BABU LAL SAINI,JAIPUR vs. ITO WD 1(1), JPR, JAIPUR

4. That the assessee craves permission to add, alter, amend or delete any ground or grounds of appeal on or before the filing of this appeal.

Babu Lal Saini vs. ITO I Babu Lal Saini S/o Shri Sukhji Saini aged about 70 years resident of 85, Mahaveer Nagar, Opp VT Road, Muhana Road, Mansarowar, Jaipur 302020 do solemnly swear and declare as under – 1. That My PAN is AGWPS9735J 2. That for the AY 2013-2014 I had filed my return of income on 03.08.2013 declaring income of Rs, 3,79,410/- 3. That the learned AO passed assessment order under section 144/147 on 28.09.2021 determining income at Rs. 49,46,450/- as against returned income of Rs. 3,79,410/- 4. That against the order passed by the learned AO on 28.09.2021 for the A Y 2013-2014 I had filed an appeal before the learned CIT(A) on 23.01.2020.

5. That the learned CIT(A) set aside the appeal vide order dated 18.02.2025.

6. That I did not receive the Appellate order passed by the learned CIT(A) on 18.02.2025 7. That I am non metric and not accustomed to watch email. My then counsel also did not inform me about the passing of the order by the learned CIT(A) 8. That order passed under section 250 dated 18.02.2025 by the learned CIT (A) was not served upon me nor these came to my knowledge before last week of April 2025 when I was inform by my previous counsel.

9. That the fact that the learned CIT(A) has passed set aside order under section 250 came to my knowledge in the last week of April 2025.

4. On the other hand, ld. DR did not dispute the facts stated in the condonation application so filed. materials available on record. The bench noted that in this case the ld. CIT(A) has set aside the matter vide order dated 18.02.2025. The assessee being senior citizen not used to check email regularly and thereby it has resulted in delay in filling the present appeal by 6 days. Looking to the overall facts and delay being of few days, we accept the explanation of the assessee and condone the delay in filling the present appeal and thereby, we admit this appeal.

As per the records, the assessee has filed the return of income for the relevant Assessment Year 2013-14 on 03.08.2013 declaring total income at Rs.3,79,410/-. Ld. AO noted that while verification, the assessee failed to explain the source of above investment in immovable property in in question was found not open for verification. As such, after recording the reasons and obtaining prior approval of Pr. Commissioner of Income Tax-1, Jaipur, the case was reopened under sec. 147 of the Act and a Notice under section 148 of the Act was issued on 19.03.2020 and served upon the assessee. Ld. AO noted that the assessee had not submitted return of income against the Notice under sec. 148 dated 19.03.2020. However, vide submission dated 21.09.2021, the assessee stated that the income tax portal did not permit/allow to submit the return in response to notice under sec. 148 for the A.Y. 2013-14. Therefore, the assessee submitted return of income for the year under consideration in response to notice under sec.

148 in PDF format. Having noted the facts stated above, ld. AO observed that the requirement of Notice within 30 days of receipts i.e. by 18.04.2020, the assessee was liable to file ITR in online mode and not in PDF format.

Since, it was evident that the assessee had not filed any return of income in response to the Notice u/s 148 of the Act dated 19.03.2020 and therefore, he completed the assessment proceedings on the basis of material available on record and merits of the case u/s. 144 of the Act.

While doing so, he noted that the assessee had purchased an immovable property situated at S-11, Ghijgarh Vihar, Hawa Sarak, Jaipur the Sub-Registrar-VIII, Jaipur on 07.01.2013. The Sub-Registrar had adopted face value of property at Rs. 52,91,377/- for the purpose of charging stamp duty and accordingly, Stamp Duty & Registration charges were charged at Rs.3,41,327/-. Thus, the assessee made total investment of Rs.54,41,327/- in the immovable property in question. During the course of assessment proceedings, the assessee vide submissions dated 25.02.2021 has stated the source of above investment as under-

Ld. AO also added a sum of 4,77,000/- being the amount paid by Smt. Shanti Devi Saini out of her income from 2007-08 to 2012-13 sourced from the rent income and the assessee has not filed any confirmation from Smt. Shanti Devi in support of this contention.

The ld. AO while examining the income under the head capital gain noted that the assessee has claimed indexed cost of acquisition for an amount of Rs. 6,91,142/- and Rs. 7,57,033/- but has not filed any supporting evidence and therefore, ld. AO revised the income under the head capital gain at Rs. 17,82,470/-.

7. Aggrieved from the above order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds raised by the assessee, the relevant finding of the ld. CIT(A) is reiterated here in below:

“6 Findings and Decision: 6.1 I have considered the material available on record before me, including the assessment order, Grounds of Appeal, Statement of Facts and the submissions filed by the appellant during the appellate proceedings.

6.3 The interest of justice would be best served if the appellant gets another chance to represent his case before the Id. AO and thereupon, the Id. AO can verify the submissions of the assessee and conduct necessary enquiries/verifications, wherever necessary to arrive at a true and correct figure for determination of income of the appellant.

6.4 In this regard, it is also noted that the Finance Act 2024 has empowered the Commissioner (Appeals) to examine the cases where assessment order was passed as best judgment/ex-parte U/s 144 of the Act and to set aside the assessment in appropriate cases back to the Assessing Officer for fresh adjudication. The Finance Act also proposed to make an amendment in section 153(3) of the Income-tax Act in order to provide the time limit for disposal of cases which are set aside by the Commissioner (Appeals). This procedural amendment is applicable to the appellate orders passed by the Commissioner (Appeals) on or after 01/10/2024.

6.5 Further, it is noted that proviso to Section 251 1(a) has been introduced with effect from 1/10/2024 and it reads as follows -

"Provided that where such appeal is against an order of assessment made under section 144/144B, he may set aside the assessment and refer the case back to the assessing officer for making a fresh assessment."

6.6 Furthermore, there has been an amendment in Sec 153(3). Insertion of the term "Section 250 has been made with effect from 1/10/2024 in three places, including the Proviso, whereby time limit has been specified for the A.O. to complete the fresh assessment pursuant to setting aside of the assessment order by the CIT Appeals as per Proviso to section 251(a) of the IT Act with effect from 1/10/2024 6.7 It is a settled fact that in the matter of procedural amendment, the date of examination of the record by the authority should be on or after the date of amendment. This has been held by Ld ITAT Rajkot in the case of Swiss Singapore India Pvt. Ltd v/s CIT (IT & TP) Ahmedabad in and 159/RJT/2023, date of order 21/05/2024. In this order reliance has been placed on the decision of Hon. Supreme court in the case of Shree Shankaracharaya University of Sanskrit and Others vs. Dr. Manu and others in CA no. 3752 of 2023 dated 15/05/2023. In addition, reliance has been placed on the order of ITAT Mumbai bench in the case of Zenzi Pharmaceuticals Industries Pvt. Ltd. vs. CIT (TP, 2023 157 taxmann.com 210(Mum-trib).

6.8 In the wake of the above discussion, the assessment order dated 28.09.2021 passed u/s 144 r.w.s. 147 is hereby set-aside to the file of the A.O. for fresh adjudication. The Assessing Officer is directed to make a fresh assessment after

6.9 Needless to say that the assessee shall fully co-operate with the A.O in the timely completion of the set aside proceedings. The appellant may note that all the necessary compliances should be made at the earliest and within the time limit prescribed in the Notices issued by Ld. AO. It should be the endeavor of the Appellant to promptly submit necessary evidences in support of her Income tax return, suo-moto or as required by the Assessing Officer without causing undue delays leading to submissions towards the fag end of the limitation period. The assessment order is thus, set aside in accordance with the Proviso to S 251(1)(a) with a direction to the AO to make a fresh assessment in accordance with the Rules and the timelines prescribed u/s 153(3) of the Act.

8. Feeling dissatisfied with the above finding of the ld. CIT(A) the assessee preferred the present appeal before this tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the assessee ld. AR of the assessee, has filed the detailed written submission running into 87 pages challenging the order of the lower authority on various counts. One of it is technical ground stating that the assessee filed the return of income u/s. 148 of the Act and after doing so the statutory notice required to be issued to the assessee was not issued and in support of that contention he made the following written submission :

B. Non issuance of notice under section 143(2) It is further submitted that it was totally unlawful on the part of the learned AO who has totally ignored the return filed by the assessee on 21.09.2021 on the ground that the same was not within the time of 30 days allowed in the notice under section 148. As discussed in the aforesaid para the return filed by the assessee was a valid return as the same was filed within the time extended by the Apex Court of the Country. The position being so, the return being valid and well within time, the learned AO was under obligation to issue notice under section 143(2) before completion of assessment in scrutiny. This having not being done the assessment order passed is illegal unlawful and invalid.

Over and above the submissions made it is further submitted that it is settled position of law that return filed beyond time allowed in notice under section 148 cannot be ignored. It is the submission of the assessee that the return filed by the assessee has been saved being in time on account of and by the order of the Hon’ble Supreme Court but even otherwise the return could not have been ignored by the learned AO and the same was to be considered at the most as a late return. And before completion of assessment the learned AO was duty bound to issue notice under section 143(2) mandatorily before completing the assessment. It is settled position of law up to the stage of the Apex Court that in cases where return has been filed in response of notice under section 148 assessments completed without issuance of notice under section 143(2) are unlawful. It is immaterial whether return has been filed within time allowed in notice under section 148 or has been filed beyond the time allowed. In both the circumstance the learned AO is mandatorily required to issue notice under section 143(2) before completing the assessment proceeding in scrutiny. Since in this case the return was filed on 21.09.2021 earlier to the completion of assessment on 28.09.2021 it was incumbent upon the learned AO to have issued notice under section 143(2) before completing the assessment proceedings. The Hon’ble Supreme Court and various other High Courts and Benches of Income Tax Tribunal have held that issuance of notice under section 143(2) is not just procedural but it is a statutory requirement under the income tax act, hence non issuance of income under section 143(2) is not just a procedural lapse but it renders the assessment proceedings unlawful. The Following case laws are quoted in support

1. Pr Commissioner of Income Tax Jaipur -3 Vs Kamla Devi Sharma order dated 25.06.2018 in appeal No. 197 of 2018 (Rajasthan High Court)

In the case the questions before the Hon ble High court were as under “ii) Whether on the facts and circumstances of the case the ITAT was right in quashing the reassessment proceedings under section 147/144 {mistakenly mentioned 143(3)} for the reason of non issuance of notice under section 143(2) wherein the assessee filed her return of income on 22.4.2014 which is 10 months 17 days beyond iii) whether on the facts and in circumstances of the case the AO was under statutory obligation to issue notice under section 143(2) before completing the assessment under section 144 wherein the assessee filed her return of income 10 months 17 days beyond the 30 days time allowed by notice issued under section 148 which expired on 05.07.2013 as the notice was served upon on 06.06.2017.”

The above questions cover the issue of the assessee also. The ratio of this decision is squarely applicable to the facts of the case of the asseseee. The moot point involved before the Hon’ble high court was whether the learned AO was required to issue notice under section 143()2) even when the return was filed beyond time allowed in notice under section 148. The hon’ble jurisdictional Rajasthan High Court has answered the question in favor of the assessee and has upheld the order of the ITAT in quashing the assessment proceedings on the ground on non issuance of notice under section 143(2) . In the case of the assessee the fact are totally identical hence the assessment completed by the learned AO without issuance of notice under section 143(2) deserves to be quashed.

In this case notice under section 148 was issued on 14.06.2017, In response to notice return of income was filed by the assessee on 12.12.2018 (after 18 months). The learned AO held that since the return was filed much beyond the statutory period of 30 days given in the notice issued under section 148 and such return cannot be given any cognizance. Accordingly the learned AO completed the assessment under section 144. On appeal the Hon’ble ITAT held that the learned AO was bound to take cognizance of the return filed by the asseseee even though it was filed beyond the time given in the notice under section 148.

The ratio of the decision is fully applicable to the facts of the case of the asseseee.

3. CIT Vs Rajeev Sharma (Allahabad High court) order dated 24.05.2010 in appeal No. 19 and 20 of 2004 232 CTR 303, (2011) 336 ITR 678, and 2010 40 DTR 129 Babu Lal Saini vs. ITO In this case notice under section 148 was issued on 26.12.2000 for the assessment year 1995-96 and on 29.03.2001 for the assessment year 1994-95. In compliance returns of income were filed on 07.02.2002 for both the assessment year 1994-95 and 1995-96. The assessment were completed without issuance of notice under section 143(2). The Hon’ble High Court held upholding the decision of Hon’ble ITAT that notice under section 143(2) was required to have been issued mandatorily. And in the absence of the same the assessments shall not be valid.

The ration of the decision is fully applicable to the facts of the case. In this case also returns were filed much beyond time allowed in the notices issued under section 148. Despite this the court has held that before completing the assessment in scrutiny the learned AO was duty bound to issue statutory required notice under section 143(2). Non issuance of notice under section 1432) has resulted in the invalidation of the assessments. Similar is the position of the case of the assessee. Therefore the assessment in the case of the assessee also requires to be held invalid, unlawful and illegal.

In This case the facts are as under:- i) Notice under section 148 issued on 30.03.2010 ii) The learned AO was informed by the AR of the assessee on 16.12.2010 (after 9 months from the issue of notice under section 148) that return filed originally on 16.09.2008 be treated as return filed in compliance to notice issued under section 148. iii) The learned AO without issuing notice under section 143(2) completed the assessment on 31.12.2010. iv) The Hon’ble High court confirmed and upheld the decision of the Hon’ble ITAT that failure by the learned AO to issue notice under section 143(2) subsequent to 16.12.2010 when the AR of the assessee made a statement before the learned AO that original return filed on 16.09.2008 be treated as return in response to notice under section 148, is fatal to the order of reassessment under section 148 Thus it is a case the ratio of which is squarely applicable to the facts of the case of the assessee. In the cited case it was just 15 days earlier to completion of assessment i.e. on 16.12.2010 whereas the assessment was completed on 31.12.2010 the AR of the assessee had intimated that return filed originally on 16.09.2008 be treated as a return in compliance to notice under section 148. Even in such a case the court has held that non issuance of notice under section 143(2) is fatal to the completion of the assessment proceedings.

The decision is fully applicable to the facts of the case of the assessee . the learned CIT A is requested to quash the assessment order.

In this case the following question for adjudication was before the Hon’ble court.

“ With consent of the learned counsel for parties, we proceed to hear this appeal finally on the following substantial question of law

“whether Tribunal was justified in holding that no issue of notice under section 143(2) would not vitiate assessment, made by Assessing Authority, since assessee filed return under section 148 after expiry of the period prescribed in law. “

In this case notice under section 148 was issued on 25.05.2007, On 11.12.2008 the AR of the assessee submitted before the learned AO that return filed originally on 02.05.2005 be accepted as return filed in compliance to notice under section 148. Subsequently the learned AO completed the assessment on 31.12.2008 without issuing notice under section 143(2) . The court has held that non issuance of notice under section 143(2) has rendered the assessment unlawful. The Court has further observed as under:

“ the question that the return was filed within or beyond time given in notice under section 148 is not relevant to determine the question whether AO can complete the assessment in scrutiny without issuing the notice under section 143(2). The provisions of section 143(2) being mandatory, the learned AO could not proceed to make the assessment without issuing notice under section 143(2). Accordingly the assessment order was quashed.

In view of the afore said cases it is established beyond doubt that the learned AO wrongly decided to ignore the return simply on the ground that the same was not within time allowed in the notice under section 148. The learned AO further acted unlawfully in completing the assessment without issuance of notice under section 143(2). The aforesaid decisions very clearly lay down and establish that even in returns filed beyond time allowed in the notice under section 148 issuance of notice under section 143(2) was mandatory. In the afore said some Babu Lal Saini vs. ITO cases return was filed or letter was issued on behalf of the assessee to treat earlier return as return filed under section 148 just 10-15 days before the completion of the assessment, even in these cases the court has held that issuance of notice under section 143(2) was mandatory. It has been held that non issuance of notice under section 143(2() is not just a procedural lapse but is fatal to the completion of the assessment. In these circumstances it is prayed that the assessment completed by the learned AO may kindly be quashed.

In View of the afore said facts it is submitted that the return filed by the assessee happened to be in time in view of the extension granted by the Hon’ble supreme court of India therefore assessment could not have been completed without issuance of notice under section 143(2). Over and above, the aforesaid decisions lay down that even if a return has been filed beyond time granted in the notice under section 148 even then scrutiny assessment cannot be completed without issuance of notice under section 143(2) which is a mandatorily requirement. The non issuance of notice under section 143(2) is not merely a procedural lapse but incurable in law which renders the assessment invalid. The Learned CIT (A) therefore is humbly requested to quashed the assessment order.

9. The assessee in support of the various contentions raised in the written submission has relied upon the following papers / documents : submission so filed on the various aspect of the matter vehemently argued that the assessee once the assessee filed the return of income in response to notice u/s. 148 of the Act the statutory notice which is required to be issued u/s. 143(2) of the Act has not been issued in this case and therefore, he relied upon the decision of the Apex Court in the case of CIT Vs. Laxman Das Khandelwal 108 taxmann.com 183(SC).

The assessee vide letter dated 21.09.2021 submitted to the ld. AO that since the portal did not permit / allow to submit the return in response to notice u/s 148 of the Act, he filed the return in PDF format. He also in support of the claim filed the screen shot contending that he had sufficient reason not to file that return online. There is no discussion of that aspect in the order of the lower authority and therefore, the return filed by the assessee in physical format considering the relaxation of the Apex Court should be considered as to have been filed within the time.

The brief facts related to the case is that the assessee filed his return on income, u/s 139 of the Act, on 03.08.2013 declaring total income at Rs. consideration of Rs. 51,00,000/- and the assessee failed to explain the source of the said investment ld. AO recorded the reasons for re-opening of the case and thereby after taking necessary approval issued a notice u/s. 148 of the Act on 19.03.2020. The assessee was supposed to file the return within 30 days from the issue of notice but due to sudden outbreak of the corona pandemic the same could not be filed. He also submitted that in the meanwhile he was trying to file the ITR in response to 148 he was unable to file the same thereby he vide his submission dated 21.09.2021 stated that the income tax portal does not permit/allow to submit the return in response to notice under section 148 for the A.Y. 2013-14. Thus, assessee submitted return of income for the year under consideration in response to notice under sec. 148 in PDF format. Having noted the facts stated above ld. AO observed that the requirement of Notice within 30 days of receipts i.e. by 18.04.2020, the assessee was liable to file ITR in online mode and not in PDF format. Since, it is evident that the assessee has not filed any return of income in response to the Notice u/s 148 of the Act dated 19.03.2020 and therefore, he completed the assessment proceedings based on material available on record and merits of the case u/s. 144 of the Act. While doing so he has not taken the cognizance of the return of income so filed by the undisputed facts that the statutory notice as required u/s. 143(2) was not issued even though the assessee filed the ITR in response to notice u/s. 148 of the Act. Thus, it is an accepted fact that the assessee filed ITR in response to notice u/s. 148 physically as there was technical glitches in the online platform. Therefore, passing the order without issue of statutory notice u/s 143(2) is invalid. We get support of our view based on the decision serviced by the assessee of decision of Apex Court in the case of CIT vs Laxman Das Khandelwal (2019) 108 taxmann.com 183 (SC) wherein the Apex Court held that ; 7. In Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362, on the question as to whether issue of notice under Section 143 (2) of the Act within the prescribed time for the purpose of block assessment under chapter- XIV B of the Act is mandatory for assessing undisclosed income detected during search conduct under Section 132 of the Act, their lordships were pleased to hold : "15 Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with......."

Since we have considered the technical ground no. 2 raised by the assessee, other ground i.e. no. 3 which is on merits of the dispute, becomes academic and ground no. 1 and 4 being general do not require findings.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 02/09/2025.

Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:-02/09/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Babu Lal Saini, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 1(1), Jaipur 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 749/JP/2025) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत