MAYA KUMARI,JAIPUR vs. ITO WARD 2(2), JAIPUR, JAIPUR

2 The ld. AO has grossly erred in law as well as on the facts of the case in passing the Ex-party order without providing the adequate and reasonable opportunity of being heard to the assessee and without considering the material and details in gross breach of law and are bad in law, invalid, illegal and on facts of the case, and hence the same may kindly be quashed and the resultant addition may kindly be deleted in full.

The ld. CIT (A) has grossly erred in law as well as on the facts of the case in passing the Ex-party order without providing the adequate and reasonable opportunity of being heard to the assessee and without considering the material and details in gross breach of law and are bad in law, invalid, illegal and on facts of the case, and hence the same may kindly be quashed and the resultant addition may kindly be deleted in full.

Rs.6,99,273/-: The ld. CIT (A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs.6,99,273/- made by the ld. AO u/s 69 on account of alleged unexplained source for payment of loss. The ld. AO and CIT (A) both have also erred in not considering the vital facts and material available on record in their true perspective and sense available on record. Hence the addition so made by the ld. AO and confirmed by the ld. CIT (A) is also being contrary to the real facts of the case and not according to the provision of law. Hence the same may kindly be deleted in full.

The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B, C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full.

That the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing."

We find that the appeal filed by the assessee is delayed by 470 days. The assessee has filed application submitting therein the reasons for delay in filing the appeal and prayed for condonation of delay. In support of the application, the assessee has also filed an Affidavit dated 14th April, 2025 duly sworn in before the Notary Public, for condonation of delay, which is being reproduced hereunder :- Maya Kumari, Jaipur. "AFFIDAVIT I, Maya Kumari W/o Late Sh. Manoj Kumar Yadav, Aged years, R/o 167, Om Shiv Colony Shyam Marg Jhotwara Jaipur Rajasthan 302012 do hereby solemnly affirm on oath as under :

Aggrieved by the order of ld. CIT (A), the assessee has come in appeal before us on the grounds reproduced herein above. Before us, the ld. A/R of the assessee submitted his written submissions which are being reproduced hereunder :- “GOA-1: Invalid action u/s 147/148 and invalid assessment: GOA-2: Addition of Rs.6,99,273/-U/S_69 on account of alleged unexplained sources for payment of losses: FACTS: The facts of the case is that the assessee is a regular IT assessee. She is having income other sources (tuition&Stitching) work and shares income loss. She not filed her ROI on being no taxable income. The ld. AO has issued the notice u/s 148 on dt.29.03.2019on the reasons that As per Information available on ITS data and information has been received through NMS that the assessee has made commodity transaction of Rs.1,25,80,56,680/- on Multi Commodity Exchange. And assessee has not filed his ROI . Hence the amount of transaction made by the assessee was not verifiable and the taxability of the said amount could not be ascertained. This not served upon the assessee. As per record the notice was issued by the ITO Ward 3(4), Jaipur and the assessment was completed by the ITO ward 2(2) Jaipur. The ld. AO has issued the notices but in want of knowledge of the assessee earlier she could not file the reply. The ld. AO called the information from Multi Commodity Exchange of India and the ld. AO stated that on perusal of the report of MCX you have suffered with a loss of Rs.6,99,273/-, hence you are required to furnish the details and source of payment of loss suffered and why the addition of Rs.6,99,273/- will be added u/s 69 as unexplained investment in shares. In response to this notice assesee has filed the reply dt. 23.11.20219(PB3-4), where she has stated that she is not having any demate_a/c_at_present so no information is available in this regard. Assessee also submitted the bank statement (PB5-7). In this letter the ld. AO filed the details and sources of funds, which have been ignored by the ld. AO and the ld. AO wrongly alleged and held that the assessee has not provided any details regarding the payment of loss, hence the source of amount to Rs.6,99,273/- will be made u/s 69 and added to the total income of the assessee. Against which assessee filed the appeal before the ld. CIT(A) and the ld. CIT(A) has dismissed the appeal of the assessee in want of any response from the assessee, while deciding the appeal the ld. CIT(A) has followed the assessment order and dismissed the appeal. Hence this appeal. SUBMISSIONS:

Sub-s. (2) of s.148 mandates reasons for issuance of notice by the AO and sub-s. (1) thereof mandates service of notice to the assessee before the AO proceeds to assess, reassess or recomputed escaped income. Sec. 147 mandates recording of reasons to believe by the AO that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Expln. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the AO that on assuming juri iction under s.147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed juri iction. For every new issue coming before AO during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under s.148.- CIT vs. Jet Airways (I) Ltd. (2011) 239 CTR (Bom) 183 : (2011) 52 DTR (Bom) 71 : (2011) 331 ITR 236 (Bom) concurred with. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the AO proceeded to reduce the claim of deduction under ss.80HH and 80-I which as per above discussion was not permissible. Had the AO proceeded to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of the discussion as above, he would have been justified as per Expln. 3 to reduce the claim of deduction under ss.80HH and 80-I as well. In view of the above discussions, the Tribunal was right in holding that the AO had the juri iction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. (d) In the case of CIT vs. Dr.DevendraGupta336 ITR 0059(Raj): held Reassessment— Scope Addition in respect of items other than the one on which notice in given— Income alleged to have escaped assessment in reasons recorded not having been actually found to. (e) Also refer AVG Construction Pvt. Ltd v/s ITO Ward 6(2) Jaipur in ITA no. 90/Jp/2020 dt. 02.09.2021 under the same facts and circumstances copy is enclosed. (f) Recently the Honble ITAT Jaipur Bench in the case of ShriShambhuDayalSaraf v/s IT in ITA No. 558/Jp/2013 dt02.07.2018 58 TW 355(Jp), has also held the same view copy of order is enclosed (g) Also refer latest decision of this Honble ITAT in the case of PappuQureshi v/s ITO in ITA No. 314//Jp/2019 dt. 28.04.2020 Sec. 292B is no applicable: S. 292B could not be invoked to correct a foundational/substantial error as it was meant so as to meet juri ictional requirement— Therefore, both impugned notice and impugned order were quashed and set aside-It was made clear that this order would not prohibit Revenue from issuing a fresh notice for reassessment, if requirement of Ss 147/148 were satisfied, including limitation period therein Kindly refer SumitBalkrishan Gupta v/s ACIT 104 CCH379(Bom.HC)(2019). Thus, cannot be said that it is an irregularity curable u/s.292B— (h)In the case of SarafGramodyogSansthan vs. ITO108 ITD 115(Agra)it has been held that Further, AO had referred to wrong bank account number in the reasons recorded by him-Sec. 292B cannot take care of any mistake in recording the reasons because that section refers to "return of income, assessment, notice, summons or other proceedings"— It does not refer to the reasons recorded by the AO—Any invalid proceedings for LucknowTrib. Reassessment—Escapement of income-Case of assessee was reopened u/s.147 for deposits in bank amounting Rs.11,00,000—Held, Bombay High Court in case has to assess or reassess income ("such income") which escaped assessment and which was basis of formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during course of proceedings—However, if after issuing a notice under s.148, he accepted contention of assessee and holds that income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income—If he intends to do so, a fresh notice under s.148 would be necessary, legality of which would be tested in event of a challenge by assessee-In view of above facts and circumstances and in view of judicial precedent-Assessee's ground allowed. (j) In the case of CIT(EXEMPTION) vs. B.P. Poddar Foundation For EducationSep 13, 2022 (2022) 115 CCH 0026 KolHCReassessment—Reopening of assessment-Assessee filed return of income declaring a total income of Rs. NIL—Return was processed under Section 143 (1—A survey was conducted from which it was found that assessee has deposited money with NIL—It was further seen that said company is a specified person of assessee-According to Assessing Officer, assessee is hit by Section 13(1)(c)(ii) and Section 13(1)(d) for such reason assessment was reopened under Section 147—Assessing Officer observed that from impugned documents it was seen that assessee had deposited sums with N and both these companies are specified persons of assessee—Therefore, Assessing Officer held that these amounts are to be taxed separately at Maximum Marginal Rate in terms of proviso to Section_164(2)—Total amount was treated as income by invoking Section 13(1)(b) read with Section 11(5)—Amount said to have received as donation was added back to income of assessee under Section 69A—CIT(A) affirmed view taken by Assessing Officer except for granting partial relief such as with regard to claim for carry forward of depreciation etc—Tribunal after taking note of factual position, more particularly, that addition which was made in reassessment proceedings having been deleted by CIT(A) reassessment on heads which were not part of reasons recorded for reopening assessment is not sustainable—Held, in case of GKN Driveshafts (India) Ltd. Versus Income-Tax Officer and Ors., (2003) 259 ITR 19 (SC) it was held that assessing officer is bound to furnish reasons within a reasonable time and noticee is entitled to file their objection to such notice and assessing officer is bound to dispose of same by passing a speaking order—Though Explanation 3 inserted by amendment empowers assessing officer to assess income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in course of proceedings under Section 147 notwithstanding that reasons for such issue have not been included in reasons recorded under Sub-Section 2 of Section 148, prerequisite is there should be a valid notice—Admittedly, in case on hand, notice was held to be not sustainable-If that be so, assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during reassessment proceedings—Foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid entire edifice sought to be raised on such foundation has to collapse—Tribunal was right in granting relief to assessee-Revenue's appeal dismissed. (k)In the case of Satyawan vs. ITO ITA No. 3423/Del/2019 Jun 20, 2022 (2022) 65 CCH 0217 DelTribReassessment-Reopening of assessment-Assessee is challenging very validity of assessment made by Assessing Officer as assessment was reopened for escapement of income on account of cash deposits made into bank account by assessee and whereas while completing assessment Assessing Officer made various disallowances of expenses other than reason for which assessment was reopened—Held, a plain reading of reasons recorded Assessing Officer has reason to believe that income of assessee has escaped assessment in respect of cash deposits of Rs.68,68,705/- as they were remained unexplained-However, while completing assessment Assessing Officer disallowed 25% of purchases for want of bills and vouchers—Assessing Officer also disallowed opening capital shown by assessee in his capital account as no explanation was offered by assessee-There is one more addition which was made by assessee is in respect of license fee paid by assessee for want of supporting documents—Other than these three additions there is no other addition or disallowance made by Assessing Officer, which relates to cash deposits by assessee made into his bank account—In other words, Assessing Officer did not make any addition for which assessment was reopened─In case of Ranbaxy Laboratories Limited Vs. CIT (ITA. No. 148/2008) Delhi High Court held that if Assessing Officer does not make any addition on primary ground on basis of which proceedings under Section 147 were initiated he cannot make other additions—Ratio of decision of Delhi High Court squarely applies to facts of case since Assessing Officer did not make any addition for which reopening was made-Assessing Officer made various other additions other than addition for which assessment was reopened-In view of above, respectfully following above decision of juri ictional High Court, reassessment order passed by Assessing Officer under Section 143(3) read with Section 147 is bad in law-Assessee's grounds allowed. Under the same facts and circumstances this Honble ITAT in the case of PradeepKuamr v/s ITO Ward-2, Jhujhunu in ITA No. 370/Jp/2022_dt.11.01.2023 has quashed the assessment.

Notice not served upon the assessee:In this regard it is submitted that in the above matter the notice U/s 148 has been issued by the ld. AO on 29.03.2019(PB1) and this reassessment, a proper and valid service of notice u/s 148 on assessee is mandatory requirement violation the same of will result in quashing of the reassessment proceedings. Assessee has demonstrated that the notice was issued/sent at an address different than the one mentioned in his return of income. Department also admits that the notice was served not on assessee but on one ShriVedPrakash who according to assessing officer is a responsible person working for the group entities of assessees family and this amounts to a proper service on assessee. These facts are admitted by the department which are evidenced by the remand report and field correspondence mentioned above. Assessee's contention that Said VedPrakash was neither s his employee nor his authorized agent, remains uncontroverted. Merely because he appeared in some other group entities will not detract the fact that notice was not served on assessee. During the course of reassessment AO was intimated about non service of notices u/s 148 and 143(2) but AO failed to take cognizance of assessee's intimation and objections. From the assessment record, remand reports, field correspondence and oral contentions, department could not demonstrate before us that notice u/s 148 was served on the assessee for A.Y. 2001-02. In the absence of a valid service of notice u/s 148 on the assessee the reassessment proceedings for AY2001-02 are bad in law, consequently they International Pvt. Ltd 296 ITR 333 (Del); Hotel Blue Moon 321 ITR 362 (SC), followed. The same contention is favoured by many land mark judgment which are as follows; Honorable ITAT, Agra Bench in M/s K.P. Cold Storage Vs ITO ITA No. 145/Agra/2018 had held that; In the present case AO on basis of information received from the ADIT(Inv.) that there were huge cash deposits in the bank accounts maintained by assessee during the period F.Y 2008-09, had issued notice under section 148 which culminated into assessment framed determining total income at Rs.2,21,60,400/- as against Rs.12,45,390/- originally returned by assessee. Assessee contended that no notice under section 148 was served upon assessee and ex-parte assessment was completed without serving any notice under section 148 till the completion of assessment which rendered the assessment order to be held void-ab-initio. It was held a valid service of a valid notice under section 148, is not a mere procedural requirement, but is a condition precedent to the validity of any assessment, reassessment or re-computation to be made under section 147 and it is so because of the use of words "shall serve on the assessee” and also the requirement to the effect “before making the assessment, reassessment or re- computation under section 147" in the section itself- meaning thereby that if no notice under section 148 is issued or if the notice so issued is shown to be invalid, or the service of notice so issued, is shown to be invalid,AO could not proceed with the subsequent proceedings for making assessment, reassessment or re-computation under section 147. Unless, the notice was served on the proper person in the manner prescribed under section 282, the service was insufficient and AO did not have juri iction to re-assess the escaped income. Thus, the service of notice under section 148 was no service in the eye of law and all subsequent proceedings including the ex parte assessment framed on 21.12.2016 in assessee's case were illegal and void ab initio. [1999] 238 ITR 694 (CAL.) HIGH COURT OF CALCUTTA Keshab Narayan Banerjee; Section 148, read with section 147 of the Income-tax Act, 1961 Income escaping assessment – Issue of notice for – Assessment years 1983-84 to 1987-88 – Whether service of notice is condition precedent for passing orders under section 147 – Held, yes – Whether respondent made attempt to serve notice under section 148 to appellant by registered post but it was not shown that either appellant refused to take service of notice or that appellant was not available at his residence or that there was no one willing to accept service on his behalf, service of notice could not be said to be properly effected and, therefore, assessment order passed u/s 147 based on service was also bad in law Held, yes (In favor of assesee). We also would like to submit your honor that if there is any issue regarding the service of notice the ld. DR may kindly be directed to produce the assessment record and report of service of notice on the assessee, order sheet and reasons recorded.

Reason to believe and not reason to suspect: 4.1It is further submitted that even under the amended law by the finance act 1989 the condition precedent or words, which continues right since inception till date, are “reason to believe" and not "reason to suspect". The word “believe” has to be understood in contradistinction of suspicion or opinion. Belief indicates something concrete or reliable. Kindly refer Gangasharan& Sons Pvt. Ltd. 130 ITR 1 (SC), and ITO v. LakhmaniMewal Das, (1976) 103 ITR 437 (SC). 4.2The belief of the Officer should be as to escapement of income and the belief should not be a product of imagination or speculation. There must be reason to induce the belief. The Court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court (SheoNath Singh v. AAC, (1971) 82 ITR 147 (SC). In the case of MukeshModi&Ors.vs. DCIT 366 ITR 418 (Raj) held that Evasion of tax was menace to society but Assessee contributing to the exchequer in form of tax could not be allowed to suffer on mere pretence that it had evaded payment of tax. Rowing and fishing enquiry in hands of AO on mere suspicion or change of opinion could not satisfy expression "reason to believe" exposing Assessee for reopening of assessment. Notice for reopening of assessment was not in consonance and in conformity with under Section 147 and made specified notice vulnerable. High Court pointed that, reasons given by AO for issuance of notice for Re-assessment were not plausible and convincing. In fact order, where objections were rejected by AO, was not self-contained speaking order. Upon perusal of the order, it was amply clear that the same contains conclusions and is bereft of reasons.(para 12)

Approval of 52/202assessee;s in one letter illegal: Further the ld. Pr. CIT/JCIT has given one consolidated approval of 200assessee's through one letter dt. 29.03.2019 vide Anexure-A page 2-4 and this show how the Pr. CIT/JCIT has acted in formal way. On inspection or perusal of the assessment record and documents on dt. 08.10.2025 it is found that the approval was not in original letter or documents. The document of approval was in the photocopy. How the approval of all the 52/202 different assessee's can be given in one documents, when all are the independent or separate assessee and reasons are different.He has given one consolidated approval of 52/202 different assessee's in one shot through one letter dated 29.03.2019 which is even not signed by him but signed by ITO (T&J), who is not a competent authority to give and signed the approval letter, which shows how the PR. CIT has acted in very formal way. When we examined of the assessment record, it isalso gathered that the approval was in photocopy and not in original or there was no original letter or documents of approval. Further the name of the assessee was at Sr.180 out of 202assessee's and even there was no tick on the name of the assessee in the approval list, which creates a doubt that the approval has been received before the issue of notice u/s 148 of the Act as the approval letter . Thus it all shows how the wrong and illegal manner has been adopted by all the authorities. On this preposition and issue kindly refer the decision of this Honble ITAT in the case of Sh. SatyaNarayaBairwa v/s ITO in ITA No. 867 & 869/Jp/2018 dt. 15.09.2021 Copy is enclosed, wherein under the same facts and circumstances the Honble ITAT has held that “20. The ld. A/R has also drawn our attention on the approval of the Pr. CIT placed at page Nos.7-8 of the paper book and also from the assessment record placed before us, we found that he has given one consolidated approval of 56 different assessee's in one shot through one letter dated 29.03.2016 which is even not signed by him but signed by ITO (T&J), who is not a competent authority to give and signed the approval letter, which shows how the PR. CIT has acted in very formal way. When we examined of the assessment record, it is gathered that the approval was in photocopy and not in original or there was no original letter or documents of approval. Further the name of the assessee was at Sr. 46 out of 56 assessee's and even there was no tick on the name of the assessee in the approval list, which creates a doubt that the approval has been received before the issue of notice u/s 148 of the Act as the approval letter lying on the file after issuance of the notice u/s 148 or not before or attached with the notice u/s_148 and may reach in the office of the AO after 31.03.2016. Thus, in our view, approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s.147 r.w.s.148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per law. Then in that eventuality, we are of the view that the issuance notice 148 of the Act and all the consequent proceedings and assessment order passed was not in accordance with law. The case laws relied upon by the ld. DR are not tenable in the facts and circumstances of present case, therefore, considering the totality of facts and circumstances of the case as well as the judicial pronouncements qua the issue under consideration, we find merit in the contention of the ld AR, therefore, we quash the proceedings U/s 147 of the Act.” The same has also been followed by this Honble bench in the case of case of Prabhati Devi vs. ITO Ward Dausa in ITA No. 1031/JPR/2024 dated 01.10.2024 considering the Sh. Ramesh Kumar Vs. Income Tax Officer, Ward-1, Jhunjhunu in ITA No. 1179/Jp/2024 dt.03.06.2025. Here is the same position.

On the other hand, the ld. DR supported the orders of the lower authorities and submitted that the order of the ld. CIT (A) be sustained.

We have heard the rival contentions, perused the material on record and gone through the orders of the authorities below. From the facts of the present case, we find that the case of the assessee was reopened by the AO by issuing notice under section 148 on 29.03.2019 on the reasons that as per Information available on ITS data and information has been received through NMS that the assessee has made commodity transaction of Rs.1,25,80,56,680/- on Multi Commodity Exchange. On examination of record available with the Department, it was found that the assessee has not filed her return of income. Hence the amount of transaction made by the assessee was not verifiable and the taxability of the said amount could not be ascertained. Therefore, the AO has reasons to believe that income chargeable to tax for the assessment year 2012-13 has escaped assessment. The ld. AO received information from Multi Commodity Exchange that the appellant had to suffer a loss of Rs.6,99,273/- on the transactions of Rs. 1,25,80,56,680/- undertaken by the assessee during the relevant previous year. The ld. AO considered the said amount of loss as unexplained investment u/s 69 of the Income Tax Act, 1961. The ld. AR has claimed vide his submissions dated 23.11.2019 that source of such payment of Rs.6,99,273/- was provided (APB 3-4) but the ld. AO did not speak any word about such submissions. He has claimed that the appellant was having an opening cash balance of Rs.2,20,000/- and she had earned Rs.1,10,000/- as net income from her job and she had also received Rs. 8,00,000/- as loan through account payee cheques and hence the appellant had a total amount of Rs.11,30,000/- with her out of which she paid the loss incurred by her in commodities trading. The amount of loss had been paid to the broker of Multi Commodity Exchange through bank transfer only. Hence the source of payment of loss of Rs.6,99,273/- stands proved and we therefore delete the addition so made by ld. AO.

Since we have deleted the only addition made by ld.AO in the assessment, we do not deem it fit to decide other grounds of appeal. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 03/11/2025. ( राठौड़ कमलेश जयन्तभाई ) (RATHOD KAMLESH JAYANTBHAI) लेखा सदस्य / Accountant Member जयपुर / Jaipur दिनांक/ Dated:- 03/11/2025 *Santosh (डॉ.एस.सीतालक्ष्मी) (Dr. S. Seethalakshmi) न्यायिक सदस्य / Judicial Member आदेश की प्रतिलिपिअग्रेशित /