INCOME TAX OFFICER, WARD-1, BIDAR, BIDAR vs. SHRI GANESH AGENCIES, BIDAR

Per Prashant Maharishi, Vice President 1. These cross appeals filed by Shri Ganesh Agencies [ Assessee/ Appellant] in ITA No.1829/Bang/2024 and ITA No.1476/Bang/2024 by The Income Tax Officer , Ward – 1, Bidar (The AO) for assessment year 2017–18 against the appellate order passed by National faceless appeal Centre, Delhi (the learned CIT – A) dated 10/6/2024 wherein the appeal filed by the assessee against the assessment order passed by the national faceless assessment Centre, Delhi under section 144 read with section 147 of The Income-Tax Act, 1961 (The Act) dated 30/3/2022, was allowed. 2. Briefly stated the facts of the case show that assessee is a partnership firm carrying on the business of pharmaceutical distributors. Assessee filed its return of income on 14/9/2017 at a total income of ₹ 1,299,720/–. As per the information gathered from Insight Portal assessee has deposited cash in the bank account during the demonetisation period from 9/11/2016 to 30/12/2016 of Rs. 1,45,14,700/-. It was found that total turnover of the assessee is ₹ 18.73 crores and the cash deposit made by the assessee during the demonetisation period itself is at ₹ 1.45 crores. Thereafter, analysing the turnover of the assessee, the reasons for reopening were recorded and notice under section 147 of the act was issued. The notices were sent on 24/6/2021 and further notice under section 142 (1) was sent on 3/11/2021. Assessee submitted acknowledgement of the return filed, reasons were provided, however no explanation as to the sources of ITA Nos.1476 & 1829/Bang/2024 Page 3 of 23

cash deposit was mentioned by the assessee, therefore, the learned assessing officer presumed that the assessee has got nothing to say in this matter.
3. Accordingly, he made an addition of ₹ 14,514,700/- to the returned income of ₹ 1,299,720/- and assessed total income at ₹ 15,814,420 by passing an assessment order under section 147 read with section 144
read with section 144B of the act on 30/3/2022. 4. Assessee, aggrieved with the assessment order preferred an appeal before the learned CIT – A challenging the reopening of the assessment as well as the addition on merits of the case. The learned CIT – A held that the assessee has maintained the regular books of account, got audited the accounts under section 44AB of the act and submitted the return in response to the notice issued under section 148 of the act.
Without examining the books of account, examining the cash deposits in bank account with the assessee, who claimed that the cash deposit is part of the business receipt, made an addition under section 69 of the act, which is contrary to the assessment procedure established. With respect to the addition made by the learned AO of the cash deposit, he held that it is a cash deposit of business nature which are already recorded in the regular books of accounts and therefore same could not have been added to the total income of the assessee. The learned CIT –
A followed several judicial precedents. Accordingly, he allowed the appeal of the assessee by appellate order dated 10/6/2024 directing the ITA Nos.1476 & 1829/Bang/2024
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learned assessing officer to delete the addition made under section 69
of the Act.
5. Thus, the ld AO is aggrieved with the deletion of addition and Assessee is still aggrieved with the appellate order preferred an appeal before us raising the ground of appeal challenging the reopening of the assessment contesting that the notice issued under section 148 of the act dated 24/6/2021 was not enforceable in law and contrary to law laid down by the Supreme Court in Union of India versus Rajeev
Bansal (2023) 1 SCC 617 and consequently the entire proceedings is void ab initio. Therefore, the assessee has challenged the appellate order on the issue of reopening of the assessment.
6. The learned assessing officer has challenged the appellate order for the reason that the learned CIT – A deleted the addition of ₹ 14,514,700
without allowing the opportunity to the assessing officer to examine the evidences produced by the assessee during the appellate proceedings and present his findings through the remand report, so appellate order is in violation of rule 46A (3) of The Income Tax Rules 1962. Thus, the AO’s grievance is deletion of the addition without allowing him and opportunity to contest for examining the evidence.
7. The ld. AR has submitted that notice under section 148 of the Act was issued to the assessee for assessment year 2017 – 18 on 24/6/2021. It was submitted that that there is an amendment to the provisions of section 148 of the act by The Finance Act, 2021 by way of substitution and a new procedure of conduct of enquiry under section 148A (a),

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issuance of show cause notice under section 148A (b), submission of response under section 148A (c) and issuance of order under section 148A (d) before issue of notice under section 148 was provided with effect from 1 April 2021. Further, where limitation for any action under the act falls between 20 March 2020 and 31st of March 2021, the time limit for the same shall be extended to 30 June 2021. In this case the learned assessing officer has issued the notice under section 148 of the act on 24/6/ 2021 i.e., after 1 April 2021 presumably in view of TOLA.
It was submitted that in cases where notices issued under section 148 of the older provision is hit by the decision of the honourable Supreme
Court in case of Ashish Agarwal wherein it was held that notices issued under section 148 of the act after 1/4/2021 was subject matter of challenge before the various High Court which quashed such notices.
The legality of such notices was eventually decided by the honourable
Supreme Court and further in case of Mr Rajeev Bansal it resulted into issue of notification dated 11/05/2022 whereby the procedure to be followed for all cases was laid down. However, the learned assessing officer on 30/3/2022 has concluded the assessment proceedings on the strength of the notice issued under section 148 despite it being set-aside and converted into a notice under section 148A (b) and the assessee taking issuance of fresh notice in compliance with Supreme Court judgement. It was further submitted that even if assessment is already concluded and those two judgements of Honourable Supreme court apply to the facts of the case because amendment applies to all 90,000
notices issued between 1/04/2021 and 30/6/2021 and no distinction is ITA Nos.1476 & 1829/Bang/2024
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made between cases where assessment order is passed and cases where assessment order is not passed. Therefore, the assessment order in question is bad in law and liable to be treated as illegal on facts and circumstances of the case.
8. Contesting the above fact, the learned departmental representative stated that the assessment in this case has already been completed prior to those decisions rendered by the honourable Supreme Court and therefore those decisions do not apply to the facts of the present case.
Accordingly, the reopening is valid. It was further stated that the learned CIT(A) does not decide such issues.
9. Defending the appeal of the learned assessing officer, the learned departmental representative vehemently supported the order of the learned assessing officer and stated that the learned CIT – A has deleted the addition without confronting the facts to the assessing officer which is mandatory in terms of the provisions of rule 46A of the income- tax rules.
10. Contesting the appeal of the revenue, the learned authorised representative relied upon the orders of the learned CIT – A holding that that amount of cash deposited in the bank account of the assessee is part of the receipts of income of the assessee and therefore addition under section 69B of the act as undisclosed income does not apply.
The amount is deposited in the bank account during demonetisation period which is arising from the regular business operations of the assessee, and the source of such funds is regular sales accounted for by ITA Nos.1476 & 1829/Bang/2024
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the assessee. Therefore, the learned CIT – A correctly relying upon the several judicial precedents has deleted the addition.
11. On the issues of the illegality of notices u/s 148 of the Act, he reiterated the decisions of Honourable supreme court and stated that it was concerned with ninety thousand notices and all those notices were held to be invalid but converted as a notice under the new provision. As such order passed based on illegal notices is invalid.
12. We have carefully considered the rival contentions and perused the orders of the learned lower authorities. We find that ld CIT (A) has deleted the addition on the merits as under: -

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assessment order making the addition remains unchallenged. We also find that even on the merits of the addition, the ld CIT (A) has given a correct finding and same is sustainable.
14. In view of this, we uphold the order of the ld CIT (A) deleting the above addition u/s 69 of the Act of Rs. 14,514,700- as the impugned cash deposit is part of the regular books of accounts of the assessee, which forms part of the sales turnover and resultant profit arising there on is already offered to tax in the regular return of income.
Accordingly, appeal of the ld AO is dismissed.
15. In view of dismissal of appeal of the ld AO, no decision was made by the ld. CIT (A), the issues in appeal of the assessee are not required to be decided as are academic and hence dismissed.
16. In the result both the appeals are dismissed.
Pronounced in the open court on this 26th day of August, 2025. (KESHAV DUBEY)
VICE PRESIDENT

Bangalore,
Dated, the 26th August 2025. /Desai S Murthy /

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