not decided the appeal after hearing the assessee and discussing the issues in detail and his reasons for agreeing with the assessment order though he/she, as per provisions of section 250(6) of the Act, is obliged to dispose of the appeal in writing with well- reasoned order on each point of determination arisen for his consideration. It is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the CIT(A) is required to apply his/her mind to all the issues arisen from the assessment order, whether or not such issues have been raised by the assessee before him/her. On cumulative consideration of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, the CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merit. Reliance is placed on the decision of the Hon'ble Bombay High Court in case of Prem Kumar Arjun Das Luthra HUF, (2017) 291 CTR 614 (Bom.).

We have taken note of the fact that the assessee has not made any compliance before the Ld. CIT(A). Even in such facts and circumstances, the Ld. CIT(A) cannot dispose the appeal ex-parte due to non-prosecution as he/she has no option except to decide the case on merit with detailed reasoning, which has not been done in this case. Keeping in view the facts of the case, we, without offering any comment on merit of the case, find the impugned order deem fit to set aside and remand the matter back to the file of the Ld. CIT(A) for deciding the case afresh/denovo not only grounds raised in Form 35 but also the above issues raised before Tribunal, in accordance with the law, after affording reasonable opportunity of being heard to the assessee. We, therefore, order accordingly. Needless to say that the appellant assessee has to cooperate in remitted appellate proceedings.

In the result, this appeal of assessee is allowed for statistical purposes.