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

ITA 902/CHANDI/2025Status: DisposedITAT Chandigarh15 December 2025AY 2020-2121 pages
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What did the Tribunal hold?

The Tribunal admitted the additional ground raised by the assessee concerning the non-issuance of a draft assessment order under Section 144C(1) of the Income-tax Act, 1961. The Tribunal found merit in the submission that this was a pure question of law going to the root of the jurisdiction, citing the Supreme Court's decision in NTPC Ltd. v. CIT. The Tribunal noted that the Assessing Officer had admittedly passed final assessment orders under Section 153A without issuing draft assessment orders, despite the assessee being an eligible assessee as per Section 144C(15)(b) and having been declared a non-resident. Following the consistent view of various High Courts, including 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 is a jurisdictional illegality, not a curable defect under Section 292B. Consequently, the final assessment orders were deemed void ab initio and without jurisdiction. The Tribunal quashed the assessments for all the AYs under appeal. As the assessment orders were void, the additions made on merits were rendered purely academic and were not examined.

What were the facts?

The assessee, Damandeep Kaur, filed four appeals before the ITAT Chandigarh against the 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. The assessee was covered in the search as an individual and trustee. The Assessing Officer made additions on account of alleged 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 and the additions made. An additional ground regarding the non-issuance of a draft assessment order under Section 144C was also admitted.

What were the issues?

1. Whether the Assessing Officer erred in assuming jurisdiction under Section 153A of the Income-tax Act, 1961, and whether the CIT(A) erred in sustaining such an assessment order, particularly in the absence of any incriminating material found during the search, and in light of the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 vs Abhisar Buildwell (P.) Ltd.? 2. Whether the Assessing Officer erred by not issuing a draft assessment order under Section 144C(1) of the Act, despite the assessee being a non-resident and thus an "eligible assessee" under Section 144C(15)(b), rendering the final assessment order void? Assessee's Contentions: - Jurisdiction under Section 153A was wrongly assumed, and the assessment order was passed without incriminating material, violating the principles laid down in Abhisar Buildwell. - The mandatory procedure under Section 144C was not followed by not issuing a draft assessment order, making the assessment void ab initio. The assessee relied on various High Court decisions, including Zuari Cement Ltd. v. Asst. CIT, Vijay Television P. Ltd. v. DRP, and Ahmed Buhari Vs. ACIT. - Specific additions were challenged on merits, including unexplained household expenses, salary differences, and foreign bank account credits, with arguments on non-residency, disclosure before the Settlement Commission, and reconciliation of salary receipts. Revenue's Contentions: - The revenue objected to the admission of the additional grounds regarding Section 144C. - The revenue contended that the failure to issue a draft assessment order could be a curable defect and the matter should be restored to the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 153A,Section 144C,Section 10(3),Section 245D(4),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 | The ACIT | House No. 2368., Phase X, Mohali | Central Circle-2, Chandigarh | Punjab-160055 | बंनाम | प्रत्यक्षती / Respondent | स्थायी लेखा सं./PAN NO: ALCPK6320J | अपीलार्थी/Appellant | निर्धिरिती 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 | उदघोषणा 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 the core legal issue raised by the assess

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