SANTOSH KUMAR SHUKLA,LUCKNOW vs. ASSESSMENT UNIT, NFAC, NFAC

This appeal has been preferred by the Assessee against the order dated 12.03.2025 passed by the National Faceless
Appeal Centre (NFAC), Delhi for Assessment Year 2015-16. 2. The brief facts of the case are that the assessee was an employee of Planning Research and Action Division of State
Planning Institute, since 1993. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961
(hereinafter called “the Act’) after issuing notice under section 148A(b) of the Act, vide dated 16.03.2022 for the reason that the assessee had made cash deposits/time deposits in his bank account. In response to notice under section under section 148
of the Act, the assessee filed his return of income for the year under consideration on 29.04.2022, declaring a total income of ITA No.400/LKW/2025 Page 2 of 26

Rs.3,37,633/-. The Assessing Officer (AO) treated the cash deposits of Rs.27.00 lakhs in the bank account of the assessee as unexplained income of the assessee and added the same to the income of the assessee under section 69A of the Act. The AO completed the assessment under section 147 read with section 144B of the Act, assessing the total income of the assessee at Rs.30,37,633/-.
3. Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.
4. Now, the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:
1. That both the assessment Order and the Appeal order passed are specifically impugned since the mandated procedure established by law and the intent, purpose and scope of section 148, 148A read with see149 vide the settled law laid down as per the Apex Court case in Uol v Rajeev
Bansal 340 CTR 865 SC and of Union of India v Ashish
Agarwal 326 CTR 47 SC has been violated. The relevant provisions of the statute itself proves that the present proceedings are per se beyond the prescribed period envisaged u/s 149 and upheld by CBDT Instruction 1 dated
11 05 2022; and grossly untenable vide sec144B; and is violative of sec. 151A,

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Appellant here u/s 69A and where it has suo motu accepted that this contrived amount of Rs.28,87,970 was nothing but that it "...consists of the same 27 lakhs cash deposits..."
231 (Karnataka HC): This judgment held that for reopening beyond three years, the income escaping assessment must be ₹50 lakh or more. The court indicated that the entire sale consideration of an asset should not be automatically considered as escaped income without accounting for the cost of acquisition.
2. Nitin Nema Vs Pr.CCIT (2023) 155 taxmann.com 276
(MP HC): This ruling similarly highlighted that for the extended period of limitation under Section 149(1)(b) to apply, the income chargeable to tax that has escaped assessment must amount to or be likely to amount to ₹50
Faceless is bad in law, being impervious to statutory proceedings prescribed vide section 144B And of sec 151A of the I.T Act 1961 per se as applied to AY 2015 16, where the very initiation of the purported reassessment is by issuing a notice u/s 148A(1)(b)dated 16.03 2022 by local ITO 4(3)
Lucknow New as the JAO instead of NFAC which makes

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even the fructification of reassessment a vitiated exercise in law. The case laws being relied upon. are inter alia as held in a number of case laws including that of Ram Narayan Sah
V Uol 340 CTR 505 Guj; Hexaware Technologies ltd V ACIT
338 CTR 536/464 ITR 430 Bom; Capital LG v ACIT 341CTR
1024 Bom Kairos Properties vs. ACIT 340 CTR 690Bom;
Kanakanala Ravinder Reddy v ITO 334 CTR 646 Telangna.
Jasjit Singh and Others v Uol 340 CTR P&H Jatinder Singh
Bhangu v Uol 339 CTR 473 P&H, Kulwant Singh v Uol 341
CTR 700 P&H. The income tax act being an All India statute the judgments and judicial pronouncements on the subject are to be well known and accepted in making assessments which is a quasi-judicial process.
6. The Learned AO erred in law and on facts since the assessment order dated 26.03.2025 is not in consonance with sec. 151A and is de hors the process of section 144B r/w section 151A of Income tax Act. It is respectfully urged that the Case laws recently upheld the contention in law that all aspects pertaining to assessment "reassessment or 'recomputation' w/s147 and issuance of Notice u/s 148 has to be through a Faceless manner and all reassessment initiated by the issuance of the notice u/s 148 is to be subject to sec 148A through the faceless mandated process alone; while here the issuance of Notice u/s 148A(b) dated
16.03.2022 was made by the ITO 4(3) Lucknow-New and not by the Assessment Unit NFAC
7. That, the authorities below have erred in law by not appreciating the law for reassessment is sec 148 subject to section 148A as applied which mandates an order to be ITA No.400/LKW/2025 Page 6 of 26

passed u/s 148A (1)(d) and in not following the mode and manner as mandated where the reassessment process has to be by way of automated allocation route to the extent provided in sec 144B. A manual selection is against clause C of the Scheme which also uses the expression in accordance with RMS (Risk Management Strategy) and the CBDT
Circulars on the issue formulated by the Board but which have all been sidelined in the illegal mode adopted in completing the Reassessment
8. That the subordinate authorities- Assessment Unit and the CIT Appeal Faceless, have erred in law and on facts by overlooking this abuse of the process of seeking and being granted approval as envisaged in section 151 from the higher official hierarchy of PCCIT UP East, which is demonstrated as a mere useless empty formality without any consideration of the rules governing such grant of approval
9. That, the authorities below erred in law and on facts by not appreciating that this contrived amount of approx.
Rs.57.8 lakhs allegedly involved as alleged financial transactions was only to artificially treat it as a case covered under the 10 years limitation u/s 149(1)b but knowing well and fully aware that such was NOT the case
10. That the Assessment Unit erred in law and on facts for its failure to appreciate and the CIT Appeals Faceless to overlook that it was ITO 4(3) Lucknow-New who has clutched at a juri ictional role not afforded by law in issuing the Impugned Notice U/s 148A(1)(b) arbitrarily making it possible for him, to stretch the limitation under sec 149

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prescribed from Three years from the end of the relevant AY for alleged escapement of Income being less than Rs.50
lakhs to Ten years instead, by including an imaginative amount of Rs.57.8 lakhs (ibid)
11. That, the authorities below erred in law by not considering that the entire exercise was only to sideline mandated limitation for alleged escaped income of less than Rs.50 lakhs; And in not allowing section 151A and sec 3 of Faceless Reassessment Scheme 2022 ( CBDT e Assessment of Income escaping Assessment Scheme 2022) was only to avoid and to escape the limitation of three years applicable by showing the reason to believe of an amount artificially enhanced to Rs.57.8 lakhs as the alleged value of escapement of income of more than Rs.50 lakhs so that the Appellant's case can be covered under the 10 year bracket vide sec 149(1)b; And then to unlawfully complete the reassessment de hors sec 144B Apart from being contrary to the intent purpose and scope of section 149 and of section 148A r/w sec 148. 12. That the CIT Appeals Faceless has erred in law and on facts by invoking sec 69A ignoring the fact that the assessment was completed by addition of amount not belonging to Appellant nor was he the owner thereof but the real owner was a third person Smt Geeta Awasthi. But the ownership of the amounts of Rs.27,00,000 in the bank account both as credit and debit entry in the bank statement of his bank account 694001010004519 Corporation bank
Branch Rai Bareilly Road Lucknow on the same date of 28.07.2014 ought to have been verified thoroughly and ITA No.400/LKW/2025 Page 8 of 26

adjudicated since the AO had obviously failed to do so by ignoring the provisions of sec 148A(1)(a) itself.
13. That the CIT appeals erred in law and on facts by not exercising its juri ictional right and enabling powers vested as first Appellate authority instead of taking a super technical and mechanical view of Rule 46A(1) not in its purposive sense especially since the said Rules do not take away the inherent powers of the CIT Appeals to verify summon and revisit all assessment processes and the relevant material facts so adduced including to pursue collateral and incidental material emanating out of the record because
 the circumstances shown and considered in the assessment Order were such whereby the CIT Appeals could have well incurred its inherent powers to provide opportunity for allowing all relevant clarificatory evidences to be taken on record for its comprehensive examination and fair decision
 the juri iction of First appellate authority is a continuation of assessment and its powers are co terminus with that of Assessing officer. The case authorities inter alia do confirm the view as in Dr. K.
Nedunchezhian v. Deputy Commissioner Income-tax
[2006] 153 Taxman 183 Madras High Court. CIT vs
Trehan Enterprises 53 ITR 225 J&K; CIT v. Kanpur
Coal Syndicate 53 ITR 225 (Supreme Court) "The AAC has plenary powers in disposing of an appeal. The scope of his powers is conterminous with that of the ITO. He can do what the ITO can do and can also direct

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him to do what he has failed to do". CIT vs Nirbheram
Daluram [1997] 224 ITR 610 (Supreme Court) Power of AAC is co-terminus with that of the ITO. Appellate power conferred on AAC is not confined to only those matters which were considered by the ITO where Jute
 power to allow additional evidence is discretionary power. [Keshav Mills Co Ltd. V. CIT [1965] 56 ITR
365(SC)] and discretionary powers is the enabling powers and not a power to act on ipse dixit alone, but it is tampered with duty to so act on being enabled with such enabling powers.
 Courts have held that clarificatory nature of materials are not additional evidence. In Sri Shankar Khandasari
Sugar Mills vs. CIT (1992) 193 ITR 669 Kar. The issue before the court, in brief, was that the ITO framed the best judgement assessment U/S 144 relying upon the material from the Commercial Tax Department relating to the turnover of the assessee Before the CIT(A), the assessee produced S.T. assessment order for the first time who refused to look into the same on the pretext of additional evidence. Holding the action of the CIT(A) to be unjustified, the court observed. The appellate authority should have accepted the material produced by the assessee as clarificatory in nature and considered the same to test the fairness and propriety of the estimate of income made by the Income-tax
Officer. Though it was belated production of very

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relevant material, no prejudice (in its legal sense) would have resulted to the Reverie by considering the material produced by the assessee" "In the absence of any prejudice to the Revenue, and the basis of the tax under the Act being to levy tax, as far as possible, on the real income, the approach should be liberal in applying the procedural provisions of the Act. An appeal is but a continuation of the original proceeding and what the Income-tax Officer could have done, the appellate authority also could do." (emof income made by the Income-tax Officer Though it was belated production of very relevant material, no prejudice (in its legal sense) would have resulted to the Revenue by considering the material produced by the assessee"
 Gauhati Third Member Bench of the Tribunal in DCIT vs. New Manas Tea Estate (P) Ltd 73 ITD 157, the relevant facts were that the assessee had purchased tea leaves from 'A' Ltd. under an agreement pursuant to which certain amount was debited in the purchase and expenses account at a certain rate plus 0.50p in respect of the cess imposed by the Government. At the end of the year, it was found that a certain amount of cess remained payable to 'A' Ltd. The AO disallowed the same under section 438. Before the CIT(A) for the first time the assessee produced a letter issued by 'A'
Ltd, stating therein that it had deposited cess in full.
The Third Member on appreciation of these facts held that the evidence in the form of the letter could not be considered an additional evidence. The CIT(A) has rightly stated that this letter was only clarificatory in ITA No.400/LKW/2025 Page 11 of 26

nature. He further held that even this clarification was not needed because the main and the only relevant evidence viz., agreement with 'A' Ltd. was already on the file of the AO.
14. The CIT A Faceless erred in law in not appreciating
Section 250(4) gives wide discretion to the CIT(A) to make such further inquiry as he thinks fit or to direct the AO, to make further inquiry and report the result to him. The Rule
46A(4) clarifies that nothing contained in rule 46A shall affect the CIT(A)'s power to direct the production of any document or the examination of any witness to enable him to dispose of the appeal. Even circular no. 108 dated 20.3.1973
explaining the amendment pertaining to introduction of rule
46A echoes the same view. The Allahabad High Court in Smt. Mohindar Kaur vs. Central Govt. 104 ITR 120 (All) prompted the Hon'ble High Court to hold that prior to enactment of rule 46A, the appellant had no right to adduce additional evidence. The CIT(A) could permit the production of additional evidence if he thought it was necessary to enable him to dispose of the appeal or if he thought it fit to make further inquiry, but under rule 46A(1), the appellant has a right to produce additional evidence in the circumstances
Shah's case (supra) to reject the technical objection of the revenue and held that CIT(A) could consider the necessary evidence in exercise of his powers under section 250(4) if ITA No.400/LKW/2025 Page 12 of 26

prima facie an information is necessary to examine the claim of the assessee.
15. That the Appellate authority erred on facts and in law even when the Statement of Facts and the corresponding
Grounds of Appeal had disclosed all relevant materials and the need for those apparent additional evidences which really were all only clarificatory in nature and a better improved version of the said evidences or as supplement of the same evidences as were part of the assessment
Therefore CIT Appeals Faceless who had only "....perused..."
them which could not have prompted the CIT Appeals
Faceless to merely state that since alleged "..sufficient opportunity was provided to Smt Geeta Awasthi...." And then to assert that his office is barred by section 46A to consider these clarificatory evidences so adduced
16. That the CITA Faceless erred in law by choosing to ignore that it has been vested with sufficient powers to decide appeal on merits on all aspects, in order to render justice by virtue of exercise of appellate power vested with him. The powers conferred vide sec 295(2)mm could have been dovetailed with its powers to seek an independent inquiry on the sole subject matter by seeking attendance of both the purchaser Smt Geeta Awasthi and the seller Mrs Rekha Vij with regard to Rs.27,00,000. 17. That the first appellate body in dubio erred on facts and in law and in the peculiar set of circumstances by drawing adverse inference against the appellant who had adduced all evidences and proof which he could muster to show the actual and real owner as Smt Geeta Awasthi w/o Dinesh

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Kumar Awasthi of Rs.27,00,000 deposited on 28.07 2014 in.
his Bank Account no 069400101008519 Corporation Bank
Telibagh branch through the sworn Affidavits of the said person owning the moneys deposited in the said Bank account of the Appellant, for the sole purposes of purchase of house property by purchaser Smt Geeta Awasthi for Rs.27,00,000 on 28.07.2014 for the undisputed same -day transfer into the account of the Seller Rekha Vijas duly corroborated by the Sale deed registered on 30.07.2014. 18. That the CITA Faceless has however erred in law and on facts in avoiding to determine the truth of the transaction of Rs.27,00,000
by choosing the most convenient yet inequitable way of burdening the Appellant here with heavy additional burden of proof to bring the Source of the Source of moneys deposited and defrayed by a third party which belonged to the said third party and transaction of Rs.27,00,000 was also of the said third party-Smt Geeta
Awasthi: Whereas Appellant had duly discharged his primary onus that the moneys did not belong to him nor was he the owner of the moneys despite its possession in his bank account and that it belonged to Geeta Awasthi and that she was the owner and who then utilized that money for her own purposes of buying house property for the said exact amount of Rs.2700000 on the same day of 28.07.2014. 19. That the first appellate body -CIT A Faceless erred on facts even when it was apparent that the said transaction of the deposit and defraying from the Appellants bank account was for the purposes of purchasing a house property by Smt
Geeta Awasthi from the seller Smt Seema Vij in Lucknow

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where Bank Statement wherein on the same day the same said Amount was found as debit and credit entry was ignored through a highly opinionated statement vide page 23
of the Assessment order "it is pertinent to mention here that the present proceedings are in respect of generation and source of such cash and not for utilization of cash the bank
Statement reflecting the purchase of property by Smt Geeta
Awasthi from Rekha Vij and debits of such money towards
Rekha Vij reflects only utilization of such cash and not generation of such cash"
20. That the CIT A Faceless erred in law and on facts by failing to apply the intent purpose and scope of section 69A to the facts which had to be read with the prima facie evidences of circumstances on record; And in drawing adverse inference against the Appellant here was in the absence of anything contrary as stated by the Purchaser
Geeta Awasthi and the Seller Rekha Vij; the CIT A Faceless could not have ignored the genuineness of such Cash
(Rs.27,00,000) as belonging to and the deposit by Geeta
Awasthi and the Affidavit sworn by her was a good evidence at least for clearing the name of the Appellant as the Owner.
The deposit in Appellant bank Account without anything more can at best show that he is in possession of the said cash but for Purpose of section 69A in this transaction with the facts it was important to ascertain the veracity from the SALE DEED dated 30.07.2014 and of the Purchaser Geeta
Awasthi and also Rekha Vij the Seller for the transaction
Amount of Rs.2700000 which itself showed that the Amount was transferred from the said Bank Account of the Appellant-694001010004519 Corporation bank Branch(ibid)

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his part to support the source of source of the moneys owned deposited utilized wholly by Geeta
Awasthi and not by him
 it was Geeta Awasthi whose cash as money deposit of Rs.27,00,000 in the Appellant s bank account was to be utilized for the purposes of purchasing the house property MIG 1/63 Vinamara Khand
Gomti Nagar near Chinhat Lucknow registered as No 12526 Pages 175 to 240 Jild no 15634 Bahi 01
bought from Smt Rekha VIj w/o Yogiraj Vij 17/9
Ashok Marg Lucknow showing the full payment of Rs.27,00,000 received on 28.07 2014.  that despite the fact that the transaction has not been denied at any stage yet the same transaction completed by her is still being treated as an addition as unexplained in the hands of Appellant who with full bona fides had only innocently allowed his bank account to be used as one time facility for his relative Geeta Awasthi form his village for the transaction of purchasing house in Lucknow from a person known to him
 the house property is still in possession of Geeta
Awasthi and enjoyed by her with her family; evidences to show House property Tax Electricity bill being regularly paid by her are available to be perused by Honble Tribunal.
23. That the CIT A Faceless erred in law and on facts by upholding the Assessment order even when the source of making payment of Rs.27,00,000 towards the purchase of ITA No.400/LKW/2025 Page 17 of 26

property by Smt Geeta Awasthi was sought by the appellant instead. The fuller and better details of facts inter alia show that i. First with the intention of settling in Lucknow the said
Geeta Awasthi and her family Geeta Awasthi had to sell off all their assets including in their village Home Churwa
Bachrawa Distt. Rai Bareilly, due to this opportunity to have own house property here in Lucknow ii. In its pursuance the said Geeta Awasthi sold off lands properties tubewells eucalyptus trees held in her Village and with help from savings account of her Husband Sh
Dinesh Kumar Awasthi did manage to accumulate funds to translocate in this new house property here in Lucknow
ⅲ. Geeta Awasthi had transferred through Registered
Sale deed dated 3.07.2014 to One Janak Dulari her agricultural holding in Khudikhera Mohanlalgunj for Rs.1300000
iv. Another Sale for Rs.800000 to one Shri Mukesh Kumar
Shukla s/o Radhey Shukla where Euclyptus trees Babul trees grove and Tubewell v. Cash Withdrawals from her Husband Dinesh Kumar
Awasthi bank account in Dena Bank Gomti Nagar
Lucknow of Rs.900000 in June 2014 and another
100000 on 12.06.2014 and yet another on 07.07.2014 of Rs.200000 and on the fateful date of 28.07.2014 actually had withdrawn Cash of Rs.18,34,000 from the joint bank
Account in name of Geeta Awasthi and Dinesh Kumar
Awasthi No s/b 1113510000325 Dena Bank Gomti nagar branch Luck now

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These better and more comprehensive details were all prepared but were found to be unacceptable due to a strict stance on Rule 46A taken by CIT A Faceless treating these crucial facts clarificatory in nature and better as alleged
'additional evidence'; which fully proved even the source of the source if at all the CIT A Faceless had incurred its inherent powers (as submitted herein above in paras 13 to 16).
24. The CITA Faceless erred on facts and in law in posing a rhetorical observation as per impugned appellate order at page 15, about no explanation available as to why the bank account of the Appellant was used when Geeta Awasthi had her spouse own bank account. This observation as the backbone of treating the transaction of Rs.27,00,000 in the hands of Appellant was only by overlooking that  the Statement of Facts had stated that it was 'paucity of time' which compelled Geeta Awasthi to seek the Appellant to allow access to his Account in Corporation Bank Telibagh which Bank was on the way from the said village Churwa Post Bachrava
Distt Rai Bareilly to Lucknow;
 The Seller Rekha Vij had given a deadline as 28 07
2014 itself to make and complete the transaction which was changed to cheque/ bank whereas earlier as she had insisted, it was to be Cash transaction with the person known to her being the Appellant- Santosh Shukla;

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 the dates perhaps could not be postponed (because from Rekha Vij versions she was getting other better
Offers from interested buyers
 while from the purchase's side it was apparently auspicious date and timings as her pandit specified and the Appellant was willing to let his bank
Account be utilised for the purposes both to satisfy the seller Rekha Vij and his relative Geeta Awasthi:
 moreover Geeta Awasthi had no bank account in her said Village in Bachrawa and her local Bank account jointly with her husband was at a far distance at Bank of Baroda Gomti Nagar Lucknow;
 the bank timings and the Sub