DRR AIMS PROPERTIES PRIVATE LIMITED,HYDERABAD vs. ITO., WARD-17(1), HYDERABAD

ITA 1488/HYD/2025Status: DisposedITAT Hyderabad23 September 2026AY 2016-1720 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order passed by the AO under section 147 read with section 144 and 144B of the Act is invalid and liable to be quashed. The primary reason for this decision was the admitted fact that no notice under section 143(2) of the Act was issued to the assessee, despite the assessee having filed a return of income in response to the notice under section 148 of the Act. The Tribunal, relying on a host of judicial pronouncements including those from the Supreme Court and various High Courts (e.g., Amec Foster Wheeler Iberia SLU-India Project Office vs DCIT, CIT vs. Nagendra Prasad, PCIT v. S.G. Portfolio Pvt. Ltd., PCIT v. Dart Infrabuild Pvt. Ltd., ACIT vs. Hotel Blue Moon), emphasized that the issuance of a notice under section 143(2) is mandatory for framing an assessment after a return is filed in response to a section 148 notice. The Tribunal concluded that the absence of this notice goes to the validity of the reassessment proceedings and cannot be treated as a mere procedural irregularity. Consequently, the appeal was allowed on this jurisdictional ground. Other grounds, including the validity of the section 148 notice and the merits of the additions, were not adjudicated upon and were left open.

What were the facts?

The assessee, DRR AIMS PROPERTIES PRIVATE LIMITED, filed an appeal against the order of the CIT(Appeals), which upheld the assessment order passed by the Assessing Officer (AO) under section 147 read with section 144 and 144B of the Income-tax Act, 1961, for Assessment Year 2016-17. The AO initiated reassessment proceedings based on information regarding substantial financial transactions, including sale of immovable property and cash deposits. The assessee claimed the cash deposits were out of sale proceeds of properties held as stock-in-trade, but failed to provide documentary evidence. The AO treated cash deposits of Rs. 1,25,25,500/- as unexplained under section 69A and the entire sale consideration of Rs. 5,36,63,145/- as capital gains under section 45. The total income was determined at Rs. 6,61,88,645/-. The CIT(Appeals) dismissed the assessee's appeal.

What were the issues?

1. Whether the assessment order passed by the AO under section 147 read with section 144 and 144B is bad-in-law for failure to issue a statutory notice under section 143(2) after the assessee filed a return in response to a notice under section 148. (Question of law) 2. Whether the impugned notice under section 148 was issued without following the automated allocation procedure, making it bad-in-law. (Question of law) Assessee's contentions: - The assessment is bad in law as no notice under section 143(2) was issued after filing the return in response to the section 148 notice, citing Sanjay Kumar Badure vs. ITO. The return filed under section 148 should be treated as a return under section 139, mandating a section 143(2) notice. - The notice under section 148 was issued by the jurisdictional AO instead of a Faceless Assessing Officer, without following the automated allocation procedure, rendering it bad-in-law. - The proceeds from the sale of properties (Rs. 5,36,63,145/-) were liable to be taxed as revenue from operations as the properties were stock-in-trade, not capital assets. - Cash deposits of Rs. 1,25,25,500/- were out of property sale proceeds and bank withdrawals, thus the addition under section 69A should be deleted. Revenue's contentions: - The revenue did not record any specific contentions in the provided text regarding the issues raised by the assessee.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 69A,Section 45,Section 143(2),Section 148,Section 148A,Section 151A,Section 139

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the CIT(Appeals), dated 24.07.2025, which in turn arises from the assessment order passed by the Assessing Officer (for short, ‘AO’) under section 147 read with section 144 read with section 144B of the Income-tax Act, 1961 (for short, ‘the Act’), dated 15.03.2024. The assessee com

The order continues below.

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