INCOME TAX OFFICER, CHENNAI vs. NIMALRAJ, NERKUNDRUM,

आयकर अपील�य अ�धकरण ’बी’ �यायपीठ, चे�नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI �ी मनु कुमार िग�र, �ाियक सद� एवं �ी एस. आर. रघुनाथा, लेखा सद� के सम� BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA Nos. 1837/Chny/2026 �नधा�रण वष�/Assessment Years: 2019-20 The Income Tax Officer, v. Nimaraj, Room No. 503, 5th Floor, Annexe No. 32, Nerkundrum, Building, No. 121, M.G. Road, Gangai Amman, Koil Street Chennai-600 034 Mettukuppam, Chennai-600 107 [PAN: AKYPN 1402 F] (अपीलाथ�/Appellant-Revenue) (��यथ�/Respondent- Assessee)

अपीलाथ� क ओर से/ Appellant- : Mr. E. Elango, JCIT Revenue by ��यथ� क ओर से /Respondent- : Mr. Y. Sridhar, CA for Mr. M. Karunakaran, Advocate Assessee by : 13.08.2026 सुनवाईक तार�ख/Date of Hearing : 14.10.2026 घोषणाक तार�ख /Date of Pronouncement आदेश / O R D E R PER MANU KUMAR GIRI, JM:

This appeal filed by the Assessee is directed against the order of ld. Commissioner of Income Tax(Appeal)[NFAC], dated 16.01.2026 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year (AY) 2019-20. 2. The Assessee raised the following grounds of appeal: 1. The order of the learned Commissioner of Income Tax (Appeals) in ITA No. ITBA/NFAC/S/250/2025-

ITA No. 1837/Chny/2026 (AY 2019-20) ITO Vs Nimalraj :: - 2 - ::

26/1084869852(1) dated 16.01.2026 for the AY 2019-20 is erroneous in law, facts and circumstances of the case. 1.1 The Ld.CIT(A) erred in holding that the reassessment proceedings initiated under sections 147/148 are invalid on the ground that the notice was issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO). 1.2. Whether the decision of the Ld.CIT(A) needs to be revised in view of the decision of the Hon'ble Supreme Court in SLP Civil Diary No.57403 of 2025 in the case of ITO & Others v Vandana Malhotra, dt.03/02/2026, wherein, the Hon'ble Supreme Court observed as under: "we dispose of these Special Leave Petitions by permitting the Petitioner(s) herein to file an application(s) before the High Court(s) in the disposed of matter(s) to bring to the notice of the High Court(s), the latest clarification which has been issued with effect from 1.4.2021 on such clarification to be inserted in the proposed Finance Act" 2.1 The Ld.CIT(A) erred in allowing the claim of Rs.48,00,000 as part of cost of acquisition, without appreciating the fact that no documentary evidence was furnished by the assessee either before the Assessing Officer or during appellate proceedings to substantiate such payment, thereby granting undue relief to the assessee. 2.2 The Ld.CIT(A) failed to appreciate that the registered document (Doc. No. 5523/2015) clearly states that the co- owners relinquished their rights out of love and affection, with no mention of any monetary consideration, thereby rendering the assessee's claim unsubstantiated. 3.1 The Ld.CIT(A) erred in allowing exemption under section 54 amounting to Rs.71,71,504 without verifying that the assessee had only acquired rights in a vacant plot of land and had not purchased or constructed a residential house within the prescribed time. 3.2 The Ld.CIT(A) failed to appreciate that the assessee did not fulfil the mandatory conditions for claiming exemption under section 54, including failure to deposit unutilized capital gains in the Capital Gains Account Scheme before the due date under section 139(1), and therefore the exemption allowed is liable to be withdrawn. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing officer be restored.

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ITA No. 1837/Chny/2026 (AY 2019-20) ITO Vs Nimalraj :: - 3 - :: 3. The assessee, an individual, did not file a return of income for AY 2019-20 on the premise that the sale of three flats allotted pursuant to a Joint Development Agreement had resulted in a capital loss. Based on information flagged under the Risk Management Strategy, the Assessing Officer initiated reassessment proceedings under section 147 of the Act and issued notice under section 148 dated 14.03.2023.In the reassessment proceedings, the AO adopted the sale consideration at Rs. 1,80,82,000/- as against Rs. 1,20,22,000/- declared by the assessee and computed long- term capital gains at Rs. 1,74,24,000/-. The AO further disallowed the assessee’s claim of Rs. 48,00,000/- towards the cost of acquisition of the shares of the co-owners and the claim of exemption of Rs. 71,71,504/- under section 54 of the Act. Aggrieved by the reassessment order, the assessee preferred an appeal before the ld. CIT(A), challenging the validity of the reassessment proceedings on the ground that the notice under section 148 had been issued by the JAO in violation of section 151A of the Act and the applicable faceless reassessment scheme. The assessee also contended that the mandatory procedure prescribed under section 144B of the Act had not been followed. On the merits of the case, the assessee disputed the inclusion of the developer’s share of the sale consideration in the computation of capital gains, sought adoption of the fair market value of the property as on 01.04.2001, claimed Page - 3 - of 6

ITA No. 1837/Chny/2026 (AY 2019-20) ITO Vs Nimalraj :: - 4 - :: deduction towards the alleged acquisition of the co-owners’ shares and sought exemption under section 54 of the Act in respect of the construction of a residential house. The ld. CIT(A) held that the notice under section 148 issued by the JAO was invalid in view of section 151A of the Act, the applicable CBDT notifications and the decision of the Hon’ble Madras High Court in Dadha Pharma LLP v. Union of India. The ld. CIT(A) further held that the failure to comply with the mandatory procedure prescribed under section 144B rendered the assessment unsustainable in law. Without prejudice to the above findings on jurisdiction and procedural compliance, the ld. CIT(A) also examined the issues on merits and held that the additions relating to the developer’s share of the sale consideration, the disallowance of the claim towards the cost of acquisition and the denial of exemption under section 54 were unsustainable.Accordingly, the ld. CIT(A) quashed the reassessment order passed under section 147 read with section 144 of the Act for AY 2019-20, holding it to be void ab initio and non est in law. The additions were also held to be unsustainable on merits, and the assessee’s appeal was allowed. Aggrieved by the order of the ld. CIT(A), the Revenue has preferred the present appeal before us. 4. We have heard the rival submissions and perused the material available on record. In the present case, we find that the assessee had raised a jurisdictional objection before the Page - 4 - of 6

ITA No. 1837/Chny/2026 (AY 2019-20) ITO Vs Nimalraj :: - 5 - :: ld. CIT(A), contending that the Jurisdictional Assessing Officer (JAO) lacked jurisdiction to issue the notice under section 148 of the Income-tax Act, 1961 (“the Act”). It was contended that, in terms of the Explanation inserted in section 151A of the Act, read with CBDT Notification No. 18 of 2022 dated 29.03.2022, the jurisdiction to issue such notice vested with the Faceless Assessing Officer (FAO). The ld. CIT(A), relying upon the decision of the Hon’ble Jurisdictional High Court in Dadha Pharma LLP v. Union of India, allowed the assessee’s appeal. 5. Having considered the matter in its entirety, we find that, in view of the amendments introduced by the Finance Act, 2026, and the order dated 03.02.2026 passed by the Hon’ble Supreme Court in the batch of matters arising out of Special Leave Petition (Civil) Diary No. 57403/2025, wherein the orders passed by the Hon’ble Bombay High Court and the Hon’ble Telangana High Court were set aside for fresh consideration by the respective High Courts, the issue requires reconsideration in the light of the subsequent legal developments. Accordingly, the matter warrants remand to the file of the ld. CIT(A) [NFAC] for fresh consideration and adjudication in accordance with law, after affording the assessee a reasonable opportunity of being heard. 6. In view of the foregoing discussion, and in the interest of justice, we deem it appropriate to restore the matter to the file of the ld. CIT(A) [NFAC] for de novo consideration and Page - 5 - of 6

ITA No. 1837/Chny/2026 (AY 2019-20) ITO Vs Nimalraj :: - 6 - :: disposal of the appeal in accordance with law, keeping in view the amendments introduced by the Finance Act, 2026, and the applicable judicial pronouncements. All contentions raised by the assessee are left open for consideration by the ld. CIT(A) [NFAC], who shall adjudicate the matter independently on its merits after providing an adequate opportunity of hearing to the assessee. 7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on the 14th day of October 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, SANDEE Digitally signed +दनांक/Dated: 14th October, 2026 by SANDEEP SNDP, Sr. PS P KUMAR आदेश क ��त,ल-प अ.े-षत/Copy to: Date: 2026.10.16 KUMAR 1. अपीलाथ�/Appellant 11:31:49 +05'30' 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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