SATPAL SETHI, BILASPUR,BILASPUR vs. INCOME TAX OFFICER 2(1), BILASPUR

ITA 539/RPR/2026Status: DisposedITAT Raipur06 October 2026AY 2018-1910 pages
AI SummaryAllowed

What were the facts?

The assessee, Satpal Sethi, filed an appeal before the ITAT, Raipur Bench, challenging the order of the CIT(Appeals)/NFAC for the assessment year 2018-19. The assessee had also filed additional grounds of appeal. During the proceedings, the assessee withdrew the first additional ground of appeal. The second additional ground of appeal challenged the validity of additions made in the assessment order, alleging non-compliance with the mandate of Section 144B of the Income Tax Act, 1961, specifically the absence of a show cause notice for proposed variations prejudicial to the assessee's interest. The assessment order had made an addition of Rs. 52,96,834/- towards the disallowance of the cost of acquisition/construction. The revenue's representative conceded that no show cause notice was issued to the assessee regarding this addition.

What did the Tribunal hold?

The Tribunal held that the assessment order was not in accordance with the mandatory procedure laid down under Section 144B of the Act. It was noted that the AO had not followed the principles of natural justice by failing to issue a show cause notice to the assessee before making the addition of Rs. 52,96,834/- on account of disallowance of the cost of acquisition/construction. The Tribunal relied on the concession made by the revenue's representative, who admitted that no show cause notice was issued. The Tribunal also referred to judicial pronouncements, including the Bombay High Court's decision in Piramal Enterprises Ltd. Vs. Addl/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, which held that assessments made without adhering to Section 144B are non-est. Consequently, the Tribunal declared the assessment order as non-est, holding that the AO lacked valid inherent jurisdiction to pass such an order. As the assessment order was non-est, any subsequent proceedings were rendered invalid. The appeal of the assessee was allowed.

What were the issues?

1. Whether the reassessment order passed by the Assessing Officer (AO) is illegal and void ab initio because no addition was made on the issues forming the basis for reopening, as argued in the assessee's withdrawn additional ground of appeal. 2. Whether the CIT(Appeals)/NFAC erred in upholding the disallowance when the AO had not issued any show cause notice challenging the point on which the valuation report was rejected, thereby violating principles of natural justice and the mandate of faceless assessment under Section 144B, as argued by the assessee. Assessee's Contentions: - The AO's belief for reopening was legally unsustainable (withdrawn). - The mandate of Section 144B of the Act was not complied with as no show cause notice was issued for the proposed addition of Rs. 52,96,834/- regarding the disallowance of the cost of acquisition/construction, violating principles of natural justice and the faceless assessment procedure. Revenue's Contentions: - The revenue's representative could not refute the facts presented by the assessee regarding the absence of a show cause notice and conceded that no such notice was issued before making the addition.

Which sections of the Income-tax Act were involved?

Section 144B,Section 143(3),Section 144,Section 147,Section 142,Section 144(4),Section 56(2)(x),Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH “DB”, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI AVDHESH KUMAR MISHRA

For Appellant: Shri Vinod Kumar Khatri, CA
For Respondent: Shri Piyush Tripathi, Sr. DR
Hearing: 09.09.2026Pronounced: 06.10.2026

PER PARTHA SARATHI CHAUDHURY, JM: The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, NFAC dated 17.04.2026 for the assessment year 2018-19 as per the grounds of appeal on record.

2.

That along with the Grounds of appeal, the assessee had filed additional grounds of appeal which reads as follows: “Additional Ground of Appeal:

Ground No 1 "The reassessment order passed by the A.O is illegal, ab initio void inasmuch as no addition was made by the A.O o

The order continues below.

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