GARIMA SAXENA ,UTTAR PRADESH vs. DCIT TAXATION CIRCLE , NOIDA

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ITITA 96/DEL/2025Status: DisposedITAT Delhi19 August 2026AY 2020-2113 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal quashed the assessment order on the ground that it was passed in violation of CBDT Instruction No. 1/2018. The instruction mandates that assessment orders in 'E-Proceedings' must be signed digitally, with no exceptions provided for manual signing. The Tribunal relied on Supreme Court judgments in Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh and Chandra Kishore Jha vs Mahavir Prasad, which hold that deviations from prescribed statutory procedures render actions illegal. The Tribunal noted that the Assessing Officer's reasons for manual signing, related to the date of limitation and transfer of charge, did not constitute an exception to the CBDT instruction. Therefore, the assessment order suffered from an incurable defect. As the assessment order was quashed, the other grounds of appeal concerning the merits of the addition and interest levied became academic and were not adjudicated upon. The appeal was allowed on the additional ground raised by the assessee.

What were the facts?

The assessee, Garima Saxena, filed an appeal against the assessment order dated 26.11.2025 passed by the ACIT, International Taxation Circle, Noida, for Assessment Year 2020-21. The assessment was framed under Section 147 read with Section 144C(13) of the Income Tax Act, 1961, determining the total income at Rs. 14,76,710/- as against the declared income of Rs. 3,90,910/-. The Revenue initiated reassessment proceedings based on information received from the Deputy Director of Income Tax (Inv.)-2, Chandigarh, regarding a search action on the Omaxe Group. Information in seized documents allegedly indicated the assessee paid Rs. 10,85,800/- in cash to the Omaxe Group for immovable property purchase during FY 2019-20. The assessment order was passed and signed manually on 10.01.2025, despite the assessment being conducted through the 'E-Proceeding' facility.

What were the issues?

1. Whether the initiation of proceedings under Section 147 of the Income Tax Act, 1961, was valid, considering alleged mechanical initiation, lack of independent application of mind, and invalidity of the notice under Section 148, especially in light of Explanation 2 to Section 148 and the absence of valid approval under Section 151. 2. Whether the assessment order dated 26.11.2025, passed under Section 147/144C(13), is illegal and void-ab-initio due to alleged violation of CBDT Instruction No. 1/2018 concerning e-proceedings and the manual signing of the assessment order. 3. Whether the addition of Rs. 10,85,800/- representing alleged unaccounted cash transactions for property purchase, made under Section 69, is justified, considering the reliance on seized electronic data, alleged lack of independent inquiry, rejection of assessee's explanation, and absence of corroborative evidence. Assessee's Contentions: - Proceedings under Section 147 were initiated mechanically and without jurisdiction. - Explanation 2 to Section 148 and Section 151 were not complied with. - The assessment order is invalid as it was manually signed in violation of CBDT Instruction No. 1/2018 for e-proceedings. - The addition under Section 69 is unsustainable due to reliance on inadmissible evidence, lack of independent inquiry, and failure to discharge the burden of proof by the revenue. Revenue's Contentions: - CBDT Instruction No. 1/2018 does not mandate quashing of orders for non-compliance and does not override statutory powers under Section 147. - The manual signing of the order was due to exceptional circumstances related to limitation and transfer of charge.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144C(13),Section 151,Section 69,Section 234A,Section 234B,Section 234C,Section 132,Section 151A,Section 131,Section 65B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI

Before: SH. VIKAS AWASTHY & SH. KRINWANT SAHAY

For Respondent: Ms. Shalini Verma, CIT
Hearing: 04.06.2026Pronounced: 19.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘D’ NEW DELHI BEFORE SH. VIKAS AWASTHY, JUDICIAL MEMBER AND SH. KRINWANT SAHAY, ACCOUNTANT MEMBER

IT (IT) A No.96/DEL/2025 (A.Y 2020-21) Garima Saxena DCIT 506-D, Gulmohar Greens, Vs. Int. Taxation Circle Mohan Nagarr Noida Ghaziabad Uttar Pradesh India-201007 PAN No.DBNPS1680H Appellant by: Sh. Ankit Kumar, Advocate Respondent by : Ms. Shalini Verma, CIT DR

Date of Hearing 04.06.2026 Date of Pronouncement 19.08.2026

ORDER PER KRINWANT SAHAY AM Appeal in this case has been filed by the assessee against the order dated 26.11.2025 passed by the ACIT, International Taxation Circle, Noida for the A.Y. 2020-21. Grounds of appeal are as under :-

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1.

That the learned Deputy Commissioner of Income Tax-IN. TAX., Noida has erred both in law and on facts in determining total income of the appellant at Rs. 14,76,710/- as against declared income of Rs. 3,90,910/- in an order of assessment dated 26,11.2025 under section 147 read with section 144C (13) of the Act. 1.1 That initiation of proceedings was mechanical and without any application of mind much less independent application of mind, therefore the notice issued u/s 148 of the Act was an invalid notice and assumption u/s 147 of the Act was without jurisdiction. 1.2 That the learned AO/DRP has failed to appreciate that Explanation 2 to section 148 of the Act has no application to the facts of the appellant and therefore assumption u/s 147 of the Act was without jurisdiction. 1.3 That the learned AO/DRP has also failed to appreciate that in absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147 of the Act are invalid and deserve to be quashed as such. 1.4 That the learned AO/DRP has failed to appreciate that notice u/s 148 of the Act is contrary to section 151A of the Act; and therefore, the assumption of jurisdiction was not in accordance with law. 2. That initiation of proceedings u/s 147 of the Act and assumption of Jurisdiction to frame assessment u/s 147/144C (13) of the Act are without satisfying the statutory preconditions provided in the Act and therefore without jurisdiction and deserve to be quashed as such.

3.

That the notice issued u/s 143(2) of the Act is not in accordance with CBDT notification dated 23.6.2017 vide F. No. 225/157/2017/ITA-II and therefore order of assessment is illegal, invalid and void-ab-initio. 4. That the learned AO/DRP has further erred both in law and on facts in making an addition of Rs. 10,85,800/- representing alleged unaccounted cash transaction made with M/s Omaxe group for purchase of immovable property on the basis of information contained in the excel sheet

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allegedly seized in the search of M/s. Omaxe group, and erroneously held as unexplained u/s.69 of the Act. 4.1 That as such, addition That while making the above addition, the learned AO/DRP has failed to appreciate the factual substratum of the case, statutory provisions of law and unjustified and therefore, unsustainable. made is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable. 4.2 That the learned AO/DRP while making the above addition has arbitrarily and, mechanically rejected the explanation and evidence tendered by the appellant and made the addition on the basis of inadmissible evidences and by drawing subjective, premeditated and preconceived inferences therefore the same is not sustainable 4.3 That furthermore the learned AO/DRP has failed to appreciate that the investigation wing report as relied upon in the impugned order of assessment has no evidentiary value apart from being factually and legally misplaced. 4.4 That the learned AO/DRP has otherwise too make the addition without appreciating that no independent enquiries had been conducted accordance with law before making the addition and therefore addition on premeditated, preconceived, opinion and borrowed inferences from the investigation wing report without confronting the same to the appellant is highly arbitrary, unjustified, illegal and untenable. 4.5 That the learned AO/DRP has erred both in law and on facts in making an addition of Rs. 10,85,800/- u/s 69 of the Act representing alleged on-money payment on the basis of unverified, untested, un-examined, unreliable determine date, particularly the learned Assessing Officer has failed to corroborate the same with any other evidence. 4.6 That the learned AO/DRP has failed to appreciate that burden is on the revenue which burden has not been discharged before making addition u/s 69 of the Act. 4.7 That even otherwise on account of lack of enquiry by the learned AO/DRP the addition made in the hands of the appellant is vitiated.

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4.8 That the learned AO/DRP has failed to appreciate that evidence gathered behind the back of the appellant including statement recorded is an inadmissible evidence and cannot be relied upon. 4.9 That the learned AO/DRP has failed to appreciate that impugned addition has been made without providing any cross examination to the appellant and therefore third-party evidence and statement could not be a ground to make an addition in the hands of the appellant. 4.10. That the learned Ao/DRP That the learned AO/DRP has failed to appreciate that it is also well settled rule of law that even loose papers seized in absence of any corroborative evidence cannot be relied upon to draw any adverse inference against the appellant 4.11 That even otherwise the learned AO/DRP has further failed to appreciate that in absence of certificate u/s 65B of the Indian Evidence Act such 'documents in electronic form recovered from third party premises' is not admissible in the eye of law and addition made on assumption or presumption is also illegal, invalid and untenable. 4.12 That adverse findings and observations in the impugned order of assessment/DRP are wholly unsubstantiated, contrary to material on record are nothing but figment of imagination and also contrary to law. 5. That the learned AO has erred in levying interest of Rs. 3,81,499/- u/s 234A of the Act, interest of Rs. 5,51,956/- u/s 234B of the Act and, interest of Rs. 9,648/- u/s 234C of the Act which are not leviable on the facts of the instant case Prayer It is therefore, prayed that the proceedings initiated under section 147 of the Act and the assessment so made under section 147/144C (13) of the Act may kindly be quashed. Furthermore, the addition made alongwith interest levied may kindly be deleted and appeal of the appellant be allowed.

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2.

Brief facts of the case are that the assessee is a Non-resident Indian. Information in this case was received from Deputy Director of Income Tax (Inv.)-2, Chandigarh in term of CBDT OM F.No. 299/44/2022-Dir(Inv.III)/264 dated 12.01.2024. On careful examination of the information received in this case, it is seen that a Search action under section 132 of the Act was carried out at various offices and residential premises in the case of Omaxe Group on 14.03.2022. During the search operation, data in form of annexure A35/A27 was found and seized, which contained several excel files wherein the details of unaccounted cash transaction of Omaxe Group were maintained by the employees of the Omaxe Group. In the course of post search investigation, the data/documents were analyzed and it was found that the assessee had paid cash of Rs. 10,85,800/- during F.Y. 2019-20 to Omaxe Group for purchase of immovable properties. In the seized instant case, as the search was conducted after 01.04.2021 and information pertaining to the assessee is contained in the seized documents, therefore, the conditions of Explanation 2 (iv) of section 148 read with proviso to section 148A are satisfied. Notice u/s.148 of the I.T. Act, 1961 was issued to the

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assessee dated 27.03.2024 requiring her to file the return of income within 90 days from the issue of this notice.

3.

During proceedings before us the Ld. Counsel of the assessee raised an additional ground which is legal in nature which is as under :-

“ That order of assessment dated 26.11.2025 u/s.147/144 of the Act is illegal, bad in law and without prejudice as the same is passed in violation of CBDT Instruction No.1/2018 [F. No.225/157/2017-ITA.II) dated 12.2.2018 and as such the order of assessment deserves to be quashed as such.”

4.

On this additional ground the Ld. DR has sought time to file reply for the AO which is reproduced as under :-

 Assessee is Non-Resident, proceedings in case of assessee were completed through E proceedings.  CBDT Instruction No. 1/2018 primarily relates to conduct of assessment proceedings electronically (c-proceedings) in scrutiny cases selected under CASS or other criteria. It does not mandate quashing of orders for any alleged non- compliance, nor does it override statutory powers under Section 147.  For reassessment proceedings (especially those based on search/investigation material). the instruction does not impose a rigid procedural bar that renders the order illegal. Compliance with principles of natural justice was ensured (notices issued, replies considered, DRP proceedings followed).

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 Even if there is any deviation, it is directory/procedural and does not affect the validity of the order, particularly when no prejudice is demonstrated. Appellate authorities have discretion to entertain additional grounds, but only if they arise from facts on record and are necessary for correct decision. Here, the ground lacks merit and is an afterthought.  (Reliance placed by appellant on NTPC and Pruthvi Brokers cases is distinguishable, us those deal with legal grounds arising from record; this does not invalidate jurisdiction.)  The assessment was framed after following 144C DRP route, which itself provides layered scrutiny. The order is sustainable on merits and procedure.  The challenges to jurisdiction (Grounds 2 to 2.4) and the Additional Ground be rejected as devoid of merit.  The proceedings were validly initiated with proper application of mind, approvals, and adherence to statutory procedures and CBDT instructions/schemes.  The appeal be dismissed on these preliminary grounds, and the additions (including on-money u/s 69) be upheld on merits as well.  Costs and any other relief as deemed fit.  The Revenue has discharged its burden through tangible material from investigation. The appellant's explanations were considered and found unsatisfactory. The order u/s 147/144C(13) is legal, valid, and within jurisdiction. In view of the above facts and submissions, it is ⚫ respectfully prayed that Ground No. 2 to 2.4 along with additional evidences raised by the appellant may kindly be dismissed.

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5.

On the other hand the Ld. Counsel of the assessee has submitted that this issue of additional ground is squarely covered by the various orders of coordinate Benches of ITAT Delhi.

6.

We find that in order in ITA No. 1601/Del/2025 for A.Y. 2022- 2023 the coordinate Bench has given a speaking order on this issue which is reproduced as under :-

Before proceeding to decide merits of the addition, the legal issue raised by the assessee in ground of appeal no.3 challenging validity of the Final Assessment Order in signing the order manually is taken up first for adjudication. A perusal of the impugned order reveals that the assessment order has been signed manually by the Assessing Officer. The assessment has been made under 'E-Proceedings'. The Board vide Notification No. 01/2018 dated 12.02.2018 has notified that all assessment proceedings in scrutiny cases are to be conducted electronically. The said instructions are reproduced herein below:

"SECTION 143, READ WITH SECTIONS 142 & 2(23C), OF THE INCOME-TAX ACT, 1961-ASSESSMENT-CONDUCT OF ASSESSMENT PROCEEDINGS IN SCRUTINY CASES ELECTRONICALLY

INSTRUCTION NO.1/2018 (F.NO.225/157/2017-ITA.II), DATED 12-2- 2018

Sub-section (23C) of Section 2 of the Income-tax Act, 1961 (Act), applicable from 1-6-2016, provides that "hearing" includes communication of data and documents through electronic mode. Accordingly to facilitate conduct of assessment proceedings electronically, vide letter dated 23-6-2017, in file of even number, Board had issued a revised format of notice(s) under section 143(2) of the Act. Para 3 of these notice(s) provided that assessment proceedings in cases selected for scrutiny would be conducted

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electronically in 'E-Proceeding' facility through assessee's account in E-filing website of Income-tax Department.

2.

In accordance with the procedure outlined in revised 143(2) notice(s) for conduct of assessment proceedings electronically, it is hereby directed that except for search related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the 'E-Proceeding' functionality in ITBA/E- filing. However, in cases where the concerned assessee objects to conduct of assessment proceedings electronically through the 'E- Proceeding' facility, such cases, for the time-being, may be kept on hold.

3.

Further, considering the situation that some of the stations have limited bandwidth, being VSAT stations and stations with limited capacity where bandwidth is in the process of being upgraded, it has been decided that till 31-3-2018, such stations, in accordance with target stipulated in Central Action Plan for financial year 2017-18, may undertake and complete only ten percent scrutiny cases (which are getting barred by limitation on 31-12-2018) having the potential to effect recovery during the current year itself. The list of such stations shall be specified by the Pr. DGIT(Systems). Accordingly, at these stations, till 31-3-2018, the assessment proceedings in cases to be completed as per Central Action Plan target, may be conducted manually if e-assessment is not possible. It is reiterated that at other stations covered under para 2 above, subject to exceptions mentioned therein, the assessments would be conducted electronically only.

4.

Some of the important procedural aspects while conducting assessment proceedings through 'E-Proceeding' are as under:

4.1 Enquiry before assessment in electronic mode: For enquiries before assessment in terms of section 142(1)(ii) of the Act, notice shall be issued electronically and delivered upon the assessee in his 'E- Filing' account. While filing the response electronically in compliance with notice under section 142(1)(il) of the Act, the concerned assessee shall verify it in the manner prescribed under rule 14 of Income-tax Rules, 1962.

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4.2 Use of digital signature by Assessing Officer: All departmental orders/communications/notices being issued to the assessee through the 'e-Proceeding' facility are to be signed digitally by the Assessing Officer.

4.3 Time for compliance: Online submissions may be filed till the office hours on the date stipulated for compliance.

4.4 Availability of facility for electronic submission of documents in time barring situation or where case has been finally heard by the Assessing Officer: The facility for electronic submission of documents through 'E Proceeding' shall be automatically closed seven days before the time barring date. In other situations, upon completion of proceedings, before passing the final order, concerned Assessing Officer, on his volition, shall close the e-submission facility after mentioning in electronic order sheet that 'hearing has been concluded'. However, if required, in exceptional circumstances, the concerned Assessing Officer may enable further filing of submissions electronically under intimation to the Range Head in ITBA.

4.5 In assessment proceedings being carried out through the 'E- Proceeding' facility, a particular proceeding may take place manually in following situation(s): i. where manual books of account or original documents have to be examined; ii. where Assessing Officer invokes provisions of section 131 of the Act or a notice is issued for carrying out third party enquiries/investigations; iii. where examination of witness is required to be made by the concerned assessee or the Department; iv. where a show-cause notice contemplating any adverse view is issued by the Assessing Officer and assessee requests for personal hearing to explain the matter. 4.6 Maintenance of 'Record' in the context of 'E-Proceeding': In cases being assessed through 'E-Proceeding', from now on, as far as possible, case-records as well as note sheet of proceedings shall be maintained electronically.

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5.

This instruction may be brought to the notice of all concerned for immediate compliance." 8. A perusal of para 4.2 of the aforesaid instructions would show that communication of all documents including orders, notices, etc. issued to the e through 'E-Proceeding' facility are to be signed digitally by the Assessing No exception has been provided in the said instructions for signing the assessment orders manually. During the course of hearing. the Id. DR sought time to furnish copy of the exceptions, if any. The time sought by the DR was allowed. However, on the next date of hearing no such instructions were furnished and the Id. DR expressed her inability to lay hands on any such instructions carving out exceptions. In the absence of any exceptions, all assessment orders in 'E-Proceedings' have to be necessary signed digitally. The instructions dated 12.02.2018 issued by the Board would apply to all assessments made electronically. The Id. DR has placed on record the reasons given by the AO for signing the order manually. The relevant excerpts from the same are reproduced herein under: "In this regard, it is submitted that the date of limitation for passing the assessment order in this case was 31.01.2025 pursuant to the directions of the Hon'ble DRP. The assessment order for AY 2022-23 was passed and sent to CP for final accounting. However, CPC had not closed the accounting of the same and the assessment order along with computation sheet and demand notice had not come back from the CPC for being digitally signed and issued to the assessee (grievance had been raised on the TBA Helpdesk for the same. Since the charge of Circle 2(2)(2) was being transferred with effect from 13.01.2025 on account of the undersigned proceeding on earned leave and since the new incumbent officer would not be able to sign the order on a later date, the assessment order in this case was passed and signed manually by the undersigned on 10.01.2025 and sent to the assessee on the same date." 9. Since CBDT Instructions No. 1/2018 (supra) requires the Assessing Officer to sign assessment order digitally where the assessments are completed through 'E-Proceedings' facility, the assessment order would stand valid only if it is passed in accordance with the CBDT Instructions. No exception has been provided by the Board to the said conditions. 10. The Hon'ble Supreme Court of India in the case of Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh (2015) 13 SSC 722 has held that any deviation in the procedure prescribed by the statue renders the action illegal. The Hon'ble Apex Court in the case of Chandra Kishore Jha vs Mahavir Prasad (1999) 8 SCC 266 held that, 11 | P a g e

if statue provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. The CBDT has laid down procedure for completing 'E-Proceedings' in a particular manner, the same are binding on the Department. The AO is thus mandatorily required to sign the assessment order digitally where the scrutiny assessments are conducted electronically. Since, in the instant case the assessment has been made under 'E'-Proceedings and assessment order has been signed manually, the same suffers from incurable defect, if, the assessment order has been served on the assessee. The reliance placed by the Revenue on the decision in the case of Mytheenkunju Muhammed Kunju Kandathil Jewellers vs. DCIT (supra) does not support the cause of Revenue as the same was passed in peculiar set of facts and hence, is distinguishable. Thus, the assessment order is liable to be quashed on this ground alone.

7.

We have considered the findings given by the coordinate Bench of Delhi ITAT on this issue and various case laws as cited above and we have also heard the arguments made by the Ld. Counsel of the assessee as well as the Ld. DR. We have also taken into consideration the reply filed by the revenue on this additional ground.

8.

We find that this legal issue is squarely covered by the coordinate Bench decision in the case of Outsystem Singapore Pte. Ltd. Vs.DCIT in ITA No.1601/Del/2025 respectfully following the decision decided by the coordinate Bench, the order passed by the AO in this case deserves to be quashed. Accordingly, the assessee’s appeal on additional ground which is legal in nature is allowed. Since we have quashed the assessment order passed by the AO in this case,

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therefore, other grounds of appeal on merit have just become academic in nature, therefore, we are not inclined to give our finding on them.

9.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Court on 19.08.2026.

Sd/- Sd/-.

(VIKAS AWASTHY) (KRINWANT SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 19/08/2026 *Neha Sr. PS* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI

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