KATRAPALLY VENUMADHAV,WARANGAL vs. INCOME TAX OFFICER, WARD-4(1), HYDERABAD

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PER RAVISH SOOD, JM:

The captioned appeals are filed by the assessee against the respective orders passed by the Commissioner of Income Tax, National
Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 12/06/2025
and 13/06/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144 r.w.s
144B of the Income Tax Act, 1961 (for short, “the Act”), dated
08/02/2024 and under section 270A of the Act, dated 30/08/2024. As the present appeals are interlinked, therefore, the same are being taken up and disposed of vide a consolidated order. We shall first take up the quantum appeal filed by the assessee, i.e., ITA No. 1395/Hyd/2025, wherein the impugned order has been assailed on the following grounds of appeal:

“1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals), National Faceless
Appeal Centre, Delhi has erred in passing the ex-parte order without deciding the appeal on merits of the case.

As the assessee by raising the aforesaid additional grounds of appeal has sought our indulgence for adjudicating a purely legal issue, therefore, we have no hesitation in admitting the same. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR
383 (SC).
3. Succinctly stated, the AO based on information that the assessee during the subject year was in receipt of income from multi facet sources, viz., (i) Salary Income: Rs.7,95,658/-; (ii) Income on sale of immovable property for a consideration of Rs.57,75,000/-; and (iii) receipt of amount from M/s. Vaishnavi Estates Private Limited
(contractor) of Rs.50,000/-, but not filed his return of income, initiated proceedings under section 148A(a) of the Act. Order under section 148A(d) of the Act was passed on 28/04/2022. Thereafter, the AO issued notice under section 148 of the Act, dated 28/04/2022. 4. Thereafter, the AO vide his order under section 147 r.w.s 144
r.w.s 144B of the Act, dated 08/02/2024, determined the income of the assessee at Rs.66,20,660/- after making certain additions, viz., (i) addition of salary from Fujitec India Private Limited:Rs.7,95,658/-; (ii) short term capital gains (STCG): Rs.57,57,000/-; and (iii) income received from M/s. Vaishnavi Estates Private Limited: Rs.50,000/-.
5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee had failed to participate in the proceedings before the First Appellate Authority, therefore, the latter on the said count itself had dismissed the appeal.
6. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.
7. We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record.
8. Shri
G.
Srinivasa
Rao,
CA, the Learned
Authorized
Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the AO had grossly erred in laws and facts of the case in assuming juri iction and framing the assessment vide the impugned order passed under section 147 r.w.s
144 r.w.s 144B of the Act, dated 08/02/2024. Elaborating on his contention, Ld. AR submitted that the AO had wrongly assumed juri iction primarily on two grounds, viz., (i) that the AO had failed to obtain the approval of the specified authority as per section 151(ii) of the Act (as was then available on statute); and (ii) that the notices under section 148A(b) of the Act and section 148 of the Act were not issued and served upon the assessee as per section 282 r.w. Rule 127
of the Income Tax Rules, 1962. 9. The Ld.AR submitted that the AO had issued notice under section 148 of the Act, 28/04/2022 after obtaining the approval of the Principal Commissioner of Income Tax, Hyderabad-1 on 28/04/2022, vide Reference No.100000029497859. Elaborating on his contention,
Ld. AR submitted that as the notice under section 148 of the Act, dated
28/04/2022 had been issued by the AO without obtaining the approval of the prescribed authority, therefore, the said notice and the consequential assessment framed by him vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 08/02/2024 cannot be sustained and is liable to be quashed on the said count itself.
Elaborating on his contention, Ld. AR submitted that as the notice under section 148 of the Act, dated 28/04/2022 for the subject year, i.e.,

AY 2018-19 had been issued by the AO beyond the period of three years from the end of the relevant assessment year, therefore, as per the mandate of section 151 of the Act, as was made available on the statute vide the Finance Act, 2021, w.e.f 01/04/2021, the said notice could have been issued only after obtaining the prior approval of the authorities contemplated in subsection (ii) in section 151 of the Act, viz.,
Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General,
Chief Commissioner or Director General. The Ld. AR submitted that the notice under section 148 of the Act, dated 28/04/2022, had been issued in the present case after obtaining the prior approval of the Principal
Commissioner of Income Tax, Hyderabad-1 on 28/04/2022. The Ld. AR to fortify his contention had drawn our attention to the notice issued under section 148 of the Act, dated 28/04/2022, which revealed that the same was issued after obtaining prior approval of the Principal
Commissioner of Income Tax, Hyderabad-1 accorded on 28/04/2022
vide Reference No.100000029497859, Page No.6 of APB.
10. Carrying his contention further, the Ld. AR submitted that as the impugned notice under Section 148 of the Act, dated 28.04.2022 had been issued by the A.O. without obtaining the approval of the prescribed authority, therefore the said notice and the consequential assessment framed by him vide his order passed under Section 147
r.w.s 144 r.w.s 144B of the Act, dated 08/02/2024 cannot be sustained and is liable to be quashed on the said count itself. The Ld. AR further submitted that the impugned notice issued under section 148 of the Act was just uploaded on the e-proceedings window in the Income Tax portal and was never served on the assessee either through post or on his registered email Id as is mandatorily required under the provisions of section 282 of the Act r.w. Rule 127 of the IT Rules, 1962. Also, the Ld.
AR submitted that the impugned show cause notice (SCN) issued under section 148A(b) of the Act, dated 25/03/2022 and the order passed under section 148A(d) of the Act were not served on the assessee either through post or on his registered email Id. Elaborating on his contention, the Ld. AR submitted that for the said reason also the impugned notice issued under section 148 of the Act is bad in law and the subsequent assessment proceedings framed based on such invalid notice cannot be sustained and is liable to be quashed.
11. Per contra, Dr. Sachin Kumar, Learned Senior Departmental
Representative (for short “Ld. Sr. DR”), on being confronted with the aforesaid factual position as was canvassed before us, failed to rebut the same. However, the Ld. Sr. DR submitted that as the A.O., after validly assuming juri iction, had issued notice u/s 148 of the Act, dated
28.04.2022, therefore, no infirmity emerges from the assessment order passed by him. The Ld. Sr. DR, submitted that on a conjoint reading of Section 151 and the “5th proviso” to Section 149(1) of the Act, for reckoning the period of three years from the end of the relevant assessment year as envisaged in Section 151 of the Act, based on which the specified authority whose sanction is required to be obtained for issuing notice under Section 148 of the Act is to be determined, the period allowed to the assessee as per the “Show Cause Notice” (SCN) issued under clause (b) of Section 148A of the Act has to be excluded.
The Ld. Sr. DR to support his contention had drawn our attention to the “5th Proviso” of Section 149 of the Act.
12. We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the lower authorities. Ostensibly, it transpires on a perusal of the record that as the assessee despite having been afforded four opportunities, had failed to participate in the proceedings before the CIT(A), therefore, the latter was constrained to proceed with and dispose of the appeal vide an ex-parte order.
However, we find that the CIT(A) taking cognizance of the fact that the assessee had not participated in the proceedings before him, therein held a conviction that he was not interested to prosecute the matter and had for the said stand alone reason dismissed the appeal without arriving at any independent finding regarding the specific grounds of appeal based on which the impugned order was assailed before him.
14. Although, we concur with the CIT(A) that in a case where the assessee fails to participate in the appellate proceedings, then the 9

same cannot be stalled and have to be proceeded with, but at the same time are unable to persuade ourselves to subscribe to the manner in which the CIT(A) had disposed of the present appeal, wherein he had refrained from addressing the specific grounds of appeal based on which the impugned order of assessment passed by the AO under section 147 r.w.s 144 r.w.s 144B of the Act, dated 08/02/2024 was assailed before him.
14. We say so, for the reason that a perusal of the order passed by the CIT(A) reveals that he had disposed of the appeal by way of a non- speaking order. In our view, once an appeal is preferred before the CIT(A), then it is obligatory on his part to dispose of the same in writing after considering the points for determination and then render a decision on each of the point which arise for consideration with reasons in support. Our aforesaid view is fortified by the judgment of the Hon'ble
Luthra (HUF) (2017) 297 CTR 614 (Bom). The Hon’ble High Court in the aforementioned case had observed as under:
"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June,
2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn.
Therefore, it would be noticed that the powers of the CITIA) are co- terminus with that of the AO i.e. he can do all that A.O could do.
Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non- prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.”

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18. As we have set aside the quantum appeal, i.e., ITA
No.1395/Hyd/2025 to the file of the CIT(A) in terms of our aforesaid observations, therefore, the captioned appeal, i.e.,
ITA
No.1396/Hyd/2025 wherein the impugned order passed by the AO under section 270A of the Act, dated 30/08/2024 has been upheld by the CIT(A) vide his order, dated 13/06/2025 is on the same terms set aside to the file of the CIT(A), who is directed to take up the same after disposing of the quantum appeal of the assessee as had been set aside to his file.
19. Resultantly, both the appeals filed by the assessee are allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 12th December, 2025. S /-
(मधुसूदन सावͫडया)
(MADHUSUDAN SAWDIA)
लेखासदèय/ACCOUNTANT MEMBER (रवीश सूद)
(RAVISH SOOD)
ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Hyderabad, dated 12.12.2025. OKK/sps
आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:-

आदेशानुसार / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad.