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Facts
The Revenue appealed against an order of the CIT(Appeals), and the assessee filed a cross-objection. The assessee's ground in the cross-objection challenged the validity of the assessment order due to non-compliance with a CBDT instruction regarding the issuance of a notice under Section 143(2). The Revenue argued that a High Court ruling supported their position.
Held
The Tribunal dismissed the assessee's cross-objection, relying on a Delhi High Court decision that held that an assessee cannot demand reasons for their case being selected for scrutiny. Regarding the Revenue's appeal, the Tribunal set aside the CIT(Appeals)'s order and remanded the matter back to the CIT(Appeals) for compliance with Rule 46A(3) regarding the admission of additional evidence.
Key Issues
Whether the assessment order was invalid for non-compliance with CBDT instructions regarding Section 143(2) notice and whether additional evidence was correctly admitted under Rule 46A without a remand report.
Sections Cited
143(2), 194C(6), 250(4), 250(6), 46A(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI AVDHESH KUMAR MISHRA
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM:
1. The present appeal preferred by the Revenue and the corresponding cross-objection by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 21.11.2025 for the assessment year 2023-24 as per the following grounds.
First, we would adjudicate the cross objection filed by the assessee in CO No.5/RPR/2025 wherein following grounds have been raised:
1. That, on the facts and in law, the order passed by the Assessment Unit, NFAC, Delhi, dt.28/03/2025 is invalid and void as the u/s.143(2), dated 19/06/2024 has been issued without complying the CBDT Instruction F. No.225/157/2017/ITA-II, dt.23/06/2017, and therefore the impugned order is not tenable in law and liable to be quashed.
2. That, the appellant reserves the right to add, alter or delete any ground.”
At the time of hearing, Ld. Sr. DR submitted that so far the ground raised in cross objection by the assessee is concerned, the decision of Special Bench, ITAT, Bengaluru is yet to be pronounced, however, the Hon’ble High Court of Delhi has ruled the issue in favour of the Revenue in the case of Bharat Bansal Vs. NFAC, W.P (C) 2238/2026, CM APPL.10798/2026 & CM APPL. 10799/2026, dated 17.02.2026. The relevant observation of the Hon’ble High Court are extracted as follows:
“5. Having heard learned counsel for the parties and upon consideration of the material available on record, including the circulars that were relied upon by the learned counsel for the petitioner, we are of the firm opinion that it is not necessary for the Assessing Officer (AO) to indicate as to why an assesse's case has been selected for scrutiny.
6. The scrutiny assessment has been provided in order to address the rigmarole and harassment being faced by the assessee in general and to confine the detailed assessment proceedings to a limited number of assessee.
7. The circulars issued by the CBDT and the Department are only with a view to determine as to which case or category of cases shall be taken up for scrutiny assessment and what shall be the nature of the scrutiny, which in our opinion is totally an inter-Departmental matter.
No assessee can as a matter of right ask as to why his case has been taken up for scrutiny. Even before the Court, an assessee cannot make such prayer, unless he is able to demonstrate that there is arbitrariness or vendetta, behind taking up his case for scrutiny.
9. According to us, the first notice under Section 143(2) of the Act of 1961 is only an intimation to the assessee that his/her case has been selected for scrutiny assessment and during the course of assessment proceedings, the AO is definitely required to issue .a specific notice , eliciting the necessary information and documents. In the instant case, the AO has exactly done what is expected of him.
For the reasons aforesaid, the writ petition is hereby dismissed.
Pending applications stand disposed of.”
That at the same time, the Ld. Counsel for the assessee after going through the aforesaid order very fairly conceded that the issue has been decided in favour of the Revenue. Considering the totality of the facts and 4 ACIT, Circle-1(1), Bilaspur (C.G.) Vs. Sanjeev Kumar Sharma CO No. 5/RPR/2026 as per the dictate of the Hon’ble High Court of Delhi (supra), the ground raised in cross objection by the assessee stands dismissed.
In the result, cross objection of the assessee in CO No.5/RPR/2026 is dismissed.
That so far as the appeal of the Revenue in Ld. Sr. DR even without going into the merits of the matter has brought to the notice of this Bench at Para 7.1.4 of the Ld. CIT(Appeals)/NFAC which reads as follows:
“7.1.4 During appellate proceedings, the appellant moved an application under Rule 46A seeking admission of additional evidences, namely (i) affidavits of the transporters confirming that they had given declarations u/s.194C(6) and owned not more than ten vehicles, (ii) a consolidated "Detail of Transporter" chart indicating, for each transporter, availability of declaration, affidavit, and remark confirming TDS/ITR, and (iii) ITR acknowledgements and computations of certain transporters evidencing that freight receipts from the assessee were offered to tax in their hands. The appellant has explained that these additional evidences could not be filed before the AO because the adverse view on the declarations was not anticipated earlier and no opportunity was provided to cure the objections by way of affidavits or additional supporting documents. Considering the nature of addition and the fact that the evidence goes to the root of the matter, I am satisfied that the assessee was prevented by sufficient cause from producing these evidences before the Assessing Officer, and therefore, in the interests of justice, the additional evidences are admitted under Rule 46A of the Income Tax Rules.”
That as discernable from the aforesaid, the Ld. CIT(Appeals)/NFAC accepted and admitted the additional evidences without calling for any 5 ACIT, Circle-1(1), Bilaspur (C.G.) Vs. Sanjeev Kumar Sharma CO No. 5/RPR/2026 remand report from the A.O which is in violation of Rule 46A(3) of the IT Rules, 1962. In the interest of principles of natural justice, we therefore, on this very issue of Rule 46A(3) itself set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file to comply with the dictate of Rule 46A(3) of the IT Rules, 1962 and call for a remand report from the A.O regarding additional evidences that had been admitted by the said authority. That once remand report is received, the Ld. CIT(Appeals)/NFAC shall pass a speaking order in terms with Section 250(4) & (6) of the Act while complying with the principles of natural justice. The assessee is also directed to comply with the hearing notices from the office of the Ld. CIT(Appeals)/NFAC.
To sum up, appeal of the Revenue is allowed for statistical purposes and cross objection of the assessee is dismissed.
Order pronounced in the open court on 1st April, 2026.