HARI HARAN KUMARAPURAM GOPAL IYER,TIRUPATI vs. ACIT, CIRCLE-1(1), TIRUPATI

आदेश / ORDER

PER VIJAY PAL RAO, VICE PRESIDENT:

This appeal by the Assessee is directed against the Order dated 12.08.2025 of the Ld. Commissioner of Income Tax (Appeals) -12, Hyderabad, for the assessment year 2011- 12.

“Ground No 1 The Appellate order passed by Ld CIT 1) Appeals , National Faceless Assessment Centre, Delhi for the asst. year 2011-12 to the extent of interest to the appellant is erroneous both on facts and in law. 2) Ground No 2 The Ld CIT Appeals ought to have considered that the order by Ld A.O is null and void as Ld A.O failed to issue mandatory notice Under section 143(2) before framing the impugned assessment order, in as much as opportunity of being heard was never provided. 3) Ground No 3 The Ld CIT Appeals grossly erred in holding that the appellant s contention regarding non- issue of mandatory notice Under Section 143(2) to afford opportunity of being heard during the impugned re-assessment proceedings, is NOT as per the specific directions of the hon’ble ITAT in its order dated 06.04.2018, CONSPICUOUSLY ignoring the instruction of the hon’ble ITAT, which upon considering the fact that the assessee was not given proper opportunity of being heard before the AO, during the assessment proceedings, deemed it fit and proper to set aside the assessment to the file of the AO for reconsideration in accordance with law. 4) Ground No 4 The Ld CIT Appeals, while rightly held that the Honourable ITAT ordered fresh assessment, however erred in law in upholding the assessment framed under section 143(3), inspite of appellant s contention that no valid notice u s 143(2) was ever issued to the appellant, rendering the impugned assessment is void ab initio and liable to be quashed for non-adherence to the mandatory jurisdictional requirement of granting an opportunity of being heard in any denovo assessment made afresh. 5) Ground No 5 The Ld CIT Appeals erred in upholding Ld Assessing officers action of non-issue of mandatory notice under section 143(2) in gross violation of the Honourable ITAT instructions to provide an opportunity of being heard, resting on an absolutely extraneous issue that the appellant was not adversely affected. 6) Ground No 6 The Ld CIT Appeals erred in holding that non-issue of notice u s 143(2) is a curable under section 292BB in complete oblivion to the settled position in law that the section 292BB can at the most cure defect in service of notice BUT non-issue of notice under section 143(2) is not covered under the ambit of section 292BB of the Act. 7) Ground No 7 The Ld CIT Appeals erred on facts in upholding the addition of Rs.14,62,250 s unexplained cash deposits, ignoring evident fact that the said account, though held in the individual name of the appellant, was in fact operated for and on behalf of KRG Hotels Private limited WHARE the appellant was a director. 8) Ground No 8 The Ld CIT Appeals failed to consider the fact that the deposits of Rs.14,62,250 were duly recorded in the books of M s KRG Hotels Private ltd which same was considered by the Ld CIT Appeals during the previous first appeal proceedings further wherein he has deleted the addition basing on the reconciliation of bank statement and cash deposit with companies books of account. 9) Ground No 9 The Ld CIT Appeals erred in law and on facts in confirming the addition of 2,00,000 - being a fixed deposit made on 06.10.2010 with Lakshmi Vilas Bank, ignoring the appellant s submissions duly supported by documentary evidence, that the funds were directly transferred by M s KRG Hotels Private limited to appellant which hence was neither income to Appellant nor claimed as expense by KRG Hotels Private Limited hence addition cannot be made 10) Ground No 10 The Ld CIT Appeals erred in law and on facts in confirming the addition of 1,00,980 - being cash deposits in the Bank of Baroda account, without properly appreciating the appellant s submissions duly supported by evidence, revealing that the said account was a joint account with the appellant s wife, who is an independent taxpayer regularly assessed to income tax, and that the deposits were duly reflected in her return of income for the relevant year. 11) Ground No 11 Without prejudice to the above ground, the Ld CIT Appeals failed to appreciate the explanation of the appellant duly supported by the documentary evidence that the said deposits were sourced from withdrawals made from M s KRG Hotels Private. Ltd., supported by ledger extracts and bank records and merely sustained the addition solely on assumptions, which is unjustified and contrary to law. 12) Ground No 12 The Ld CIT Appeals erred in law and on facts in denying exemption u s 54F of 22,41,483 - by ignoring that the vital requirement under the provision is the development OR construction of a residential house, which fact of compliance was duly established by the appellant through municipal plan approvals and municipal tax receipts, which municipal tax receipt is conclusive evidence of existence and completion of the house, and other documents like contractor bills OR vouchers are merely incidental and not mandatory, since an individual taxpayer cannot be expected to maintain exhaustive records, and therefore the exemption ought to have been allowed 13) Ground No 13 The appellants submits that Without prejudice to the above grounds, the Ld CIT Appeals ought to have appreciated that Section 54F is a beneficial provision intended to promote investment in residential housing, and therefore once substantial compliance is established by demonstrating actual construction of a house and possession thereof, and minor procedural lapses like absence of certain supporting bills cannot defeat the very purpose of the provision in such circumstances, the appellant s investment being more than the net consideration received, the exemption u/s 54F ought to have been allowed in full. 14) Ground No 14 The appellant may add OR alter modify OR substitute OR delete add OR rescind all OR any grounds of appeal at any time before OR at the time of hearing.”

“6. Considering the fact that the assessee was not given proper opportunity of being heard before the AO, during the assessment proceedings, following the decision of the Hon'ble Supreme Court (Supra), we deem it fit and proper to set aside the assessment to the file of the AO for reconsideration in accordance with law.”

5.1. Thus, it is clear that the Tribunal has set aside the matter to the file of Assessing Officer for reconsideration in accordance with law though the term used in the Order is set aside the assessment to the file of Assessing Officer for reconsideration which in substance means the matter was set aside/remanded to the record of the Assessing Officer for reconsideration in accordance with law and after giving a proper opportunity of being heard to the assessee. The provisions of sec.143(2) gives the jurisdiction/power to the Assessing Officer to take up the return of income filed by the assessee for scrutiny. It is pertinent to note that where no return is filed by the assessee there is no requirement of issuing the notice u/sec.143(2) of the Act. Similarly, once the matter is remanded to the record of the Assessing Officer by the Appellate Authority then the jurisdiction of the Assessing Officer flow from the Order of the Appellate Authority and not u/sec.143(2) of the Act. Hence, we are of the considered opinion that there is no requirement of issuing the notice u/sec.143(2) of the Act for initiating the proceedings for reconsideration of the matter as remanded by this Tribunal. The only requirement in the set aside proceedings is to issue a notice to the assessee u/sec.142(1) of the Act for given an opportunity of hearing, calling the assessee to produce the supporting documentary evidence, details as well as explanation of the assessee. The issue in the decision as relied upon by the learned Authorised Representative of the Assessee in the case of Jai Prakash vs. ITO (supra), was entirely different as the Tribunal set aside/quashed the assessment order and there was no direction or order by the Tribunal for remanding the matter to the Assessing Officer however, after the Order of the Tribunal setting aside/ annulling the assessment, the Assessing Officer again initiated the proceedings which were further challenged before the Tribunal and in those facts and circumstances the Tribunal held that the Assessing Officer can continue with the previous assessment proceedings. Accordingly, we do not find any merit in ground nos.2 to 6 of the assessee’s appeal. The same are dismissed.

“2. The assessee, an individual, has filed his return of income electronically for the A.Y. 2011-12 on 28.03.2012, declaring an income of Rs.2,44,120/-. The assessee is a director in K.R.G. Hotels (P) Ltd. The return was selected for scrutiny in CASS and a notice u/s 143(2) was issued to the assessee. Subsequently, the AO passed the assessment order u/s 144 of the I.T. Act by making the following additions:

9.1. Thus, total five additions were made by the Assessing Officer in the original assessment order passed which was challenged by the assessee before the learned CIT(A). While passing the order dated 15.05.2017, the learned CIT(A) has deleted some of the additions in Para nos.7 to 12 as under:

9.2. Thus, substantial relief was granted by the learned CIT(A) while passing the earlier order against which there was no appeal filed by the Revenue and therefore, the matter to the extent of relief granted by the learned CIT(A) attained finality as the assessee filed the appeal before the Tribunal in respect of the additions sustained by the learned CIT(A) in the first round of appeal. Hence, the matter remanded by the Tribunal in the earlier round of appeal vide Order dated 06.04.2018 is only in respect of the additions sustained by the learned CIT(A) and the additions which were already deleted by the learned CIT(A) had attained the finality at the stage of the Order of the learned CIT(A). Accordingly, in the remand proceedings the subject matter before the Assessing Officer was confined only to the extent of the additions sustained by the learned CIT(A) in the first round of appeal and it was not open to the Assessing Officer to re-do the entire assessment once the learned CIT(A) granted part relief to the assessee. The details of additions which were deleted by the learned CIT(A) are as under:

9.3. Accordingly, in the facts and circumstances of the case and in the interest of justice the above said additions deleted by the learned CIT(A) which has attained finality cannot be repeated in the remand proceedings and the same are deleted.

Order pronounced in the open court on 24.06.2026.

Sd/- Sd/- MADHUSUDAN SAWDIA VIJAY PAL RAO ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, dated 24th June, 2026. VBP Copy to: HARI HARAN KUMARAPURAM GOPAL IYER, 1 483 R R COLONY, TIRUPATI (URBAN), CHITTOOR, TIRUPATI H.O,, TIRUPATI-517501, ANDHRA PRADESH 2 ACIT, CIRCLE-1(1), AYAKAR BHAVAN, K.T ROAD,, TIRUPATI-517501, ANDHRA PRADESH 3 THE Pr. CIT, Tirupati. 4 THE D.R., ITAT, HYDERABAD SMC-BENCH, HYDERABAD. 5 GUARD FILE TRUE COPY VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO ASSISTANT REGISTRAR : Date: 2026.06.24 ITAT HYDERABAD. RAO 14:43:53 +05'30'