DAMANDEEP KAUR,MOHALI vs. ASSISTANT COMMISSIONER OF INCOME TAX (CENTRAL CIRCLE-2), CHANDIGARH, CHANDIGARH

ITA 901/CHANDI/2025Status: DisposedITAT Chandigarh15 December 2025AY 2019-2021 pages
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What did the Tribunal hold?

The Tribunal admitted the additional ground raised by the assessee challenging the validity of the assessment proceedings due to the non-issuance of a draft assessment order under Section 144C(1) of the Act. The Tribunal found this ground to be purely legal, going to the root of the jurisdiction, and not requiring fresh investigation of facts, thus admissible as per the ratio in NTPC Ltd. v. CIT. The Tribunal noted that the assessee was declared a non-resident for the relevant financial years based on inquiries and an order under Section 10(3) of the Black Money Act. Respectfully following the decisions of various High Courts, including the Bombay High Court in Barentz India (P.) and the Delhi High Court in Sumitomo Corporation India (P.) Ltd., and the Madras High Court in Ahmed Buhari Vs. ACIT, the Tribunal held that the failure to issue a draft assessment order under Section 144C(1) when the assessee is an eligible assessee renders the final assessment order void ab initio and without jurisdiction. Consequently, the assessment orders passed for AYs 2016-17, 2018-19, 2019-20, and 2020-21 under Section 153A without issuing draft assessment orders under Section 144C were quashed. The Tribunal stated that once the assessment orders are found to be without jurisdiction, the additions on merits become purely academic and need not be examined. The operative direction was to quash the assessments.

What were the facts?

The assessee, Damandeep Kaur, is appealing against orders of the CIT(A)-3, Gurgaon, for assessment years (AYs) 2016-17, 2018-19, 2019-20, and 2020-21. These assessments were framed under Section 153A of the Income-tax Act, 1961, following a search and seizure action on October 3, 2019, involving the Chandigarh Group of Colleges. The assessee, an individual and trustee, was covered by the search. Assessments were made with additions for household expenditure, salary differences, foreign bank account credits, and overseas property investment. The CIT(A) partly confirmed these additions. The assessee raised grounds challenging the jurisdiction under Section 153A, the absence of incriminating material, and specific additions. An additional ground regarding the non-issuance of a draft assessment order under Section 144C was also raised.

What were the issues?

1. Whether the Assessing Officer erred in assuming jurisdiction under Section 153A of the Income-tax Act, 1961, in the absence of any incriminating material found during the search, and whether the CIT(A) erred in sustaining such an assessment order, in light of the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 vs Abhisar Buildwell (P.) Ltd.? 2. Whether the CIT(A) erred in dismissing the assessee's appeal by disregarding various grounds of appeal? 3. Whether the CIT(A) erred in sustaining the addition of Rs. 3,00,000/- on account of 'Unexplained Household Expenses', considering the assessee's non-resident status for the majority of the previous year and the prior adjudication of household expenses by the Settlement Commission in the case of her husband? 4. Whether the CIT(A) erred in sustaining the addition of Rs. 15,33,250/- on account of the alleged difference between salary receipts and declared income, given the reconciliation submitted, the receipt of advance salary for a subsequent AY, and the absence of adverse inferences against the employer? 5. Whether the CIT(A) erred in sustaining the addition of Rs. 26,77,331/- on account of credits in the foreign bank account, considering the assessee's non-resident status and prior explanation of these credits under the Black Money Act? 6. Whether the CIT(A) erred in sustaining the assessment order passed based on a mechanical approval under Section 153D? 7. Whether the assessment orders are void ab initio due to the failure of the Assessing Officer to issue a draft assessment order under Section 144C(1) of the Act, as the assessee is an 'eligible assessee' being a non-resident? Assessee's contentions: The assessee argued that jurisdiction under Section 153A was wrongly assumed without incriminating material, relying on Abhisar Buildwell. Regarding household expenses, the assessee was non-resident and her husband had already disclosed and paid tax on family expenses before the Settlement Commission, making the addition a double taxation. For salary differences, reconciliation and documentary evidence were provided, and a portion related to advance salary for a future AY. Foreign bank credits were explained and not taxable in India due to non-resident status, with no adverse inference in Black Money Act proceedings. The assessment order lacked due application of mind due to mechanical approval. Crucially, the assessee contended that as a non-resident 'eligible assessee', a draft assessment order under Section 144C(1) was mandatory, and its absence rendered the final assessment order void, citing various High Court decisions. The assessee relied on NTPC v. CIT for admitting additional grounds. Revenue's contentions: The Revenue objected to the admission of additional grounds.

Which sections of the Income-tax Act were involved?

Section 153A,Section 10(3),Section 245D(4),Section 144C,Section 153D,Section 292B

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आयकर अपीलीय अधिकरण, चण्डीगढ़ न्यायपीठ “ए”, चण्डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE श्री ललित कुमार, न्यायिक सदस्य एवं श्री कृणवन्त सहाय, लेखा सदस्य BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM आयकर अपील सं. / ITA No. 899 To 902/Chd/ 2025 निर्धारण वर्ष / Assessment Year : 2016-17, 2018-19, 2019-20 & 2020-21

| Damandeep Kaur | बनाम | The ACIT | House No. 2368., Phase X, Mohali | | Central Circle-2, Chandigarh | Punjab-160055 | | | स्थायी लेखा सं./PAN NO: ALCPK6320J | | | अपीलार्थी/Appellant | | प्रत्यर्थी / Respondent

| निर्धारिती की ओर से/Assessee by : | | Shri Rohit Kapoor, Advocate & | | | Shri Virsain Aggarwal, ITP | राजस्व की ओर से / Revenue by : | | Shri Manav Bansal, CIT, DR

| सुनवाई की तारीख/ Date of Hearing : | 04/11/2025 & 15/12/2025 | उद्घोषणा की तारीख/Date of Pronouncement : 15/12/2025

आदेश/Order

PER LALIET KUMAR, J.M: These four appeals by the assessee are directed against the respective appellate orders passed by the Ld. CIT(A)-3, Gurgaon pertaining to A.Ys.2016- 17, 2018-19, 2019-20 and 2020-21 arising from assessments framed u/s 153A of the Income-tax Act. Since t

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