INCOME TAX OFFICER, WARD 2(1) JALGAON, JALGAON vs. HIRAMAN RAMDAS BONDE, NIMBAORA

आयकरअपीलीयअिधकरण, पुणे‘SMC’ पीठ�, पुणे INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH ‘SMC’, PUNE BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER ITA 2642/PUN/2025 (िनधा�रणवष�/AssessmentYear:2016-17) INCOME TAX OFFICER, WARD HIRAMAN RAMDAS BONDE 2(1) JALGAON 952/1/2 ASKOKA, NIMBAORA, 2ND FLOOR, INCOME TAX OFFICE, RAVER, JALGAON 425502 Vs. OLD B J MARKET, JALGAON, JALGAON-425502, JALGAON-425001, MAHARASHTRA MAHARASHTRA अपीलाथ�Appellant ��थ� Respondent Permanent Account Number of Assessee: AOOPB7128L अपीलाथ��ारा/Appellant represented by: Shri Sandeep Jumale, Addl.CIT(virtual) ��थ��ारा/Respondentrepresented by: Shri Rohit Tapadiya सुनवाईकीतारीख/Date of conclusion of hearing: 03-Aug-2026 घोषणाकीतारीख/Date of pronouncement: 16.10.2026 आदेश / ORDER PER VINAY BHAMORE, JUDICIAL MEMBER : This appeal is filed by the Departmentagainst the order of Ld. CIT(A), NFAC Delhi dated 11the September, 2025 for the Assessment Year 2016- 17. 2. At the outset, Ld. Counsel of the assessee drew our attention to the fact that the tax effect involved in the instant appeal is only Rs.14,28,044/- and therefore, the instant appeal filed by the Revenue is not maintainable in the light of CBDT Circular No.5/2024 dated 15.03.2024 wherein monetary limit for filing appeal before the Appellate Tribunal has been fixed at Rs.50,00,000/-. Apart from that it was also submitted by the counsel of the

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE assessee that the appeal does not fall in the exception clause 3.1 of the said Circular. Accordingly, Ld. Counsel of the assessee prayed before the Bench to dismiss the appeal of the Revenue on this short ground only. 3. On the other hand, Ld. Departmental Representative appearing from the side of the Revenue furnished an internal communication dated 15.06.2026 between the concerned Assessing Officer and the Commissioner of Income Tax (DR)/ITAT-3, Pune which reads as under :- “03. The Hon. CIT(A), NFAC has treated the notice u/s 148 of the Act as invalid by relying upon the decision of Hon'ble Bombay High Court in the case of Hexaware Technologies Ltd. v. Assistant Commissioner of Income Tax and accordingly the subsequent proceedings has been quashed. The Ld. CIT(A) has not appreciated that the facts of assessee's case are quite different from the facts of the case of Hexaware Technologies Pvt. Ltd., however it included one common issue of "Whether the impugned notice issued u/s 148 of the Act is invalid and bad in law being issued by the JAO as the same was not in accordance with Section 151A of the Act?" which was dealt in this order are found identical in the present case. 04. The Ld. CIT(A) in his order (para no. 4.3) has also held that the Section 151A, inserted by the Finance Act, 2021, explicitly requires reassessment proceedings to be conducted in a faceless manner. To give effect to this provision, the Central Board of Direct Taxes (CBDT) issued the "e-Assessment of Income Escaping Assessment Scheme, 2022," which came into force on 29.03.2022". 05 The above notification has been misinterpreted by the Ld. CIT(A) as to clarify the issue of notice u/s 148 by the Assessing Officer, Parliament passed the Finance Act, 2026, issuance of notice u/s 148 inserting Section 147A retrospectively from April 1, 2021. This amendment clarified that the term "Assessing Officer" for Section 148/148A exclusively means the JAO, thereby validating actions taken by JAOs since the faceless regime's inception. Following the enactment, the Hon'ble Supreme Court set aside the conflicting High Court judgments and remanded all pending cases back to the respective jurisdictional High Courts to adjudicate the validity of issue of 148 notices afresh specifically in light of the retrospective operation, validity, and impact of the new Finance Act, 2026 amendment. Therefore, in view of the above cited decision, it is clear that the notice u/s 148 issued by the JAO and the consequent re-assessment is valid. 6. Hence, in view of the pending decision of Hon’ High Courts regarding the aforesaid CBDT Notification and Section 151A in respect of jurisdiction of JAO for issuance of notice u/s 144 of the Act and to keep the issue alive in the instant case, an appeal has been filed by this office as per the exception 3.1(a)/3.1(b) of the CBDT Circular no.5/2024 dated 15.03.2024.”

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE 4. On the basis of above, Ld. Departmental Representative vehemently argued submitting that the instant case falls under exception as per point No.3.1(a)/3.1(b) of CBDT Circular No.05/2024 dated 15.03.2024 since the validity of operation of section 147A of the IT Act w.r.e.f. 01.04.2021 is subject to challenge before Hon’ble Court and therefore, the appeal is maintainable. 5. We have heard Ld. Counsels from both the sides and perused the material available on record. It is thecontention of Ld. DR, that the operation of new section 147A of the IT Act with retrospective effect from 01-04-2021 is under challenge before Hon’ble Court & therefore the instant appeal falls under exception clause 3.1 a & b of the said circular, which are as under “3.1 Monetary limits given in paragraph 4 with regard to filing appeal/SLP shall be applicable to all cases including those relating to TDS/TCS under the Act with the following exceptions where the decision to appeal/file SLP shall be taken on merits, without regard to the tax effect and the monetary limits: a. Where any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid, or b. Where any order, notification, instruction or circular of the Board or the Government has been held to be illegal or ultra vires the Act or otherwise constitutionally invalid, or” 6. With regard to the above claim of Revenue, we find that the issue of new section 147A of the IT Act, the validity of which is subject to challenge before the Hon’ble courts, was not the subject matter before Ld. CIT(A) rather section 151A of the IT Act was one of the issue before Ld. CIT(A). We further find that Ld. CIT(A) has allowed the appeal on both the counts i.e. on legal ground as well as on merits of the case by observing as under :- “Ground on Jurisdictional Validity (Additional Ground) 4.2 The assessee has raised a fundamental challenge to the very foundation of the reassessment proceedings. He submits that the notice issued under Section 148,dated 29.03.2023, was issued by the Jurisdictional Assessing Officer (JAO),

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE a procedural action that is contrary to the mandatory provisions of Section 151A and the "e-Assessment of Income Escaping Assessment Scheme, 2022". 4.2 The AO's order is notably silent on this critical jurisdictional point. The order simply documents that the notice was issued by the JAO after a Section 148A(d) order and was served electronically. This omission to address a clear legal challenge to jurisdiction is a significant procedural defect. 4.3 Section 151A, inserted by the Finance Act, 2021, explicitly requires reassessment proceedings to be conducted in a faceless manner. To give effect to this provision, the Central Board of Direct Taxes (CBDT) issued the "e- Assessment of Income Escaping Assessment Scheme, 2022," which came into force on 29.03.2022. Clause 3(b) of this scheme mandates that the issuance of notices under Section 148 "shall be through automated allocation... in a faceless manner". The notice in the present case was issued on 29.03.2023, which is well after the effective date of the scheme. 4.5 The jurisdictional issue raised by the assessee is not merely a procedural technicality; it strikes at the very root of the AO's authority to initiate the proceedings. The Hon'ble Bombay High Court in the case of Hexaware Technologies Ltd. v. Assistant Commissioner of Income Tax[TS-298-HC- 2024(BOM)] has delivered a conclusive verdict on this matter. The court held that a notice issued under Section 148 by a JAO after the notification of the faceless scheme is legally invalid. The reasoning was that the scheme, a form of subordinate legislation, is mandatory, and by assigning a specific jurisdiction to the Faceless Assessing Officer (FAO) through automated allocation, it effectively excludes the jurisdiction of the JAO. 4.6 Furthermore, this position has been cemented by the Hon'ble Supreme Court. The Supreme Court dismissed the Revenue's Special Leave Petition (SLP) in the case of ITO v. Prakash PandurangPatil, Dairy No 39689/2025 which challenged the very same jurisdictional principle affirmed by the Bombay High Court. The dismissal was on the merits, which confirms that there is no concurrent jurisdiction between the JAO and the FAO and that any attempt to suggest otherwise would render the faceless scheme redundant. This judicial pronouncement transforms the assessee’s argument from a mere ground of appeal into a settled principle of law. 4.7 Therefore, the issuance of the notice under Section 148 by the JAO constitutes a fundamental jurisdictional defect. An action initiated without proper jurisdiction is void ab initio. Consequently, the notice under Section 148 and the ensuing assessment order passed by the AO are legally unsustainable and are hereby quashed. This finding alone is sufficient to allow the assessee's appeal. However, for the sake of completeness and to address the substantive grounds of appeal, the following points are also considered. Ground 1: Addition under Section 69A of Rs. 46,21,500/- 4.8 The AO made a significant addition of Rs. 46,21,500/-, treating the cash deposits as unexplained money under Section 69A of the Act. 4.9 At the outset, a factual error in the AO's calculation is noted. The assessee has meticulously detailed that the total cash deposit figure used by the AO is inaccurate. A comparative table is presented below to highlight the discrepancy. Table 1: Discrepancy in Cash Deposit Amounts

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE Sr. Bank Account Name Cash Deposit as Cash Deposit as per Difference No. per AO's Order (in Bank Statement (in Rs.) Rs.) (Assessee) (in Rs.) 1. Jalgaon People’s Co-operative 40,50,000/- 40,40,500/- 9,500/- Bank Limited 2. Central Bank of India 2,71,500/- 1,75,000/- 96,500/- 3. State Bank of India 3,00,000/- 3,00,000/- Nil Total 46,21,500/- 45,15,500/- 1,06,000/- 4.10 The AO's figure is overstated by Rs. 1,06,000/-. This minor but verifiable error indicates a lack of thoroughness in the AO's analysis.Theassessee claims that the cash deposits are from his accumulated agricultural income. He supports this claim with substantial evidence: • He submitted a notarized affidavit stating that he is a third-generation farmer and that agriculture is his sole major source of income. • He provided 7/12 extracts, which are land records, demonstrating that he and his wife jointly own 16.03 acres of agricultural land and have been engaged in farming for over 45 years. • He presented a detailed, estimated profit and loss account for his agricultural activities for the financial years 2013-14 and 2014-15, which showed a significant net income. • He explained that due to his advanced age and lack of formal education, he isnot accustomed to banking transactions and, like many farmers, conducts his business in cash. He stated that the accumulated cash savings were deposited into the bank accounts for the specific purpose of purchasing a property. He also submitted that a claim of saving an average of Rs. 1,50,000 annually over 20 years, amounting to Rs. 30 lakh, is a reasonable proposition given his landholding. 4.11 The AO accepted that the assessee held agricultural land and was a farmer but summarily rejected his claim of agricultural income as the source of cash deposits. The AO's primary justification for the addition was the absence of formal documentary evidence such as sale bills, purchase bills for seeds and fertilizers, or details of labor used for agricultural activities. 4.12 The AO's approach in this matter is fundamentally flawed. The AO has not presented any contradictory material to suggest that the assessee has a source of taxable income to justify the cash deposits. The AO's rejection of the assessee's explanation is based entirely on the lack of formal documentation, a standard that is often unattainable and unrealistic in the context of India's agricultural sector, which is still largely an informal, cash-based economy. The AO's insistence on such documents, while not bringing any contrary evidence on record, demonstrates a flawed understanding of the burden of proof. 4.13 Once the assessee provides a plausible explanation for the source of funds and substantiates that he is engaged in agricultural activities with verifiable land ownership, the onus shifts to the AO to prove that the source of the deposits is from a taxable source. The AO's order fails to provide any such evidence or even an alternative plausible source for the funds. 4.14 This stance is contrary to well-established judicial precedents. The Income Tax Appellate Tribunal (ITAT), Jaipur, in Shri Ajit Singh Meena vs ITO, in ITA

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE No785/JP/2019 held that a claim of agricultural income is "very reasonable and fair" when the assessee has demonstrated agricultural operations on a specific land area. The ITAT also found that a claim of accumulated savings from agricultural income over several years is not an "abnormal claim". This principle is directly applicable to the present case, where the assessee's claim of accumulating savings from 16.03 acres of land over a long period is a reasonable proposition. 4.15 Similarly, the ITAT, Indore, in ITO vs Smt. ShahnajBano, in ITA No. 443/Ind/04 order dated 07.01.2005 held that if an individual's only source of income is agricultural, no addition can be made unless the AO can prove that the assessee has another source of income that is taxable under the Act. The AO's order in the present case fails to identify any such alternative taxable source. The ITAT ChennaiinSmt. AnnakkalanjiamMathivananin ITA No. 2451/Chny/2018 order dated 22.01.2019 also reinforces that the non-availability of bills and vouchers cannot be the sole basis for disallowing an agricultural income claim when cultivation is undisputed. 4.16 Based on the foregoing analysis, the AO's addition under Section 69A is based on a legally and factually untenable premise. The assessee has provided a valid and plausible explanation that is consistent with the nature of his business and is supported by judicial precedents. Therefore, the addition of Rs. 46,21,500/- is hereby directed to be deleted in its entirety. Ground 1.2: Telescoping Benefit 4.17 Without prejudice to the primary argument, the assessee has requested the benefit of telescoping cash withdrawals against the cash deposits. He has provided a summary of withdrawals amounting to Rs. 18,77,000/- from his bank accounts during the period from 2012 to 2016, which he claims were the source for a portion of the deposits. 4.18 The assessment order completely fails to address this valid and plausible argument. The AO's order makes no mention of the cash withdrawals or the principle of telescoping, demonstrating a clear non-application of mind and a significant procedural lapse. 4.19 The "theory of telescoping" and "peak credit theory" are well-established principles in tax jurisprudence, designed to prevent double taxation by allowing an assessee to offset unexplained investments or deposits with documented cash withdrawals or other sources of income. The underlying principle is that the same money, which has already been taxed or its source explained, should not be taxed again, both as an outflow and a subsequent inflow. The assessee's claim is not based on unrecorded or unverifiable transactions; rather, it is based on cash withdrawals from his own bank accounts, which can be easily verified from the submitted bank statements. 4.20 The AO's failure to consider this alternate, well-documented explanation for the cash deposits is a grave procedural injustice. Even if the primary argument regarding agricultural income were to be disregarded, the assessee is entitled to the telescoping benefit. The documented cash withdrawals of Rs. 18,77,000/- should have been set off against the cash deposits, which would have, at the very least, reduced the addition to a far lower figure. The AO's complete disregard for this claim is a separate and significant reason to set aside the assessment. Ground 2: Addition of Interest Income of Rs. 56,916/-

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE 4.21 The AO made an addition of Rs. 56,916/-, treating it as interest income from other sources. The assessee argues that this income is not taxable because his total non-agricultural income is below the basic exemption limit for a senior citizen, which was Rs. 3,00,000/- for the A.Y. 2016-17. 4.22 The AO's reasoning for this addition is baffling. The AO justified the addition by stating that the assessee did not disclose the interest income in his return filed in response to the Section 148 notice. The AO further compounded this error by adding the interest income under Section 69A, a provision meant for unexplained money, even though the source of the income (bank interest) is clearly known and documented. 4.23 This addition is a fundamental legal error. For A.Y. 2016-17, the basic exemption limit for a resident individual aged 60 years or more was Rs. 3,00,000/-. The assessee is 65 years old. His total taxable income for the year is only the interest income of Rs. 56,916/-. This amount is well below the statutory exemption limit of Rs. 3,00,000/-. 4.24 An income that is below the basic exemption limit is not subject to tax. The AO's contention that the income was not disclosed is a non-sequitur, as an individual with a total income below the exemption threshold is not obligated to file a return of income under Section 139. The AO's misapplication of Section 69A to a known source of income further underscores the lack of technical competence in passing the assessment order. This addition is a clear and manifest error of law. 4.25 Therefore, the addition of Rs. 56,916/- is completely devoid of legal basis and is hereby directed to be deleted. 5. In the final result, the appeal of the assessee is allowed.” 7. Form a perusal of above order, we find that ld.CIT(A), while deciding the issues, has firstly dealt with legal issue raised in the additional ground challenging the jurisdiction to issue notice u/s.148 of the Act and has held that notice u/s.148 of the Act is legally unsustainable and quashed the same. Even otherwise, we find that ld.CIT(A) held that the source of cash deposits have been accepted as earned out of Agricultural income and has deleted the addition of Rs.46,21,500/- made u/s.69A of the Act. Ld.CIT(A) has also allowed the Telescopic benefit for the withdrawals of Rs.18,77,000/- made by the assessee from the disclosed bank accounts apart from deleting the Interest Income as the same is not taxable because of threshold limit. In view of the above discussion, we do not find any merit in the contention that it is falling under any exceptions of CBDT Circular No.05/2024 dated 15.03.2024. Therefore, the appeal is not maintainable since the appeal is also allowed on the merits of the case which involves

ITA 2642/PUN/2025 HIRAMAN RAMDAS BONDE tax effect of only Rs.14,28,044/- & admittedly the same is less than the monetary limits prescribed by CBDT in its circular. Accordingly, in the light of our above discussion, we hold that the appeal filed by the Revenue is not maintainable. 8. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 16th October, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; �दनांक Dated : 16th October, 2026 Sujeet/DOC

Copy to: INCOME TAX OFFICER, WARD 2(1) JALGAON, 2ND FLOOR, INCOME TAX OFFICE, OLD B J 1 MARKET, JALGAON, JALGAON-425001, MAHARASHTRA HIRAMAN RAMDAS BONDE, 952/1/2 ASKOKA, NIMBAORA, RAVER, 2 JALGAON 425502, JALGAON-425502, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, PUNEBENCH 5 GUARD FILE आदेशानुसार/ BY ORDER, // True Copy // Sunil Kumar More Digitally signed by Sunil Kumar More Assistant Registrar Date: 2026.10.25 10:40:47 +05'30' आयकरअपीलीयअिधकरण ,पुणे / ITAT, Pune.