DEPUTY COMMISIONER OF INCOME TAX CIRCLE 3(1)(1) AHMEDABAD, AHMEDABAD vs. PHOENIX FLEXIBLES PRIVATE LIMITED, AHMEDABAD

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This appeal filed by the Revenue and the Cross Objection of the assessee are directed against the order of National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 31.01.2025 for the Assessment Year (A.Y.) 2018-19 in the proceedings under Section 147 r.w.s. 144 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’). The assessee has also filed a Cross Objection. 2. The grounds raised by the Revenue in its appeal and the ground taken by the assessee in the Cross Objection are as under :- ITA No.669/Ahd/2025 - Assessment Year: 2018-19

“(a)
The Ld. CIT(A) has erred in law and on facts in setting aside the order to the file of AO for fresh assessment u/s.251(1)(a) of the IT Act holding that the assessment order was passed ex-parte u/s.144 of the Act by ignoring the fact that during the assessment proceedings, the assessee has filed various replies in response to statutory notices issued which is clearly mentioned in Para 2 of the assessment order and the order was not ex-parte and the case does not fall under Section 251(1)(a) of IT Act.
(b)
The Ld. CIT(A) has erred in law and on facts in not deciding the appeal on merits of the case.
(c)
The appellant craves leave to add, alter and/or to amend all or any the ground before the final hearing of the appeal.”

C.O. No.53/Ahd/2025 - Assessment Year: 2018-19

“1. The Id. CIT(A) erred in law as well as on fact in setting aside assessment order for fresh assessment to Id. AO without deciding juri ictional issue of validity of notice u/s.148 for want of proper sanction u/s.151 of the Act.”

ITA No.669/Ahd/2025 &
C.O. No.53/Ahd/2025
Assessment Year: 2018-19
3. The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2018-19 on 30.10.2018 declaring income of Rs.4,46,456/-. subsequently, the Assessing Officer had received an information regarding transaction of the assessee with certain entities which were in the nature of accommodation entries. The Assessing
Officer had reopened the case after following due process and notice u/s 148 of the Act was issued on 07.04.2022. In the course of assessment proceedings, the assessee had made compliance and filed its replies.
However, the Assessing Officer was not convinced with the explanation of the assessee and passed order under Section 147 r.w.s. 144 r.w.s.
144B of the Act on 11.03.2024 wherein additions of Rs.48,12,068/- u/s 68
of the Act and addition of Rs.9,66,745/- u/s 69C of the Act were made.
4. The assessee had filed appeal before the First Appellate Authority against the order of the Assessing Officer which was decided by the Ld.
CIT(A) vide the impugned order and the matter was set aside to the file of the Assessing Officer for making a fresh reassessment.
5. Both the Revenue as well as the assessee are aggrieved with the order of the Ld. CIT(A). Shri Sudhakar Verma, the Ld. Sr. DR submitted that the Ld. CIT(A) was not correct in setting aside the matter to the file of the Assessing Officer for fresh assessment. He explained that the assessee had made compliance in the course of assessment proceedings and filed reply to the various statutory notices which was discussed in paragraph no.2 of the Assessment Order. Thus, the order of the Assessing Officer was not an ex-parte order and merely because the Assessing Officer had wrongly quoted Section 144 of the Act in the body of the order, the ld. CIT(A) was not correct in setting aside the matter to ITA No.669/Ahd/2025 &
C.O. No.53/Ahd/2025
Assessment Year: 2018-19
6. Per contra, Shri Chetan Agrawal, the Ld. AR of the assessee, submitted that the assessee had raised certain legal grounds against initiation of proceedings under Section 148 of the Act, which was not adjudicated by the Ld. CIT(A). He submitted that there was no proper sanction u/s 151 of the Act and, therefore, the notice issued u/s 148 of the Act was not valid. The Ld. AR submitted that the Ld. CIT(A) was not correct in setting aside the matter to the Assessing Officer for fresh assessment without deciding the juri ictional issue of validity of notice u/s 148 of the Act.
7. We have considered the rival submissions. It is found that the Ld.
CIT(A) had set aside the matter in view of the provisions of Section 251(1)(a) of the Act which allowed the Ld. CIT(A) to set aside the matter to the Assessing Officer for fresh assessment where the order of assessment was made under Section 144 of the Act. It is found that the Ld. CIT(A) has been guided by the section as mentioned in the first page of the assessment order without examining the contents of the order. In fact, in the grounds taken by the assessee before the Ld. CIT(A), it was nowhere contended that the order of the Assessing Officer was passed ex-parte u/s 144 of the Act. Further, the Assessing Officer at page no.-2
of the assessment order had categorically mentioned that the assessee had made compliance to the notice issued u/s 142(1) of the Act dated
10.10.2023 and the show cause notice dated 24.02.2024. The Assessing
Officer had also acknowledged the reply filed by the assessee in the course of assessment proceedings, in his order. Thus, the order of the Assessing Officer, in essence, was not an ex-parte order.

ITA No.669/Ahd/2025 &
C.O. No.53/Ahd/2025
Assessment Year: 2018-19
It is further found that the Assessing Officer had raised the following grounds challenging the validity of reassessment proceedings and issue of notice under Section 148 of the Act: -

“1. The Ld. AO erred in law as well as on fact in issuing notice u/s.148A(b) without providing underlying documents, materials and evidences relied upon in said notice.
2. Ld. AO erred in law as well as on fact in issuing notice u/s.148A(b) without conducting Inquiry u/s.148A (a) of the Act.
3. The Ld. AO erred in law as well as on fact in issuing notice u/s.148 taking approval of PCIT instead of PCCIT resulting into invalid notice.”

ITA No.669/Ahd/2025 &
C.O. No.53/Ahd/2025
Assessment Year: 2018-19
PBN/*
Copies to: (1)
The appellant
(2)
The respondent

(3)
The PCIT

(4)
The CIT(A)

(5)
Departmental Representative

(6)
Guard File

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