POTU JANARDHAN RAO,WARANGAL vs. ITO., WARD-1, WARANGAL

The assessee, being aggrieved with the CIT(A) order, has carried the matter in appeal before us. 6. We have heard the learned authorized representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial precedents that have been pressed into service by the Ld. AR to drive home his contentions. 7. Shri SNSR Chinmai, Advocate, the learned authorized representative for the assessee [for short “the Ld.AR”], at the threshold of the hearing of the appeal, submitted that the CIT(A) grossly erred in law and the facts of the case in summarily setting aside the matter to the file of the AO for de novo assessment. Elaborating on his contentions, the Ld.AR submitted that as the assessee had, inter-alia, assailed the validity of juri iction that was assumed by the Juri ictional Assessing Officer (for short, “JAO”) for issuing notice u/s 148A(b) and notice u/s 148 of the Act, therefore, the CIT(A) was obligated to have adjudicated the said issue, instead of summarily setting aside the entire matter to the file of the AO for de novo assessment in the backdrop of the powers vested with him under the “Proviso” to section 251(1)(a) of the Act as has been made available in the statute w.e.f.01.10.2024. Elaborating further on his contention, the Ld.AR submitted that as the adjudication of the “Ground of appeal No.3”, i.e., the validity of the assessment order passed by the “JAO” could safely be adjudicated, looking no further beyond the facts borne on record, therefore, the CIT(A) had grossly erred in refraining from dealing with the said aspect and summarily setting aside the matter to the file of the AO. 8. Per contra, Shri Gurpreet Singh, learned Departmental Representative (for short “the Ld. DR”) relied on the orders of the lower authorities. 9. We have given our thoughtful consideration to the contentions advanced by the learned authorized representatives of both parties in the backdrop of the orders of the lower authorities. 10. Admittedly, it is a matter of fact discernible from the record that the assessee had, inter-alia, vide his “Ground of appeal No.3” that was raised before the CIT(A), specifically assailed the notice issued by the AO u/s 148A and u/s 148 of the Act, on the ground that the juri iction to issue the said respective notices was exclusively vested with the AO/NFAC. For the sake of clarity, the “Ground of appeal No.3” raised by the assessee before the CIT(A) is culled out as under : 3. The order of assessment is not in accordance with law as the initial notice u/s 148A, the order u/s 148A and notice u/s 148 were issued by the juri ictional Assessing Officer instead of NFAC. Therefore, the consequent assessment made is invalid. 11. We find substance in the Ld. AR’s claim that now when the assessee had, inter-alia, assailed the validity of the juri iction that was assumed by the AO i.e., “JAO” for framing the impugned assessment vide his order passed u/s 147 r.w.s. 144 r.w.s.144B of the Act dated 21.12.2023, therefore, the CIT(A), despite being vested with the powers to set aside an ex-parte assessment to the file of the AO for de novo adjudication, vide the newly inserted “Proviso” to section 251(1)(a) of the Act, as had been made available on the statute w.e.f. 01.10.2024, ought to have taken a call and adjudicated the said challenge to the validity of the juri iction that was assumed by the “JAO”, as the same did not require looking any further beyond the facts borne on record. Although the “Proviso” to section 251(1)(a) of the Act as had been made available on the statute, vide the Finance Act (No.2), 2024, w.e.f.01.10.2024, had vested juri iction with the CIT(A) to set aside the order of the assessment made u/s 144 and refer the case back to the AO for making a fresh assessment, but, the said powers cannot overshadow the innate powers which remains vested with him for disposing the appeal, i.e. confirm, reduce, enhance or annul the assessment.

We find that a similar issue had come up before the ITAT, Hyderabad bench in the case of Eyegear Optics India Private Limited Vs. ITO in ITA No.1347/Hyd/2024 and 1291/Hyd/2024, wherein, it was held as under: “10. We have heard the learned authorized representatives of both parties, perused the orders of the lower authorities as well as considered the judicial pronouncements that were pressed into service by the Ld.AR. 11. Ostensibly, it is a matter of fact apparent from the record that the assessee company in the course of assessment proceedings had adopted an evasive approach, wherein, it had neither complied with the notice issued u/s 148 of the Act; nor replied/furnished the details as were called for by the AO in the course of the reassessment proceedings. Also, the conduct of the assessee company was no better before the Ld.CIT(A), wherein, it had once again adopted an evasive approach and not participated /filed the requisite details before him. 12. Be that as it may, it is however a matter of fact borne from record that the assessee company in its “Ground of appeal No.2” before the Ld.CIT(A), had specifically assailed the validity of juri iction that was assumed by the AO for initiating the reassessment proceedings, on the ground, that the same was beyond the time limit prescribed under the “1st proviso” to section 147 of the Act. For the sake of clarity, the “Ground of appeal No.2” raised by the assessee company before the CIT(A) is being culled out as under: “2. Initiating the reassessment proceedings beyond the time-limit prescribed under the first proviso to section 147 of the Act. 13. Admittedly, the legislature in all its wi om had vide the Finance (No.2) Act 2024 w.e.f. 01.10.2024 inserted the “Proviso” to section 251(1)(a) of the Act, as per which the CIT(A) has been vested with the power to set-aside the assessment and refer the case back to the AO for making afresh the assessment, in a case, where the appeal filed before him is against the order of assessment made u/s 144 of the Act. For the sake of clarity, section 251(1) is culled out as under: “251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers – (a) In an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment.

As we have set aside the matter to the file of the CIT(A) for fresh adjudication, therefore, we refrain from dealing with other contentions that have been raised by the assessee, which, thus, are left open.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. 15. The present appeal filed by the assessee is directed against the order passed by the CIT(A), NFAC dated 29.05.2025, which in turn arises from the order passed by the AO u/s 272A(1)(d) of the Act. The assessee has assailed the impugned order on the following grounds before us: 16. Succinctly stated, as the assessee had failed to effect necessary compliance to the notices issued. u/s 142(1) of the Act dated 18.09.2023 and 21.04.2023, therefore, the AO, while framing the assessment, vide his order passed u/s 147 r.w.s. 144 r.w.s.144B of the Act dated 21.12.2023 had initiated penalty proceedings u/s 272A(1)(d) of the Act.

Thereafter, the AO, after culmination of the assessment proceedings, issued notice, calling upon the assessee to explain as to why penalty u/s 272A(1)(d) of the Act may not be imposed upon him for the failure on his part to comply with the aforesaid notices. However, the assessee even failed to comply with the “Show Cause Notices” (for short “SCNs”) that were issued by the AO, calling for u/s 272A(1)(d) of the Act.

The AO, vide his order passed u/s 272A(a)(d) of the Act dated 16.05.2024, after taking cognizance of the facts relating to addition of Rs.54 lac u/s 69A of the Act, observed that, the assessee had neither in the course of assessment proceedings complied with notices issued u/s 142(1) of the Act nor complied with the SCNs issued in the course of the present penalty proceedings, which were validly served upon him. Accordingly, the AO held a firm conviction that the assessee had no explanation for his non-compliance of the notices issued in the course of assessment proceedings u/s 142(1) of the Act dated 18.09.2023 and 21.04.2023, thus held the assessee as liable for a penalty of Rs. 10,000/- for each default u/s 272A(1)(d) of the Act. Thus, the AO, vide his order passed u/s 272A(1)(d) of the Act dated 16.05.2024, imposed a penalty of Rs. 20,000/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success. For the sake of clarity, observations of the CIT(A) are culled out as under: 20. The assessee, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us. Shri SNSR Chinmai, Advocate, the Ld.AR, at the threshold of the hearing of the appeal, submitted that the failure on the part of the assessee to comply with the notices u/s 142(1) of the Act dated 18.09.2023 and 21.04.2023 was not deliberate, but was due to some compelling circumstances beyond his control. Alternatively, the Ld.AR imposed the penalty u/s 272A(1)(d) of the Act, separately for both the defaults on the part of the assessee to comply with the aforementioned notices, i.e., dated 18.09.2023 and 21.04.2023. 21. Per contra, Shri Gurpreet Singh, Ld. DR relied upon the orders of the lower authorities.

We have thoughtfully considered the facts involved in the present case in the backdrop of the contentions of the Ld. Authorized Representatives of both parties. We find that the Ld.AR, except for claiming that the failure on the part of the assessee to comply with the notices issued u/s 142(1) of the Act dated 18.09.2023 and 21.04.2023 was not deliberate, but for reasons beyond his control had, however, failed to substantiate his said claim by placing on record any supporting material/ explanation. Rather, we find that the conduct of the assessee even in the course of the penalty proceedings, wherein, he had once again not complied with the SCNs, that were issued by the AO, calling upon him to explain as to why penalty may not be imposed on him u/s 272A(1)(d) of the Act, reveals the consistent lackadaisical approach adopted by him regarding the income tax proceedings. We, thus, find no substance in the Ld. AR’s claim that the AO had wrongly imposed the penalty u/s 272A(1)(d) of the Act.

Apart from that, we are unable to persuade ourselves to subscribe to the Ld. AR’s claim that the AO had erred in separately imposing the penalty for non-compliance by the assessee of both the notices issued by him u/s 142(1) of the Act dated 18.09.2023 and 21.04.2023. We say so, for the reason that Section 272A(d)(1) of the Act in unequivocal terms contemplates, that in case of any failure on the part of the assessee to comply with the notices u/s 142(1) of the Act, he shall pay by way of penalty, a sum of Rs.10,000/- for each such default or failure. We, thus, in terms of our aforesaid observations, find no infirmity in the view taken by the CIT(A), who had rightly sustained the penalty imposed by the AO u/s 272A(1)(d) of the Act, uphold the same.

Resultantly, appeal filed by the assessee is dismissed. 25. In the result, the appeal in ITA No.1072/Hyd/2025 is allowed for statistical purposes in terms of our aforesaid observations and the appeal in ITA No.1073/Hyd/2025 is dismissed.