HITESHBHAI MANSUKHBHAI PATEL,BHARUCH vs. ITO, WARD 2 (1), BHARUCH

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ITA 1260/SRT/2025Status: DisposedITAT Surat22 October 2026AY 2012-136 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the additional ground raised by the assessee regarding the non-issuance of notice under Section 143(2). The Tribunal noted that the AO, while computing the assessed total income, took into account the income as per the return filed by the assessee, despite holding it to be time-barred and invalid. This indicated acceptance of the return by the AO. The Tribunal found the CIT(A)'s observation that no compliance was made by the assessee to be incorrect, citing the AO's own assessment order which mentioned the assessee's reply and supporting documents. Therefore, the assessment passed under Section 144 was not justifiable. The Tribunal held that the additional ground regarding the non-issuance of notice under Section 143(2) was valid because the assessee's return, filed after the Section 148 notice, was accepted by the AO. Consequently, the addition on account of unexplained income under Section 69A did not survive. Regarding the addition on unexplained credit, the Tribunal found that the assessee had provided a profit and loss account demonstrating substantial cash withdrawals during the assessment year, thus explaining the credits. Therefore, this addition also did not sustain. The appeal of the assessee was allowed.

What were the facts?

The assessee, Hiteshbhai Mansukhbhai Patel, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 30.09.2025, for Assessment Year 2012-13. The assessee had not filed a return of income for AY 2012-13. Reassessment proceedings were initiated by issuing a notice under Section 148 of the Income Tax Act, 1961, on 28.03.2019. The assessee filed a return of income on 21.11.2019, after the statutory time limit. The Assessing Officer (AO) made additions of Rs. 11,84,000/- on account of unexplained income under Section 69A and Rs. 4,63,939/- towards unexplained credit in the assessee's bank account. The AO also noted that the return filed by the assessee was time-barred and invalid. The CIT(A) dismissed the assessee's appeal, which was then restored to the CIT(A) by the ITAT for a fresh order. Subsequently, the CIT(A) set aside the case to the AO for fresh assessment.

What were the issues?

1. Whether the assessment is invalid due to the non-issuance of a notice under Section 143(2) of the Income Tax Act, 1961, when the return of income was filed belatedly in response to a notice under Section 148. Assessee's Contention: The assessee argued that the return filed in pursuance of a notice under Section 147 is valid, and the AO only acquires jurisdiction if a notice under Section 143(2) is issued. The CIT(A) failed to appreciate this jurisdictional fact and the implications of Supreme Court judgments like CIT vs. Laxman Khandelwal and ITO vs. Mukesh Mahavir Prasad Sen. The assessee also contended that the entire assessment is violative of natural justice as a statement of a banana dealer was not provided. Revenue's Contention: The revenue argued that the legal ground raised by the assessee is based on an erroneous factual premise. The assessee failed to furnish a return in response to the Section 148 notice. The belated communication could not substitute the statutory requirement. The requirement of issuing a notice under Section 143(2) presupposes the existence of a valid return. Furthermore, the assessee actively participated in the reassessment proceedings without questioning the absence of notice under Section 143(2) before the completion of assessment, and thus, the objection is barred by Section 292BB. 2. Whether the additions made by the Assessing Officer on account of unexplained income and unexplained credit are justified.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 147,Section 148,Section 143(2),Section 144,Section 69A,Section 251(1)(a),Section 154,Section 250,Section 292BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

Pronounced: 22.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.1260/SRT/2025 (निर्धारण वर्ा/Assessment Year: 2012-13) HITESHBHAI MANSUKHBHAI PATEL, ITO, WARD 2 (1) 19, PATEL FALIYU NAVA SAKKARPOR BHATHA, NFACT, CIT(A) SAKKAROR, BHARUCH, SAJOD S.O., SURAT- BHARUCH, GUJARAT Vs. 393020, GUJARAT अपीलधर्थी Appellant प्रत्यर्थी Respondent

Permanent Account Number of Assessee: BINPP5820P

अपीलधर्थी द्वारा/Appellant represented by: Shri Ashutosh P. Nanavaty, CA प्रत्यर्थी द्वारा/Respondent represented by: Shri Ashish Kumar, Sr. DR सुनवाई की तारीख / Date of conclusion of hearing: 27.07.2026 घोषणा की तारीख / Date of pronouncement: 22.10.2026 O R D E R PER : SUCHITRA KAMBLE, J M: The appeal filed by the assessee is against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] dated 30.09.2025 for the Assessment Year (in short “AY”) 2012-13.

2.

The assessee has raised the following grounds of appeal: “1. LD NFAC has failed to appreciate that assessee has filled his return of income in pursuance of notice u/s 142(1) dated 23/08/2019 on 20/09/2019 hence return of income filed in pursuance of notice u/s 147 is valid therefore LD AO shall get jurisdiction of assessment only if notice u/s 143(2) is issued which is jurisdictional fact and unless such fact is adjudicated, remand u/s 251(1)(a) of the IT Act, is infructuous and bad in law.

ITA No.1260/SRT/2025 (A.Y. 2012-13) HITESHBHAI MANSUKHBHAI PATEL 2. LD NFAC has failed to appreciate that past history by reproducing order of ITAT is itself irrelevant and specific direction of Hon'ble ITAT that grounds of appeal raised by assessee is restored back to file of CIT(A) to pass order afresh on considering merits of the case which implies that LD NFAC has failed to adjudicate upon jurisdictional fact.

3.

LD NFAC has failed to appreciate that there are Supreme Court judgements CIT Vs Laxman Khandelwal in Civil Appeal Number-6261-6262/19 as well as ITO Vs Mukesh Mahavir Prasad Sen and Atul K Mehta etc. and LD NFAC has failed to note implications of directions of ITAT as well as jurisdictional fact and mandatory supreme court judgements.

4.

LD NFAC has failed to appreciate that cash is deposited out of agriculture income and evidence of agriculture income is also provided and alternatively assessee has no other source of income therefore LD AO has failed to exercise judicial discretion in judicial manner solely relying upon statement of banana dealer which itself violates rule of natural justice because of copy such statement of banana dealer is never provided to assessee.

5.

As entire exercise of assessment is violative of fundamental rules of natural justice therefore entire assessment is null and void and therefore assessment order needs to be annulled.” 3. The assessee did not file return of income for AY 2012-13. Assessment was reopened by issuing notice u/s. 148 of the Income Tax Act, 1961 (in short “the Act”) dated 28.03.2019. The assessee did not file return of income in response to notice u/s. 148 of the Act, but filed return of income after awaiting 30 days of time limit on 21.11.2019. Notice u/s. 142(1) was issued on 23.08.2019 & 20.09.2019 but as per postal remark “assessee denied to receive notice”. The assessee did not give reply. However, assessee replied vide letter dated 21.11.2019 to notice u/s. 141 of the Act issued on 18.11.2019 that the assessee is engaged in carrying out business activities in the field of cropping and selling agriculture produces & mainly involved in producing Green Bananas and sale it to wholesale merchants. The assessee also produced 7/12 extracts of agricultural land holding, copy of bank statement and bill of agriculture produce sold to Naeem Kela Suppliers & other details. The Assessing Officer (in short “the AO”) rejected assessee's explanation and made addition on account of unexplained income amounting to Rs.11,84,000/- u/s. 69A of the Act. The

ITA No.1260/SRT/2025 (A.Y. 2012-13) HITESHBHAI MANSUKHBHAI PATEL AO also made addition of Rs.4,63,939/- towards unexplained credit amount in assessee's bank account maintained with SBI. The AO while computing the taxable income taken into account the return of income of the assessee (Rs.3,840/-) which was stated by AO as time barred & invalid return in para 2 of assessment order. The assessee filed appeal before CIT(A) & CIT(A) vide order dated 5.10.2023 dismissed the appeal which was restored by ITAT to the file of CIT(A) for fresh order vide order dated 28.05.2024.

4.

The CIT(A) set aside and referred back the case to the AO for making fresh assessment vide order dated 30.09.2025 passed u/s. 154 r.w.s. 250 of Act.

5.

The Ld. Authoritised Representative (in short “the Ld. AR”) for the assessee submitted that the assessee has taken additional ground of non- issuance of notice u/s. 143(2) of the Act vide synopsis of submission dated 04.05.2026 filed before Tribunal on 06.05.2026. The Ld. AR submitted that neither Sec. 147 nor 144 has laid down that belated return is null and void. Secondly, assessee has responded to the notice u/s. 142(1) of the Act, therefore conditions of Sec. 144 are complied, hence it is incorrect to assessee u/s. 147 r.w.s. 144 of the Act. Besides, Rule 11 of ITAT rules, 1962 does not permit additional ground of appeal at the discretion of the Tribunal. Hon'ble Supreme Court in case of NTPC Ltd. 229 ITR 383 (SC) laid down the principle to raise additional legal ground. The Ld. AR relied upon following decisions: “i) Parmanand vs. ITO (ITA No. 447/Agr/2025 order dt. 17.04.2026) (2026) (4) TMI 1257 - ITAT AGRA ii) Wazeera Saleh Mithiborwala vs. DCIT (ITA No. 484/MUM/2025 order dated 15.10.2025) (2025) (11) TMI 1299 - ITAT MUMBAI iii) SATYA Enterprises vs. ITO (2025) 180 taxmann.com 808 (Raipur Trib) iv) PCIT vs. Cosmat Traders (P) Ltd. (2023) 146 taxmann.com (Calcutta HC)”

ITA No.1260/SRT/2025 (A.Y. 2012-13) HITESHBHAI MANSUKHBHAI PATEL 6. The Ld. Departmental Representative (in short “Ld. DR”) submitted as under: “The legal ground raised by the assessee proceeds on an erroneous factual premise and, therefore, deserves to be rejected at the threshold. The assessment records unmistakably demonstrate that the reassessment proceedings were initiated by issuance of notice under section 148 dated 28.03.2019, which was duly served upon the assessee. The statutory obligation thereafter was upon the assessee to furnish a return of income in response to the said notice.

3.

Admittedly, the assessee failed to do so. Even after repeated statutory notices and adequate opportunities granted by the Assessing Officer, no return was furnished in compliance with section 148. The assessee now seeks to contend that the return already available on record should be regarded as a return filed pursuant to notice under section 148. This contention is completely unsupported by the record. Neither was any fresh return filed nor was there any communication requesting the Assessing Officer, within the prescribed time, to treat the earlier return as one filed in compliance with section 148.

4.

On the contrary, the assessment order specifically records that only on 21.11.2019, long after expiry of the statutory period, the assessee merely furnished a copy of the earlier return and requested that it should not be treated as an valid return. The Assessing Officer rightly held that such belated communication could not substitute the statutory requirement of furnishing a return in response to notice under section 148.

5.

The assessee's reliance upon the order-sheet entry dated 17.09.2019 is equally misplaced. The said noting merely records the receipt of correspondence and cannot, by any stretch of interpretation, be construed as acceptance of the original return as a valid return furnished pursuant to notice under section 148. No such satisfaction has ever been recorded by the Assessing Officer.

6.

Once these admitted facts are appreciated, the entire legal plea advanced by the assessee necessarily fails. The requirement of issuing notice under section 143(2) presupposes the existence of a valid return filed in response to notice under section 148. In the absence of such a return, no statutory obligation to issue notice under section 143(2) ever arose. A person who has himself failed to comply with the mandatory requirement of law cannot subsequently seek to invalidate the reassessment by alleging non-compliance with a procedural requirement that never became operative.

7.

Without prejudice, the assessee actively participated in the reassessment proceedings and never questioned the alleged absence of notice under section 143(2) before completion of the assessment. Such an objection has been raised for the first time at the appellate stage. The Hon'ble Gauhati High Court in CIT v. Shankar Lall Goenka [(2025) 174 taxmann.com 31] has categorically held that an

ITA No.1260/SRT/2025 (A.Y. 2012-13) HITESHBHAI MANSUKHBHAI PATEL assessee who has participated in the assessment proceedings without raising such objection is precluded, by virtue of section 292BB, from questioning the validity of the assessment on that ground at a later stage. 8. In the present case, therefore, the assessee's challenge is liable to fail on both counts-first, because no valid return was ever furnished pursuant to notice under section 148 and consequently the question of issuing notice under section 143(2) never arose; and secondly, because the objection is clearly barred by section 292BB. Accordingly, the legal ground deserves to be dismissed.” 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the AO while computing assessed total income has also taken the income as per return filed by the assessee. At one point, AO held that the said return filed by the assessee is time barred and invalid, but while computing assessed total income add the same, that means the AO accepted the return of income filed by the assessee. Besides, this, the observation made by the CIT(A) that neither before AO nor before CIT(A) compliance was made by the assessee, is incorrect observation by the CIT(A) as the AO in Para 3 of the Assessment Order categorically mentions assessee's reply dated 21.11.2019 alongwith 7/12 extract of agricultural land holdings, copy of Bank Statement and bill of agricultural produce sold to Naeem Kela Suppliers & other details. Thus, the assessment passed u/s 144 is also not justifiable on this issue. The additional ground taken by the assessee is not properly formed. But the substance of ground is that notice u/s 143(2) is not issued to the assessee and hence assessment becomes invalid. In present case the assessee filed return after issuance of notice u/s. 148 of the Act which was accepted by Assessing Officer as per computation of income mentioned at para 6 of Assessment Order. Therefore, the additional ground does sustain. Hence additional ground is allowed. As relates to merit, the action of AO has not considered Assessee's details which clearly shows that the assessee is deriving exempt agriculture income and the return filed by the assessee are accepted by the AO. Thus, addition on unexplained income u/s. 69A does not survive. As relates to addition on unexplained credit, the assessee has given the profit and loss account, therein demonstrating that the assessee

ITA No.1260/SRT/2025 (A.Y. 2012-13) HITESHBHAI MANSUKHBHAI PATEL has substantially withdrawn the cash during present assessment year. Thus, the credits were also explained. Therefore, this addition also does not sustain.

8.

In result, appeal of the assessee is allowed.

Order pronounced in the open court on 22.10.2026

Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat; Dated: 22.10.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order,

Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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