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Facts
The assessee claimed deductions under sections 80C, 80D, and 80GGC, and loss from a house property in his return. The Assessing Officer initiated proceedings under section 148, alleging that a donation of Rs. 2,50,000 to Yuva Jan Jagruti Party was bogus, based on a search action concerning Registered Unrecognized Political Parties (RUPPs). The AO passed an assessment order disallowing the claimed deductions and loss, thereby increasing the total income. The CIT(A) set aside the assessment order for fresh assessment.
Held
The Tribunal held that the CIT(A) rightly set aside the assessment order to the file of the Assessing Officer for a fresh assessment. The assessee failed to raise objections before the Assessing Officer during the assessment proceedings, thus losing the opportunity as per the GKN Driveshafts case. However, for the cause of justice, a fresh assessment was deemed necessary.
Key Issues
Whether the notice under section 148 was issued in violation of the Act, whether the approval under section 151 was mechanical and invalid, and whether the CIT(A) erred in not adjudicating these grounds and setting aside the order for fresh assessment.
Sections Cited
148, 147, 144, 144B, 151, 80C, 80D, 80GGC, 139(1), 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: Ms. Suchitra Kamble
आदेश/ORDER This is an appeal filed against the order dated 10-11- 2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2019-20.
The grounds of appeal
1. are as under:- “1. Ld. CIT(A) erred in law in not allowing the ground of appeal raised before him that the notice u/s 148 of the I.T. Act dated 16-04-2023 was issued in violation of the provisions contained under the said section and therefore, the same was issued against the mandate of law and thus, the said notice and consequent Assessment Order are void and invalid in eyes of law.
2. The approval granted by Ld. PCIT, Ahmedabad -1 u/s 151 of the I.T. Act dated 15-04-2023 is mechanical and hence invalid and therefore, the consequent notice and order are also invalid and liable to be quashed. 2.1 Ld. CIT(A) erred in law and grossly acted against the principle of natural justice by not adjudicating and not making any discussion on the ground of appeal raised before him that the approval granted by Ld. PCIT u/s 151 of the I.T. Act is mechanical in nature and hence invalid.
The copy of approval granted u/s 151 of the act dated 15-04-2023 is unsigned and therefore, the same does not represent a valid approval on part of the specified authority.
Ld. CIT(A) grossly acted against the principle of natural justice by rejecting the ground of appeal
1. 1. relating to invalid issuance of notice u/s 148 of the Act without granting to appellant the opportunity of being heard through the Video Conferencing Mode despite the fact that in the submission made before the Ld. CIT(A), the appellant had specifically requested for such opportunity if any of the contentions raised in the submission filed by appellant did not find favour with the Id. CIT(A).
5. The Appellant reserves the right to add, alter, amend and withdraw any of the above grounds of appeal.”
3. The assessee filed his return of income u/s 139(1) for A.Y. 2019-20 declaring total 1. income of Rs.4,75,820/-. The proceeding u/s 148 of the Act was initiated alleging that the assessee the donation of Rs. 2,50,000/-given by assessee to Yuva Jan Jagruti Party was bogus. Such allegation was levelled based on search action carried out in case of Registered Unrecognized Political Parties (RUPPs) one of which was Yuva Jan Jagruti Party as well. It was alleged that the assessee received back the said amount of donation in cash from the said political party after paying some amount of percentage of commission. However, the said allegation was not supported by any independent evidence either found during the course of search or brought on record in any other manner. The Assessment Order u/s 147 r.w.s. 144 of the I.T. Act was passed on 28-01-2025 making following disallowances:
Particulars Amount (Rs.)
(i) Disallowance of deduction claimed u/s 2,50,000 80GGC alleging that the said donation was bogus (ii) Disallowance of deduction claimed u/s 80C 1,50,000 of the Act (iii) Disallowance of deduction claimed u/s 19,343 80D of the Act (iv) Disallowance of Loss from house property 66,264 TOTAL 4,85,607 Accordingly, the total income of appellant was assessed at Rs. 9,61,427/- as against the returned income of Rs. 4,75,820/-.
The assessee filed appeal before the CIT(A). The CIT(A) 4. set aside the assessment order to the file of Assessing Officer for fresh assessment.
The ld. A.R. submitted that the notice issued u/s. 148 of the Income Tax Act was issued in violation of provisions contained under the said section and therefore is void, invalid, null and void. The ld. A.R. submitted that the notice should have been issued prior to 31st July, 2023. The ld. A.R. further submitted that the approval taken is also mechanical and the quantum is less than 50 lakhs. Thus, the approval is not justifiable. There is no signature on the approval. Beside this on merit also, the ld. A.R. submitted that the assessee has given all the details and has rightly claimed deduction u/s. 80D, 80C and 80GGC of the Act.
The ld. D.R. relied upon the assessment order and the 6. order of the CIT(A).
I have heard both the parties and perused all the 7. relevant material available on record. As regards the validity of the proceedings u/s. 148 of the Act, the Assessing Officer has rightly invoked section 148 for which the CIT(A) has given a detailed findings in para 6.1 itself. The CIT(A) on legal as well as on merits has decided the matter as follows:- “Decision - 6.1 I have perused the order passed u/s 147 r.w.s. 144 r.w.s.144B, Grounds of Appeal and other details available on record. It is seen that the appellant did not provide any documents or proof during assessment proceedings to clearly explain the claim of deductions made by him. During the appellant proceedings, the appellant has submitted that all the deductions claimed by him are genuine. Further, the appellant in his grounds of appeal has raised objection towards the validity of notice u/s 148.
I am of the view that if there was any objection which the appellant had, and which it is now raising before this authority vide these grounds of appeal, it was incumbent on it to raise such objections before the Assessing Officer during the course of proceedings u/s.147 of the Act. The Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer [2002] 125 Taxman 963 (SC) has laid down a chronology of event which needs to be followed both by the Assessing Officer as well as the appellant. The Hon'ble Apex Court has held that after a notice u/s.148 is issued by an Assessing Officer, it is incumbent on the appellant to respond to such notice u/s. 148 of the Act and then raise its objections. The Assessing Officer, in turn, is duty bound to supply a reply to the objections to the appellant. The Hon'ble Supreme Court has clearly stated that if the appellant has any objection, it can file the same before the Assessing Officer, who before proceeding any further in the matter, should dispose off the objections by passing a speaking order. As per appellant's own submission, he has received the Notice u/s 148A(b) and also claims that he provided a reply. Therefore, he was well aware of the assessment proceedings.
In the appellant's case, he has failed to raise objections before the Assessing Officer during the course of assessment proceedings and consequently, has missed an opportunity to raise objections, as mandated by the Hon'ble Supreme Court in the case of GKN Driveshafts (supra). Thus these Grounds of Appeal are rejected.
However, it is felt that to serve the cause of justice, both the parties should be provided a further opportunity.
6.2 As per the newly inserted proviso to section 251(1)(a) of the Act, Commissioner (Appeals) in case of order of assessment made u/s. 144 of the Act, may set aside such assessment and refer the case back to the AO for making a fresh assessment. This proviso has been inserted in the Act w.e.f. 01.10.2024. The relevant extract of this proviso section 251(1)(a) of the Act is reproduced as under:
(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:
Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment.
6.3 In view of the facts, I am of the opinion that the statement of facts being provided by the appellant are required to be carefully considered by the Assessing Officer so as to reach a conclusion. Therefore, the Order passed by 4 the Assessing Officer u/s.147 r.w.s. 144/144B of the Act dated 28.01.2025, is hereby set aside for making fresh assessment. Needless to say, that, the Assessing Officer should, while conducting the set aside proceedings, give proper opportunities of representing the case to the appellant and take into account any further submissions which the appellant has to file during the course of the said proceedings. The appellant should comply with the correspondences issued by the Assessing Officer.
The appeal filed by the appellant is thus set aside to the file of the AO for fresh assessment.”
The CIT(A) has rightly set aside the matter to the file of the Assessing Officer for fresh assessment. There is no need to interfere with same.
In the result, the appeal of the assessee is dismissed.