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Facts
The assessee, an individual, did not file a return of income for AY 2017-18. The AO reopened the assessment under Section 147 based on cash deposits of Rs. 60,04,600 in his bank account. Despite notices, the assessee failed to comply, leading to an ex-parte assessment.
Held
The CIT(A) set aside the assessment order and directed the AO to redo the assessment after providing a reasonable opportunity of being heard. The Tribunal upheld the CIT(A)'s order, finding it in accordance with law and rejecting the assessee's grounds.
Key Issues
Whether the CIT(A) was justified in setting aside the ex-parte assessment order and remanding the case to the AO for fresh adjudication after providing an opportunity of being heard.
Sections Cited
139(1), 147, 148, 142(1), 144(1), 69A, 148A(b), 148A(d), 144B, 151A
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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
करदाता का प्रतततितित्व/ : Shri SNSR Chinmai, Assessee Advocate. Represented by राजस्व का प्रतततितित्व/ : Shri Gurupreet Singh, Sr.A.R. Department Represented by सुिवाई समाप्त होिे की ततति/ : 06.10.2025 Date of Conclusion of Hearing घोर्णध की तधरीख/ : 08.10.2025 Date of Pronouncement O R D E R PER MANJUNATHA G., A.M :
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless 2 Mohd. Azgar Ali Appeal Centre, Delhi, dated 22.07.2025 and pertains to the assessment year 2017-18.
The brief facts of the case are that the appellant is an individual and has not filed return of income for the assessment year under consideration under Section 139(1) of the Income Tax Act, 1961. The assessment has been reopened under Section 147 of the Income Tax Act, 1961, for the reasons recorded. As per which specific information available with the department shows that the assessee has made cash deposits of Rs.60,04,600/- in his bank account maintained with Andhra Bank. Since the assessee has not filed the return of income, the A.O. was of the opinion that the income chargeable to tax has been escaped assessment within the meaning of Section 147 of the Income Tax Act, and accordingly notice under Section 148 of the Act, dated 21-03-2022 was issued and served on the assessee. The assessee did not comply with the notice issued under Section 148 by filing the return of income. Therefore, the A.O. issued various notices under Section 142(1) of the Act and also show cause notice under Section 144(1) and called upon the assessee to explain as to why the assessment 3 Mohd. Azgar Ali should not be completed to the best of his knowledge as per the information available on record. Once again, the assessee neither complied with the notice issued by the A.O. nor furnished the details. Therefore, the A.O. passed the order under Section 147 r.w.s. 144 of the Act on 08.01.2025 and determined the total income at Rs.60,04,600/- by making addition of Rs.60,04,600/- under Section 69A of the Act, as unexplained money towards cash deposited in the bank account.
Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee challenged the notice issued under Section 148A(b), and the order passed under Section 148A(d) of the Act, and subsequent notice issued u/s 148 of the Act, by the jurisdictional A.O. in light of the provisions of Section 144B of the Act. The assessee had also challenged the addition made towards cash deposits on the ground that the source for the cash deposits was out of cash withdrawals from the very same bank account on earlier occasions.
4 Mohd. Azgar Ali
The Ld. CIT(A) after considering the relevant submissions of the assessee and also taken note of the fact that the assessment proceedings before the A.O. was ex parte and the assessee did not get a reasonable opportunity of hearing to explain the case, passed the order setting aside the issue to the file of the A.O. with a direction to redo the assessment afresh in accordance with law after providing a reasonable opportunity of being heard to the assessee.
Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
The learned counsel for the assessee Ms. SNSR Chinmai, referring to the grounds of appeal
filed by the assessee, submitted that although the assessee has challenged the validity of the reassessment order passed by the A.O. under Section 147 r.w.s. 144 of the Act, dated 08.01.2025 in light of the notice issued under Section 148 of the Act, by the jurisdictional A.O., i.e., ITO, Ward-1, Nalgonda, but the Ld. CIT(A) does not adjudicate the grounds taken by the assessee. The learned counsel for the assessee further referring to the decision of the Hon’ble Supreme
5. Mohd. Azgar Ali Court in the case of ITO Vs. Prakash Pandurang Patil reported in [2025] 178 Taxmann.com 8 submitted that, the Hon’ble Supreme Court dismissed the SLP filed by the Revenue against the order passed by the Hon’ble High Court of Bombay in the case of Prakash Pandurang Patil Vs. ITO [2025] 177 Taxmann.com 552, and held that where reopening notice issued under Section 148 of the Act by the jurisdictional A.O. without mandatory faceless mechanism as per the provisions of Section 151A is not sustainable and the consequent assessment order passed by the A.O. is invalid. Therefore, he submitted that the order passed by the A.O. should be quashed.
The learned Senior A.R. for the Revenue Shri Gurpreet Singh, on the other hand, submitted that since the assessment proceedings before the A.O. is ex parte, the Ld. CIT(A) has rightly given one more opportunity to the assessee to explain his case before the A.O., and once the case has been set aside to the A.O., there is no proceedings pending as of now, and the assessee can challenge the validity of the notice issued by the A.O. at appropriate stage. Therefore, he submitted that there is no error in 6 Mohd. Azgar Ali the order passed by the Ld. CIT(A), and thus, the same should be upheld.
We have heard both parties, perused the material on record, and had gone through the orders of the authorities below. There is no dispute with regard to the fact that the reassessment proceedings before the A.O. are ex parte because, the assessee neither filed the return of income in response to the notice issued under Section 148 of the Act nor filed any details in response to various notices issued under Section 142(1) of the Act to explain the source for cash deposits in the bank account. Since the assessment proceedings before the A.O. are ex parte, the Ld. CIT(A) has rightly set aside the assessment proceedings to the file of the A.O. with a direction to redo the assessment afresh in accordance with law after providing a reasonable opportunity of being heard to the assessee.
Insofar as the arguments of the learned counsel for the assessee in light of the decision of the Hon’ble Supreme Court in the case of ITO Vs. Prakash Pandurang Patil (supra) is concerned, in our considered view, once the proceedings before the A.O. are 7 Mohd. Azgar Ali ex parte and the assessee has not availed the opportunity of hearing, the order passed by the Ld. CIT(A) setting aside the issue to the file of the A.O. to give another opportunity of hearing to the assessee is in accordance with law.
Further, the assessee can very well challenge the proceedings initiated under Section 147 of the Act by issuing notice under Section 148A(b), order passed under Section 148A(d), and the subsequent notice issued under Section 148 of the Act, in the consequent proceedings before the A.O. Therefore, in our considered view, at this stage, there is no grievance for the assessee to agitate the order passed by the Ld. CIT(A) setting aside the issue to the file of the A.O. Therefore, we are inclined to uphold the order of the Ld. CIT(A) and reject the grounds taken by the assessee.
We further make it clear that, the assessee is at liberty to challenge the legality of the reassessment proceedings initiated by the A.O. consequent to the notice issued under Section 148 of the Act, by the jurisdictional A.O. in the consequent assessment proceedings and subsequent proceedings arising on account of the 8 Mohd. Azgar Ali pending proceedings before the learned A.O. In other words, we keep open all issues to be adjudicated at the appropriate level and at the appropriate stage.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the Open Court on 8th October, 2025. (श्री रवीश सूद) (मंजूिधथ जी) (RAVISH SOOD) (MANJUNATHA G.) न्यायिक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER