VIKAS AROLKAR,MAPUSA vs. INCOME TAX OFFICER, PANAJI

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ITA 269/PAN/2025Status: DisposedITAT Panaji22 October 2026AY 2017-184 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the legal issue challenging the validity of the Section 148 notice, which was raised for the first time before it. The Tribunal noted that such legal issues can be raised at any stage and do not require fresh fact investigation, relying on the judgment of the Hon'ble Apex Court in National Thermal Power Co. Ltd. Vs. CIT (229 ITR 383). The Tribunal also observed that the NFAC had not adjudicated some of the legal issues raised before it. Citing the judgment of the Delhi High Court in 'Divine Infracon Pvt. Ltd. Vs PCIT' [2025, 171 taxmann.com 92 (Del)], the Tribunal held that it has no jurisdiction to decide a ground that did not arise from the impugned order of the first appellate authority, irrespective of whether it was raised in the first appeal. Consequently, the order of the NFAC was set aside, and the grounds of appeal raised by the assessee were allowed for statistical purposes. The matter was remitted back to the file of the NFAC for necessary adjudication of the legal issues along with other issues. The assessee was directed to provide updated contact details and remain vigilant. No specific finding was given on the addition of Rs. 95,30,000/-.

What were the facts?

The assessee, Vikas Arolkar, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Panaji Bench, against the order of the National Faceless Appellate Authority (NFAC), Delhi, dated 31.07.2025. This order emanated from an assessment order dated 13.05.2023 passed under Section 147 read with Section 144B of the Income Tax Act, 1961. The assessment year under appeal is 2017-18. The primary dispute concerns an addition of Rs. 95,30,000/- made by the Assessing Officer (AO) for unexplained money under Section 69A read with Section 115BBE of the Act, which was confirmed by the NFAC. The assessee had filed a return of income for AY 2017-18 on 28.01.2023 in response to a notice under Section 148. The AO assessed the total income at Rs. 1,04,25,440/-.

What were the issues?

1. Whether the reassessment proceedings and the assessment order are null and void and without jurisdiction, considering that the proceedings were purportedly taken as per the directions in Union of India Vs. Ashish Agarwal (2022) 444 ITR 1 (SC), but allegedly without a prior notice under Section 148 for the assessment year under appeal during the period from 01.04.2021 to 04.05.2022? (Mixed law and fact, concerning Sections 147, 148, and the Supreme Court's order in Ashish Agarwal). 2. Whether the reassessment proceedings are invalid as they were based on a notice under Section 148 issued in contravention of CBDT Circular 19 of 2019? (Mixed law and fact, concerning Sections 147, 148, and CBDT Circular 19 of 2019). 3. Whether the reassessment proceedings are invalid as they were based on a notice under Section 148 issued in contravention of the 'Faceless Jurisdiction of Income-tax Authorities Scheme, 2022' and 'e-Assessment of Income Escaping Assessment Scheme, 2022'? (Mixed law and fact, concerning Sections 147, 148, and the Faceless Schemes). Assessee's contentions: The assessee argued that the legal issue challenging the validity of the Section 148 notice, allegedly issued in contravention of the Faceless Jurisdiction Scheme and e-Assessment Scheme, was raised for the first time before the ITAT. The assessee sought admission of this issue and had no objection if it was restored to the NFAC for adjudication. The assessee also relied on the judgment of the Hon'ble Apex Court in Union of India Vs. Ashish Agarwal. Revenue's contentions: The learned Senior Departmental Representative (DR) supported the order of the NFAC.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 69A,Section 115BBE,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI DB BENCH, PANAJI

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri S.J. Kamat, CA
For Respondent: Shri Mayur Kamble, Sr. DR
Hearing: 20.08.2026Pronounced: 22.10.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of assessee pertaining to A.Y. 2017-18 is directed against the order dated 31.07.2025 of ld. NFAC, Delhi emanating out of Assessment Order dated 13.05.2023 passed u/s.147 r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’).

2.

On merits, the assessee has challenged the finding of ld.CIT(A) confirming the addition made by the Assessing Officer at Rs.95,30,000/- for unexplained money u/s.69A r.w.s.115BBE of the Act.

3.

Further, a legal issue challenging the validity of notice u/s.148 of the Act has been raised for the first time before this Tribunal placing reliance on judgment of Hon’ble Apex Court in the case of Union of India Vs. Ashish Agarwal (2022) 444 ITR 1. At the outset, ld.

2 Vikas Arolkar

Counsel for the assessee submitted that the legal issue challenging the validity of notice u/s.148 of the Act allegedly been issued in contravention of Faceless jurisdiction of the Income Tax Authorities Scheme 2022 and e-assessment of Income Escaping Assessment Scheme 2022 has been raised for the first time before this Tribunal. Only prayer made to admit the same, however, raised no objection if the same is restored to the file of ld.CIT(A) for necessary adjudication.

4.

On the other hand, ld. DR supported the order of ld.CIT(A)

5.

We have heard the rival submissions and perused the record placed before us. The assessee is an individual and filed the return of income for A.Y. 2017-18 in response to notice u/s.148 of the Act on 28.01.2023 declaring income of Rs.8,95,440/-. Thereafter, notice u/s.148 of the Act issued for carrying out the reassessment proceedings and finally addition u/s.69A r.w.s.115BBE of the Act made at Rs.95,30,000/- assessing the income at Rs.1,04,25,440/-. Subsequently, assessee preferred appeal before ld.CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal raising one of the legal issue challenging the reassessment which reads as under :

“2. The Learned Commissioner of Income Tax (Appeals) has erred in not declaring the assessment proceedings and assessment order as Null and void and without jurisdiction in spite of the fact that a. The proceedings taken purportedly as per the directions of the honourable Supreme Court in Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC) having been without jurisdiction as there was no prior notice u/s 148 issued for the assessment year under appeal during the period from 1-4-2021 till 4-5-2022 covered by the aforesaid order of the honourable Apex Court; b. The proceedings having been based on a notice u/s 148 issued in contravention of the CBDT circular 19 of 2019. 3 Vikas Arolkar

c. The proceedings having been based on a notice u/s 148 issued in contravention of the 'Faceless Jurisdiction of Income-tax Authorities Scheme, 2022' and 'e-Assessment of Income Escaping Assessment Scheme, 2022'”

6.

The above legal issue stands raised for the first time before this Tribunal and the same goes to the root cause of the reassessment proceedings. Since the legal issue can be raised at any stage and no fresh facts are required to be investigated, we therefore placing reliance on the judgment of Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. Vs. CIT (SC) (229 ITR 383) admit the same. We also find that ld.CIT(A) has not adjudicated some of the legal issues raised before it. In the light of these facts, we are of the considered view that the legal issues along with other issues are remitted back to the file of ld.CIT(A) by virtue of judgment of Hon’ble Delhi High Court in the case of ‘Divine Infracon Pvt. Ltd. Vs PCIT’ [2025, 171 taxmann.com 92 (Del)], wherein their Hon’ble Lordship vide para 13 have categorically held that, the Tribunal has no jurisdiction to proceed to decide the ground which did not arise from the impugned order passed by first appellate authority, irrespective of such ground was raised in first appeal or not. Order of ld.CIT(A) is set aside and the grounds of appeal raised by the assessee are allowed for statistical purposes. Assessee is directed to provide latest email id and contact detail to the Department for receiving the notices from ITBA portal. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause.

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7.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 22nd October 2026 under Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963. (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Panaji; दिन ंक / Dated : 22nd October, 2026. Satish Satish Kumar Kumar Madishetty Madishetty Date: 2026.10.22 17:04:46 +05'30'

आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

2.3.

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, Panaji 4. ‘DB’ Bench / DR, ITAT, Panaji ‘DB’ Bench ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER,

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