SHANTHI FOLIE,CHENNAI vs. ITO, NCW-10(3), CHENNAI

The Assessee raised the following grounds of appeal : “1. The order of the Commissioner of Income Tax (Appeals) ["CIT (A)"] is against the law, the facts and circumstances of the case and the principles of equity and natural justice.

The CIT(A) failed to objectively consider the grounds and documents enclosed alongwith Form 35.

The CIT(A) failed to appreciate that the National Faceless Assessment Centre, Delhi (NFAC, Delhi) erred in assuming jurisdiction to conduct reassessment proceedings and pass the Re-Assessment Order dated 24.03.2022 particularly when prior to issuance of Notification No.18 of 2022 dated 29.03.2022 (applicable with effect from 29.03.2022) pursuant to section 151A of the Income Tax Act, 1961 ('Act), NFAC was not empowered to make reassessment in a faceless manner.

The CIT(A) failed to appreciate that approval obtained under section 151 of the Act prior to issuance of the notice under section 148 of the Act was neither physically signed nor the same was digitally signed. Considering the rationale laid down by the Hon'ble Allahabad High Court in the case of Vikas Gupta vs UOI in (2022) 448 ITR 1 (Allahabad) as affirmed by the Hon'ble Supreme Court in SLP (Civil) Diary No.21742 of 2023, the approval under section 151 of the Act lacking physical or digital signature is invalid. Consequently, the notice under section 148 of the Act and proceedings pursuant to the notice under section 148 of the Act are liable to be treated as non-est.

initiate the reassessment The CIT(A) failed to appreciate that the assessing officer had erroneously assumed jurisdiction to proceedings particularly when the prerequisite for initiating the reassessment proceedings are not fulfilled in the facts of the present case.

The CIT(A) failed to appreciate that the assessing officer had issued the notice under section 148 without reason to believe income of the appellant has escaped assessment

The CIT(A) failed to appreciate that the assessing officer had erroneously made addition under section 69 of the Act particularly when the implication of section 69 of the Act does not apply to the facts and circumstances of the present case.

The CIT(A) failed to appreciate that the assessing officer had made addition under section 69 of the Act to the tune of Rs.44,10,642/- particularly when the source of term deposit of Rs.44,10,642/- was duly explained by the Appellant.

The appellant craves the leave of the Hon'ble Tribunal to raise additional grounds before and during the course of hearing of this appeal.”

Briefly, the facts of the case are that the appellant is an Individual. No regular Return of Income under the provisions of section 139(1) of the Income Tax Act, 1961 was filed for the Assessment Year 2014-15. Based on the information that the appellant received interest income from State Bank of India during the previous year relevant to assessment year under consideration, the Assessing Officer formed an opinion that the income got escaped assessment from tax. Accordingly, a notice u/s.148 of the Act, the appellant filed Return of Income on 08.01.2022 declaring income of Rs.6,68,920/-. Against the said Return of Income, assessment was completed by the e-Assessment Unit of the Department (hereinafter called ‘AO’) vide order dated 24.03.2022 passed u/s.147 r.w.s 144B of the Income Tax Act, 1961 at a total income of Rs.50,79,560/-. While doing so, the Assessing Officer made addition of Rs.44,10,642/- being the investment made in the fixed deposit made with State Bank of India rejecting the explanation of the appellant that said time deposits were made out of the sale consideration were received on the sale of immovable property as the appellant has failed to file the documentary evidence in support of the explanation.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order dismissed the appeal for non-prosecution without entering into the merits of the addition.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. It is submitted that the appellant could not comply with the notices issued by the ld.CIT(A) as no notice was served on the appellant.

On the other hand, the ld.Sr.Departmental Representative opposed the above submissions and submits that the order passed by ld.CIT(A) is justified as the appellant had not caused appearance before the ld.CIT(A).

We heard the rival submissions and perused the material on record. At the outset, we find that the ld.CIT(A) dismissed the appeal in limine for non- prosecution. We also find that ld.CIT(A) issued notices through ITBA Portal which is not a proper service of notice.

In our considered opinion, it is not a valid method and manner of service of notice as specified under the provisions of section 282(1) of the Income-tax Act, 1961 Act and Rule 127(1) of the Income-tax Rules, 1962. Therefore, it is crystal clear that the notices were not served upon the appellant. To fortify our view, we would like to make reference to a decision rendered by the Hon’ble Punjab & Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship Vs. CIT (Exemptions) (2024) 463 ITR 560 (P&H), wherein the Hon’ble High Court after making reference to provisions of 282(1) held that service of notice through ITBA portal is not valid service and remanded the matter to AO for denovo disposal of case. The relevant paragraphs of the judgment are reproduced below : “7. We are afraid that we cannot subscribe to the submissions as advanced by the learned counsel for the Revenue-respondent. The provisions of section 282(1) of the Act of 1961 and rule 127(1) of the Income-tax Rules, 1962 provides for a method and manner of service of notice and orders which read as follows : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

In view of the above, it is essential that before any action is taken, communication of the notice must be done in terms of the provisions as enumerated hereinabove. The provisions do not mention communication to be “presumed” by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of natural justice are inherent in the income-tax provisions and the same are required to be necessarily followed.

Having noticed as above, this court is of the firm view that the petitioner has not been given sufficient opportunity to put up its please with regard to the proceedings under section 12A(1)(ac)(iii) of the Act of 1961 and as it was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter.

In view of the above, the writ petition is allowed and the order dated January 16, 2023 (annexure P-5) is quashed and set-aside. The Department would provide an opportunity of hearing to the petitioner and they will also allow the petitioner to appear personally for the purpose and pass a speaking order independent of the order passed earlier by them on January 16,2023. The same shall be done expeditiously provided the petitioner file his reply within a period of three weeks.”

In view of the above legal position, we are of the considered opinion that proper notice(s) of hearing were not served upon the appellant. Therefore, we are of the considered opinion that in the interest of justice, the matter should be remitted back to the file of ld.CIT(A) for denovo disposal of application after affording reasonable opportunity to the appellant, in accordance with law.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 24th June, 2026.