MANIKAPPA,BIDAR vs. INCOME TAX OFFICER, WARD-1, BIDAR, BIDAR

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ITA 2117/BANG/2025Status: DisposedITAT Bangalore29 April 2026AY 2014-158 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in not adjudicating the legal grounds raised by the assessee, which were filed along with Form 35. For AY 2014-15, the Tribunal directed the AO to verify if a notice under Section 143(2) was issued, as its absence could render the assessment invalid.

What were the facts?

The assessee, a food grain merchant, challenged assessment orders for AYs 2013-14 and 2014-15. The Assessing Officer (AO) made additions under Section 69A for unexplained money related to transactions with KPCC Bank. The CIT(A) set aside the issue to the AO for reconsideration but did not adjudicate all legal grounds.

What were the issues?

Whether the CIT(A) erred by not adjudicating all legal grounds raised by the assessee, and whether the assessment proceedings under Section 147 are valid without a notice under Section 143(2) for AY 2014-15.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 143(2),Section 148,Section 148A(d),Section 144,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.

For Appellant: Shri Nagaraj K.H, CA
For Respondent: Shri Subramanian .S, JCIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE

BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER

ITA Nos. 2116 & 2117/Bang/2025 Assessment Years : 2013-14 & 2014-15 Shri Manikappa, M/s. Mahesh Foodgrain Merchants, The Income Tax Moti Bazar, Officer, Gandhi Gunj, Ward – 1, Distt. – Bidar Bidar. Vs. Karnataka – 585 401. PAN: BSFPM8419P APPELLANT RESPONDENT

Assessee by : Shri Nagaraj K.H, CA

Revenue by : Shri Subramanian .S, JCIT-DR

Date of Hearing : 02-02-2026 Date of Pronouncement : 29-04-2026

ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER

These are the appeals filed by the assessee challenging the orders of the NFAC, Delhi both dated 26/08/2025 in respect of the A.Ys. 2013-14 and 2014-15. The assessee had raised almost similar grounds in respect of both the years except a new ground for the A.Y. 2014-15 in which the assessee had challenged the assessment order made u/s. 147 without issuing any notice u/s. 143(2) of the Act. The assessee had raised the following grounds in respect of both the assessment years.

Page 2 of 8 ITA Nos. 2116 & 2117/Bang/2025 ITA No. 2116/Bang/2025 “Grounds of Appeal No. 1.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts arid law by not deciding that the learned Assessing Officer has erred in assumption of jurisdiction and the notices issued u/s. 148 of the Income Tax Act, 1961 dated 09/04/2021 and 21/07/2022 are time barred, without jurisdiction, against the principle of natural justice and therefore the same are bad in law. Grounds of Appeal No. 2.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not considering that the learned Assessing Officer had issued a notice u/s. 148 of the Income Tax Act, 1961 dated 21/07/2022 without a Computer Generated Document Identification Number (DIN), which is deemed to be an invalid notice and have no legal effect in accordance with the Central Board of Direct Taxes Circular No. 19/2019 dated 14th August 2019. Hence, the assessment proceedings based on an illegal notice is void-ab-initio and liable to be set-aside. Grounds of Appeal No. 3.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the order passed u/s. 148A(d) of the Income Tax Act, 1961 dated 21/07/2022 is purely based on incorrect assumption of facts, suspicion basis, non application of mind and without conducting independent enquiry and therefore the same is bad in law. Grounds of Appeal No. 4.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the assessment proceedings initiated u/s. 147 of the Income Tax Act, 1961 and assessment order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 dated 19/05/2023 are time barred and therefore the same is bad in law. Grounds of Appeal No. 5.0 The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the learned Assessing Officer has erred in making additions of Rs. 1,10,07,463/- u/s. 69A of the Income Tax Act, 1961 as unexplained money as the same is opposed to the law and facts of the case.”

Page 3 of 8 ITA Nos. 2116 & 2117/Bang/2025 ITA No. 2117/Bang/2025 “Grounds of Appeal No. 1.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the learned Assessing Officer has erred in assumption of jurisdiction and the notices issued u/s. 148 of the Income Tax Act, 1961 dated 09/04/2021 and 21/07/2022 are time barred, without jurisdiction, against the principle of natural justice and therefore the same are bad in law. Grounds of Appeal No. 2.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the order passed u/s. 148A(d) of the Income Tax Act, 1961 dated 21/07/2022 is purely based on incorrect assumption of facts, suspicion basis, non application of mind and without conducting independent enquiry and therefore the same is bad in law. Grounds of Appeal No. 3.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not considering that the learned Assessing Officer had issued a notice u/ s. 148 of the Income Tax Act, 1961 dated 21/07/2022 without a Computer Generated Document Identification Number (DIN), which is deemed to be an invalid notice and have no legal effect in accordance with the Central Board of Direct Taxes Circular No. 19/2019 dated 14th August 2019. Hence, the assessment proceedings based on an illegal notice is void-ab-initio and liable to be set-aside. Grounds of Appeal No. 4.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that learned Assessing Officer has not issued statutory notice u/s. 143(2) of the Income Tax Act, 1961 before completion of assessment and therefore the assessment order passed is bad in law. Grounds of Appeal No. 5.0 : The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the assessment proceedings initiated u/s. 147 of the Income Tax Act, 1961 and assessment order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 dated 18/05/2023 are time barred and therefore the same is bad in law. Grounds of Appeal No. 6.0 The learned Commissioner of Income Tax (Appeals) has erred on facts and law by not deciding that the learned Assessing Officer has erred in making additions of Rs. 1,10,07,463/- u/s. 69A of the

Page 4 of 8 ITA Nos. 2116 & 2117/Bang/2025 Income Tax Act, 1961 as unexplained money as the same is opposed to the law and facts of the case.” 2. The brief facts of the case are that the assessee is a dealer in food grains and a wholesaler of pulses and similar food items. The assessee had filed his return of income u/s. 139 of the Act on 25/03/2015 and on 26/03/2015 respectively. The said returns were processed u/s. 143(1) of the Act and the same were accepted vide intimation dated 03/05/2015 and 18/05/2015. Subsequently, the second 147 proceedings has been initiated and the said initiation was closed by accepting the explanations. Thereafter based on the manual notice issued u/s. 148 of the Act, the AO had alleged that the assessee had transactions with M/s. KPCC Bank which was not explained in spite of the notices issued under the provisions and therefore treated the said deposits as unexplained money u/s. 69A of the Act. Similar addition was made in both the A.Ys. The assessee challenged the said assessment proceedings before the Ld.CIT(A) and raised several legal grounds in the grounds of appeal filed separately along with the form 35. In respect of the A.Ys. 2013-14 and 2014-15, the assessee had also submitted that all the cash deposits are from the business income earned by him and also submitted that he has not maintained any accounts in the said M/s. KPCC Bank and also furnished the bank names in which the assessee had maintained the accounts. The assessee had also raised a ground for the A.Y. 2014-15 that the assessment order passed u/s. 147 of the Act without issuing the mandatory notice u/s. 143(2) is bad in law. The assessee filed theses appeals with a delay and also filed an application in which the assessee had relied on the health issues for filing the appeal belatedly. The Ld.CIT(A) had condoned the said delays and taken up the appeal for hearing. Before the Ld.CIT(A), the assessee had submitted various documents to show that the assessee was not having any bank accounts with M/s. KPCC Bank and therefore the money paid to the said bank is for purchasing the cheques or DD for the sellers since the State Bank of India and other banks are charging more commission on the purchase of DDs. The assessee had also furnished the other details such as the persons from whom he had effected the purchases and the payments made to the said

Page 5 of 8 ITA Nos. 2116 & 2117/Bang/2025 sellers and therefore prayed not to treat the said amount as unexplained money u/s. 69A of the Act. The Ld.CIT(A) had considered the various documents and set aside the issue to the AO for reconsidering the same. The Ld.CIT(A) had not adjudicated the legal grounds raised in the grounds of appeal enclosed separately along with the form 35 on the ground that the same were not found place in form 35 and therefore not adjudicated the legal issues including the non-issue of notice u/s. 143(2) of the Act for the A.Y. 2014-15.

3.

As against the said orders, the assessee is in appeals before this Tribunal.

4.

At the time of hearing, the Ld.AR submitted that the Ld.CIT(A) had remitted the issue to the file of the AO for fresh consideration based on the materials placed before him but unfortunately, had not inclined to deal with the legal grounds raised by the assessee since the assessee had not mentioned the said grounds in form 35. The Ld.AR submitted that the annexure to form 35 is the detailed grounds of appeal filed by the assessee in which all the legal issues were raised and therefore the order of the Ld.CIT(A) in not considering the said legal grounds are not valid in the eye of law. Insofar as the A.Y. 2014-15 is concerned, the Ld.AR submitted that the AO had not issued any notice u/s. 143(2) of the Act when the assessee had e-filed his return of income on 22/07/2022 to the manual notice issued u/s. 148 of the Act and therefore the assessment order is bad in law.

5.

The Ld.DR submitted that the Ld.CIT(A) had correctly concluded that the assessee had not raised the legal grounds in form 35 and also not filed any application to admit the additional grounds and therefore prayed to confirm the order of the Ld.CIT(A).

6.

We have heard the arguments of both sides and perused the materials available on record.

Page 6 of 8 ITA Nos. 2116 & 2117/Bang/2025 7. Insofar as the A.Y. 2013-14 is concerned, the Ld.CIT(A) had remitted the issue on merits by considering the various documents furnished before him but unfortunately the Ld.CIT(A) had not dealt with the legal grounds raised by the assessee. The reasoning given by the Ld.CIT(A) is that the assessee had not mentioned the said grounds in form 35 but filed a separate grounds of appeal without any application to admit the said additional grounds.

8.

We have gone through the various records produced by the assessee and from that we found that the assessee had filed form 35 and raised a ground on merits about the cash deposits. Along with the form 35, the assessee had furnished the grounds of appeal in which various legal grounds were raised by the assessee. These grounds are not filed as additional grounds but filed along with the form 35 and therefore in our opinion, there is no requirement to file any application to admit the additional grounds. Even though the Ld.CIT(A) had remitted the issue for deciding the issue on merits, we are satisfied that the legal grounds raised by the assessee has also to be addressed by the AO while deciding the issue based on the directions of the Ld.CIT(A). No doubt, the Ld.CIT(A) had not given any specific directions but we are issuing these directions by considering the fact that these are all the legal grounds raised by the assessee and the various Hon’ble High Courts and the Hon’ble Supreme Court had held that legal plea can be raised at any point of time. In the present case, these legal grounds were not raised by way of additional grounds. But in addition to form 35, these grounds are raised. Therefore, while confirming the order of the Ld.CIT(A) on merits, we further direct the AO to consider the legal grounds raised by the assessee also while deciding the issue afresh.

9.

Insofar as the A.Y. 2014-15 is concerned, the findings given in the above paragraphs will apply mutatis mutandis to the facts of the present case. But in the present appeal, the assessee had also raised another legal plea that the AO had failed to issue notice u/s. 143(2) of the Act and

Page 7 of 8 ITA Nos. 2116 & 2117/Bang/2025 therefore the entire proceedings initiated u/s. 147 is illegal and without authority of law. As seen from the records submitted before us, we do not find that the AO had issued any notice u/s. 143(2) of the Act before the proceedings u/s. 147 was completed. In order to verify the said facts, we are directing the AO to verify the records and if found that there is any such notice u/s. 143(2) of the Act, then the order of the Ld.CIT(A) has to be given effect to and the other legal grounds has to be considered by the AO while making the assessment. We also made it clear that if there is no such notice u/s. 143(2) of the Act available on record, the assessment initiated u/s. 147 could not be sustained. For verifying the above said facts, we are remitting this issue to the AO along with the other directions given by the Ld.CIT(A) on merits and also to consider the other legal grounds while making the assessment u/s. 147 of the Act.

10.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the open court on 29th April, 2026.

Sd/- Sd/- (PRASHANT MAHARISHI) (SOUNDARARAJAN K.) Vice President Judicial Member

Bangalore, Dated, the 29th April, 2026. /MS /

Page 8 of 8 ITA Nos. 2116 & 2117/Bang/2025 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order

Assistant Registrar, ITAT, Bangalore

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