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Facts
The Assessing Officer (AO) received information that the assessee deposited Rs. 4,67,000/- in cash during the demonetization period. The AO reopened the assessment under Section 147 read with Section 148 of the Income Tax Act, 1961, and made an addition of Rs. 10,25,700/-. The CIT(A) upheld the AO's order.
Held
The Tribunal held that the reopening of assessment was invalid because the Assessing Officer failed to record any satisfaction regarding escapement of income and did not provide valid reasons for reopening. The notice issued under Section 148 and the subsequent assessment order were quashed.
Key Issues
Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961, was valid without proper satisfaction and reasons recorded by the Assessing Officer.
Sections Cited
250, 147, 148, 151, 69A, 115BBE, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH,KOLKATA
Ansar Rahaman, C/o S.N. Ghosh & Associates, Advocates 2, Garstin Place, 2nd Floor, Suite No. 203, Off Hare Street, Kolkata - 700001 [PAN: ACYPR1355H] ……..…...……………....Appellant vs. ITO, Ward 49(1), Kolkata, DS-4, Uttarapan Complex, Ultadanga, Maniktala Civic Centre, Kolkata – 700054 ................................ Respondent Appearances by: Assessee represented by : Somnath Ghosh, Adv. Sarnath Ghosh, Adv. Department represented by : Shankar Naskar, Sr. DR Date of concluding the hearing : 09.09.2025 Date of pronouncing the order : 12.09.2025 O R D E R
This appeal arises from order dated 09.10.2023, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)].
The assessee has raised the following grounds of appeal:
“1. FOR THAT the Id. Commissioner of Income Tax (Appeals)-NFAC. failed to appreciate that none of the conditions precedent existed and/or have been complied with and/or fulfilled by the Ld. Income Tax Officer. Ward 49(1), Kolkata for his alleged assumption of jurisdiction u/s 147 of the Income Tax Act, 1961 in the facts and circumstances of the instant case and the alleged assessment order dated 31-03-2022 passed u/s. 147 of the Act in pursuance to notice dated 31-03-2021 issued u/s 148 of the Act is therefore ab initio void. ultra vires and null in law.
Ansar Rahaman 2. FOR THAT the Id. Commissioner of Income Tax (Appeals)-NFAC erred in upholding the validity of the impugned notice dated31-03-2021 issued u/s. 148 of the Income Tax Act, 1961 and the consequential assessment order framed u/s 147 of the Income Tax Act. 1961 by the Ld. Income Tax Officer, Ward 49(1). Kolkata in absolute infringement of the CBDT. Instruction No. 1/2011 dated 31-01-2011 and the purported action on that behalf is altogether unfounded, unjustified and untenable in law.
FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of s. 147 of the Income Tax Act. 1961, the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. was absolutely in error in upholding the action of the Ld. Income Tax Officer, Ward 49(1), Kolkata of issuing notice u/s. 148 of the Act without adducing any tangible material on record in support of such illegitimate exercise and the purported conclusion reached on that behalf is completely unfounded, unlawful and untenable in law.
4. FOR THAT the spurious action of the Id. Commissioner of Income Tax (Appeals)-N.F.A.C. in upholding the initiation of proceedings u/s. 147 of the Income Tax Act. 1961 by the Id. Income Tax Officer, Ward 49(1). Kolkata without any proper application of mind on the specious information received is invalid for want of jurisdiction as the pre-conditions for initiation of the proceedings as stipulated therein are not fulfilled in the circumstances of the case.
5. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. acted unlawfully in upholding the validity of notice u/s. 148 of the Income Tax Act. 1961 issued by the Id. Income Tax Officer, Ward 49(1). Kolkata without seeking any valid approval required u/s. 151 of the Income Tax Act. 1961 from the competent authority as required under the statute and the purported action on that behalf is thoroughly opposed to law.
FOR THAT the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. acted unlawfully in upholding the purported additions in the amounts of Rs. 5,60,700/- and Rs. 4.65.000/- made by the Id. Income Tax Officer. Ward 49(1). Kolkata alleging unexplained cash credits invoking the provisions of s. 69A read with s. 115BBE of the Income Tax Act, 1961 in the circumstances of the instant case and the specious finding on that issue is absolutely arbitrary. unwarranted, and perverse.
7. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC. erred in upholding the purported addition of Rs. 10.25.700/- in aggregate made by the Ld. Income Tax Officer. Ward 49(1). Kolkata on account of alleged unexplained monies being the cash deposits made in Specified Bank Notes during Demonetization Period on extraneous considerations not germane to the issue and totally ignoring the cogent elucidation on record and the impugned finding on that issue is completely unfounded, unjustified, and untenable in law.
FOR THAT on the facts and in the circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. was wholly in error in upholding the addition in the aggregate of Rs. 10,25,700/- resorted to by the Ld. Income Tax Officer, Ward 49(1), Kolkata on account of alleged unexplained monies under the garb of the provisions of s. 69A read with s. 115BBE of the Income Tax Act, 1961 and the specious action on that behalf indulging in speculation, surmise, suspicion, and conjecture is wholly illegal, illegitimate, and infirm in law.”
3. The issues in Ground No. 1 by the assessee is against the order of Ld. CIT(A) upholding the assessment order which has been passed by the Assessing Officer without satisfying the precedent conditions to section 147 read with section 148 of the Act.
The facts in brief are that the assessee filed return of income on 29.03.2018 declaring total income of Rs. 20,62,230/-. Subsequently, the Assessing Officer received information from the Investigation Wing that the assessee has deposited Rs. 4,67,000/- in his bank account No. 6622000100040 with Kolkata Branch of Karnataka Bank Ltd. Consequently, notice under Section 148 of the Act was issued on 31.03.2021 and the assessee filed return of income on 27.10.2021. Finally, the addition was made of Rs. 10,25,700/- in the cash deposit during demonetization period vide assessment order under Section 147 read with section 144B of the Act dated 31.03.2022. In the appellate proceedings, the CIT(A) dismissed the appeal of the assessee.
After hearing the rival submissions and the perusing the material on record including the reasons recorded under Section 148(2) of the Act copy of which is available at page no. 22 of the paper book which reveals that there is no recording of any satisfaction by the Assessing Officer qua escapement of income. The reasons recorded are extracted below.
“As per information received, that the assessee Ansar Rahaman PAN ACYPR1355H has deposited cash of Rs.4,67,000/- during demonitisation on OHD noted. The assessee failed to provide any explanation regarding source of cash deposited. Therefore, the case was reopened u/s 147 of the Income- tax Act 1961. Approval was granted by the JCIT, Range-49, Kolkata for issuance of 6. Thus, we note that the reopening assessment has been by made invalidly without recording any findings that income has escaped by assessment during the year. In our opinion, the notice has been issued under Section 148 of the Act for reopening the assessment under Section Ansar Rahaman 147 of the Act is invalid as there are no valid reasons recorded by the Assessing Officer. Consequently, we quash the reopening of assessment as well as assessment framed.
In result, appeal of the assesseeis allowed.
Order pronounced on 12.09.2025