Loading judgment…
Facts
The assessee, a partnership firm, did not file its income tax return for A.Y. 2013-14. Consequently, the Assessing Officer issued a notice under Section 148 on 31.03.2021, leading to an assessment order under Section 147 read with Section 144B dated 30.03.2022, assessing a total income of Rs. 46,67,126/-. The assessee appealed, raising grounds concerning the validity of the Section 148 notice due to limitation and the classification/treatment of interest income/expense.
Held
The Tribunal noted that the CIT(A) failed to adjudicate the crucial legal ground regarding the limitation period for issuing the Section 148 notice. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for de novo adjudication of all grounds, particularly the limitation issue, providing the assessee an opportunity of hearing.
Key Issues
1. Validity of the reassessment proceedings initiated by notice under Section 148, especially concerning the limitation period under Section 149. 2. Proper classification and treatment of interest income and expenses related to loans to a sister concern.
Sections Cited
147, 148, 144B, 250, 149, 139(1), 56
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2013-14 Shri Anand Venkateshwara V The Income Tax Officer, Developers, s Ward-9(3), Pune. S.No.23/2/1 B 5, S.No.23, H.No.2/1 B5, Anand Park, Thergaon Road, Pimpri, Pune – 411033. Maharashtra. PAN: ACNFS5707R Appellant/ Assessee Respondent / Revenue Assessee by Shri Suhas P Bora Revenue by Shri Harshit Bari – Addl.CIT(Virtual) Date of hearing 18/12/2025 Date of pronouncement 22/12/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Income Tax Act, 1961 for the A.Y.2013-14 dated 29.08.2025 emanating from the Assessment Order passed under section 147 r.w.s 144B of the Act, dated 30.03.2022. The Assessee has raised the following grounds of appeal :
The learned CIT(A) while holding that the assessment order passed u/s 147 r.w.s. 144B of the Act is not bad in law has failed to appreciate the following: a) The time frame required for issue of notice u/s 148 has lapsed. b) The approval granted by Higher Authority is mechanical in nature and without any independent application of mind. c) Various judicial and jurisdictional High Court decisions relied upon by the appellant.
The learned CIT(A) has grossly erred in erred in confirming an addition of Rs. 47,87,027/ made by the AO on account of interest expense claimed by the assessee and in upholding the AO's action of taxing the interest received from sister concern under the head "Income from Other Sources" u/s 56, instead of treating the same as "Business Income."
The learned CIT(A) has erred in not appreciating the contention of the appellant that - a) The borrowed funds were utilized for the purpose of business by lending to sister concern on interest, which generated income for the appellant. b) The transaction was on account of commercial expediency as the same were advanced to the sister concern on interest to safeguard business interest and generate income. c) The interest earned from sister concern had a direct nexus with the interest expenditure incurred, and therefore, the principle of netting off of interest should have been applied
5. The appellant craves leave to add, amend, modify, delete, or alter any of the grounds of appeal at the time of hearing, as may be deemed 2 fit in the interest of justice.
Additional Ground No. 1 "The Ld. Assessing Officer erred in issuing notice under section 148 of the Income-tax Act, 1961 dated 31.03.2021 for Assessment Year 2013- 14, which is barred by limitation under section 149 of the Act, and therefore the assumption of jurisdiction itself is invalid and void ab initio. Consequently, the reassessment order passed pursuant thereto deserves to be quashed."
2.Additional Ground No. 2 (Without prejudice) "The Ld. CIT(A) erred in law in not adjudicating the jurisdictional ground raised by the assessee challenging the validity of notice issued under section 148 on the ground of limitation, thereby rendering the appellate order unsustainable in law."
The appellant submits that the additional ground raised are purely a legal issue as all the facts are on record and the appellant requests for the above ground.
Though this aspect of the matter is not examined by the CIT(A), however in view of the settled legal position in the light of Hon'ble Supreme Court Decision in the case of National Thermal Power Co. Ltd vs CIT 223 ITR 383 the assessee is not precluded from raising this legal issue at this stage.” Submission of ld.AR : 2. The ld.Authorised Representative(ld.AR) for the Assessee filed a paper book. In this case, ld.AR filed additional grounds of appeal regarding limitation under section 149 of the Act. Ld.AR submitted that the limitation ground was raised before ld.CIT(A), however, ld.CIT(A) has not adjudicated the said ground of appeal. Ld.AR read out para 6.2 of the order of ld.CIT(A) to demonstrate 3 the same. No other ground was pleaded by ld.AR.
Submission of ld.DR : 3. The ld.Departmental Representative(ld.DR) for the Revenue accepted that ld.CIT(A) has not adjudicated the limitation issue.
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, as per the assessment order, Assessee is a partnership firm and not filed return of income under section 139(1) of the Act, for A.Y.2013-14. Assessing Officer based on AIMS Data, issued notice u/s.148 dated 31.03.2021 for A.Y.2013-14. In response to the notice u/s.148 of the Act, assessee filed return of income on 16.04.2021 declaring nil income. The assessment order was passed u/s.147 r.w.s 144B of the Act, for A.Y.2013-14 on 30.03.2022, assessing total income at Rs.46,67,126/-.
Aggrieved by the assessment order, Assessee filed appeal before ld.CIT(A).
Ld.CIT(A) has reproduced grounds of appeal in the order. Ground No.2 is a legal ground stating that order u/s.147 is void ab initio as notice u/s.148 was issued beyond the time allowed under
On perusal of the ld.CIT(A)’s order, it is noted that ld.CIT(A) has not adjudicated the legal ground that notice u/s.148 was issued beyond the time allowed under the Act. In these facts and circumstances of the case, we set-aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. The ld.CIT(A) shall provide opportunity of hearing to the assessee. The Assessee shall file necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the Assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 22 December, 2025.