BELUR MANJUNATH SANTOSH,BELUR vs. DCIT CC , HASSAN

ITA 2004/BANG/2026Status: DisposedITAT Bangalore28 September 2026AY 2019-208 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once an assessment order is set aside by a competent authority under section 263 of the Act, it cannot form the basis for further appellate adjudication. An appeal under section 246A arises from a specific assessment order. If that order is itself set aside and a fresh assessment is directed, the foundation of any pending appeal against the original order ceases to exist. The Tribunal found merit in the assessee's concern regarding parallel proceedings, inconsistent findings, and overlapping consequences. The Tribunal reasoned that the original assessment order dated March 19, 2024, was set aside by the PCIT on March 18, 2025, and a fresh assessment order was passed on February 19, 2026. Therefore, when the CIT(A) passed the impugned order on March 31, 2026, the original assessment order was no longer the operative assessment. Consequently, the impugned order of the CIT(A) confirming the addition based on the original assessment could not be sustained. The Tribunal set aside the CIT(A)'s order and declared the appellate proceedings arising from the original assessment as infructuous. The Tribunal clarified that it had not opined on the merits of the cash receipts addition and that the assessee could raise all contentions in the pending appeal against the fresh assessment. The CIT(A) was directed to adjudicate the appeal against the fresh assessment independently, without being influenced by the now-set-aside order.

What were the facts?

The assessee, engaged in crushed stone supply and land development, filed an original return for AY 2019-20. A search in another case revealed information about the assessee's alleged cash receipts from sale of sites. The Assessing Officer (AO) completed the original assessment under section 147 r.w.s. 143(3) on March 19, 2024, adding Rs. 37,95,500. The assessee appealed this to the CIT(A). Meanwhile, the Principal Commissioner of Income Tax (PCIT) initiated proceedings under section 263, finding the original assessment erroneous as it considered Rs. 37,95,500 instead of Rs. 39,26,105 in cash receipts. The PCIT set aside the original assessment on March 18, 2025, directing a fresh assessment. The AO passed a fresh assessment order on February 19, 2026, adding Rs. 39,86,105. However, the CIT(A) proceeded to decide the appeal against the original assessment, confirming the addition of Rs. 37,95,500 on March 31, 2026. The assessee's appeal to the ITAT challenges this CIT(A) order, and an appeal against the fresh assessment is pending before the CIT(A).

What were the issues?

1. Whether the appellate proceedings arising from the original assessment order can continue after the original assessment order has been set aside by the PCIT under section 263 of the Income Tax Act, 1961, and a fresh assessment has been directed and passed. Assessee's contentions: - The original assessment order dated March 19, 2024, was set aside by the PCIT under section 263 on March 18, 2025. A fresh assessment order was subsequently passed. - Despite the original assessment being set aside, the CIT(A) proceeded to decide the appeal against it, confirming the addition. - This has led to two sets of appellate proceedings for the same AY and issues, risking parallel adjudication, inconsistent findings, and overlapping demands. - Once the original assessment was set aside, the basis for the appeal before the CIT(A) ceased to exist. - The Tribunal should issue directions to protect the assessee's rights concerning the operative fresh assessment order. Revenue's contentions: - The Revenue supported the order passed by the CIT(A). - The Revenue did not dispute the factual position that the original assessment order was set aside under section 263 before the impugned CIT(A) order was passed. - The Revenue also did not dispute that a fresh assessment had been passed and that the assessee had separately challenged it before the CIT(A).

Which sections of the Income-tax Act were involved?

Section 250,Section 139(1),Section 132,Section 147,Section 143(3),Section 263,Section 246A,Section 246(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

PER SHRI WASEEM AHMED, ACCOUNTANT MEMBER:

The assessee has filed the present appeal against the order of the Learned Commissioner of Income Tax (Appeals)-2, Panaji [hereafter “the Ld. CIT(A)”] passed under section 250 of the Income Tax Act, 1961 (hereafter “the Act”) for A.Y. 2019-20 vide order dated 31.03.2026. 2. The assessee has raised various grounds challenging t

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 139(1)

All 8,117 judgments and leading authorities on Section 139(1) →

Recent GST High Court judgments

Search GST case law →