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Facts
The assessee filed an appeal against the order of the CIT(A) which upheld an addition of Rs. 58,61,712/- on account of alleged cash credits. The reassessment proceedings were initiated based on information from a search conducted in other cases, prior to April 1, 2021.
Held
The Tribunal held that the reassessment proceedings were initiated based on information from a search prior to April 1, 2021, and thus the amended provisions of Sections 147, 148, 148A, 149, and 151 of the Act would not apply. The Tribunal also noted that the CIT(A)'s order was cryptic and lacked proper discussion of the grounds of appeal and submissions.
Key Issues
Whether the reassessment proceedings initiated based on a search conducted prior to April 1, 2021, are valid under the amended provisions of the Income Tax Act? Whether the CIT(A) properly considered the grounds of appeal and evidence, and provided a fair opportunity of hearing to the assessee?
Sections Cited
147, 144B, 148, 132, 148A, 149, 151, 250, 68, 143(2), 142(1)
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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: DR. BRR Kumar & Shri T. R. Senthil Kumar
आदेश/ORDER PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER
This appeal is filed by the Assessee as against the appellate order dated 27-10-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 147 read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
The grounds of appeal raised by the assessee are as under:
“1. The Ld. CIT (A) has grossly erred in law and on facts in dismissing the appeal filed by the appellant. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before the Ld.CIT(A). I. Challenging the validity of Notice issued u/s. 148 of the Act for reopening of the case of appellant pursuant to the search action conducted in other persons before 01.04.2021 and order passed u/s. 147 r.w.s. 144B of the Act dated 31.03.2022.
1. The Ld. CIT(A) has erred in law and on facts in not considering that the reassessment proceedings were initiated based on information received from a search conducted under Section 132 in the case of the Kushal Group of Ahmedabad on 05.02.2019. Since the search was conducted prior to 01.04.2021, the amended provisions of Sections 147, 148, 148A, 149, and 151 do not apply. Therefore, the notice issued under Section 148 is contrary to the applicable legal provisions and is liable to be quashed.
2. The Ld. CITIA) has erred in not appreciating that the Ld.AO has obtained approval for issuance of the impugned notice under section 148 of the Act from the authority designated as 'Range 3(1), Ahmedabad'. However, in terms of section 151 of the Act, the Assessing Officer was mandatorily required to obtain approval from the Principal Chief Commissioner or Principal Director General or, in their absence, from the Chief Commissioner or Director General. The approval dated 31.03.2021, having been taken from a subordinate/junior authority, is therefore in clear violation of the statutory mandate. Consequently, the impugned notice issued under section 148 under the amended provisions of the Act, as well as the reassessment order passed under section 147 r.w.s. 1448 dated 31.03.2022, are illegal, void ab initio, and liable to be quashed in light of the various judicial pronouncements relied upon by the appellant."
3. The Ld. CIT(A) has erred in not properly considering various judicial pronouncements relied upon by the appellant in the Synopsis of Arguments uploaded on the ITBA Portal on 17.10.2025. I. Addition on account of alleged cash credit u/s. 68 of the I.T.Act, Rs. 58,61,712/-
1. The order passed under Section 250 on 27.10.2025 for A.Y. 2017-18 by the Ld. CIT(A), wherein the addition of Rs. 58,61,712/- made under Section 68 of the Act on account of alleged cash credits arising from the sale of shares of Kushal Ltd. and treated as accommodation entries by the Assessing Officer has been upheld, is wholly illegal, arbitrary, and contrary to the principles of natural justice.
2. The Ld. CIT (A) has failed to appreciate that there was a gross violation of the principles of natural justice, inasmuch as both the lower authorities did not fully or properly consider the explanations and evidence furnished by the appellant from time to time. The Ld.AO did not provide the complete material, statements, or details relied upon by him while issuing notices under sections 148, 143(2), and 142(1), as well as the show-cause notice, thereby depriving the appellant of a fair and reasonable opportunity to present its case.
The Ld. CITIA) has erred in law and on facts in disregarding the detailed submissions, supporting evidence, and relevant documents furnished by the appellant, all of which clearly established that the transactions pertaining to the purchase and sale of shares of Kushal Ltd. were genuine.
4. The Ld.AO has grievously erred in law as well as on facts in failing to consider and appreciate the various judicial pronouncements relied upon by the appellant, including binding decisions of the Hon'ble Jurisdictional Gujarat High Court and the Hon'ble Ahmedabad Bench of the ITAT in the Synopsis of Arguments uploaded on the ITBA Portal on 17.10.2025. These decisions were squarely applicable to the facts of the appellant's case and ought to have been duly examined and followed. The non-consideration of such binding precedents renders the assessment order bad in law and unsustainable."
3. Ld. Counsel for the assessee submitted that though the Ld.CIT(A) refers to the written submission filed on 17.10.2025, which is running to 29 pages with 7 Exhibits. However, the same was not considered by the Ld. CIT(A) and confirmed the addition on Long Term Capital Gain (‘LTCG’) on the transactions of Kushal Group shares of Rs.58,61,712/- as bogus cash credit of the assessee. The Ld. CIT(A) neither considered the grounds of appeal on the reopening of assessment as well as merits of the case. The assessee was never given any opportunity of hearing before deciding the appeal. Thus, Ld. Counsel requested to set aside the matter back to the file of the Ld.CIT(A).
Ld. Sr.DR appearing for the Revenue has no serious objection in setting aside the appellate order.
We have considered the appellate order passed by the Ld.CIT(A), wherein one show cause notice was issued on 26.12.2024 and recorded the written submission filed by the assessee on 17.10.2025. However, in a cryptic two paragraph order confirmed the addition made by the AO without making any discussion on the grounds of appeal and written submission filed by the assessee, which in our considered opinion, is not a proper appellate order. Ld. Counsel filed before us a Paper Book running to 621 pages including the written submission filed before Ld. CIT(A). Therefore, in the interest of justice, we deem it fit to set aside the matter back to the file of the Ld.CIT(A) with the direction to give proper opportunity of hearing to the assessee and pass order in accordance with law. Needless to say, the assessee should make use this final opportunity of hearing and file all necessary details before the Ld. CIT(A) to pass order on merits of the case.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11-03-2026