HARISH KUMAR CHANDNANI,BHOPAL vs. INCOME TAX OFFICER -3(1), BHOPAL, BHOPAL

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ITA 107/IND/2025Status: DisposedITAT Indore11 November 2025AY 2012-201311 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Notice of Demand issued under Section 156 of the Income Tax Act, 1961, in the name of the assessee/appellant, Harish Kumar Chandnani, instead of the Society, is invalid and unsustainable in law. The reasoning was based on a careful consideration of Section 156, which mandates that when any sum is payable in consequence of an order passed under the Act, the AO shall serve a notice of demand upon the assessee. The Tribunal found that the identity of the assessee in the assessment order and the corresponding Notice of Demand must be identical. There is no provision in Section 156 that allows the AO to issue a Notice of Demand in the name of a person other than the one against whom the assessment order was made. The learned Departmental Representative for the revenue could not demonstrate any other provision in the Income Tax Act, 1961, to justify the AO's action. Consequently, the Tribunal quashed the impugned Notice of Demand. The Tribunal clarified that it was not expressing any opinion on the assessment order passed in the name of the Society, and the AO may, if permissible, issue a fresh Notice of Demand in the name of the Society. The delay in filing the appeal was condoned.

What were the facts?

The assessee, Harish Kumar Chandnani, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging an order passed by the Commissioner of Income-Tax (Appeals)-NFAC, Delhi. The assessment year in question is 2012-13. The Assessing Officer (AO) had passed an assessment order against 'Swami Grah Nirman Sehkari Maryadit Co-operative Ltd., Bhopal' (the Society) under Section 144 read with Section 147 of the Income Tax Act, 1961, determining escaped income of Rs. 8,23,51,000/-. Subsequently, the AO issued a Notice of Demand under Section 156 of the Act in the name of the assessee/appellant, Harish Kumar Chandnani, for a demand of Rs. 6,97,51,190/-. The assessee contended that this notice was illegal as it was issued in his name, not in the name of the Society against whom the assessment order was passed. The appeal was filed with a delay of 266 days.

What were the issues?

1. Whether the Notice of Demand issued under Section 156 of the Income Tax Act, 1961, in the name of the assessee/appellant, Harish Kumar Chandnani, is legally sustainable when the assessment order was passed in the name of 'Swami Grah Nirman Sehkari Maryadit Co-operative Ltd., Bhopal'? (Question of law, turning on Section 156). Assessee's Contentions: - The expression 'in consequence of any order passed under this Act' and 'the assessee' in Section 156 clearly refer to the assessment order and the person assessed. - The AO's action of issuing a Notice of Demand against the assessee/appellant, when the assessment order was against the Society, is without legal provision or authority. - The assessee is prejudiced by this illegal action and the CIT(A) failed to adjudicate this ground, only going into the merits of the Society's assessment order. - The Society has filed an independent appeal against the AO's assessment order. - The prayer is limited to quashing the Notice of Demand issued against the appellant. Revenue's Contentions: - The AO issued notices during assessment proceedings to 'Shri Harish Kumar S/o Late Shri Bherumal', the assessee/appellant. - The Revenue could not show any legal authority enabling the AO to issue the Notice of Demand against the assessee/appellant.

Which sections of the Income-tax Act were involved?

Section 156,Section 144,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI

For Appellant: Shri P.K. Jain, AR
For Respondent: Shri Anoop Singh, CIT-DR
Hearing: 06.11.2025Pronounced: 11.11.2025

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

1.

Feeling aggrieved by order of first appeal bearing DIN & Order No. ITBA/NFAC/S/250/2023-24/1060485199(1) dated 05.02.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] for AY 2012-13, the assessee has filed this appeal on the grounds as mentioned in Form No. 36 (Appeal Memo).

2.

We have heard learned Representatives of both sides and carefully perused the case record.

Harish Kumar Chandnani – AY 2012-13 3. The controversy which calls for our adjudication is very narrow and does not require much elaboration. The only relevant facts to be narrated are such that the AO passed assessment-order of a Society named “Swami Grah Nirman Sehkari Maryadit Co-operative Ltd., Bhopal”, the first-page and last two pages of assessment-order are scanned and re-produced below for an immediate reference:

Page 2 of 11 Harish Kumar Chandnani – AY 2012-13 Page 3 of 11 Harish Kumar Chandnani – AY 2012-13 Page 4 of 11 Harish Kumar Chandnani – AY 2012-13 Page 5 of 11

Harish Kumar Chandnani – AY 2012-13 4. However, the AO issued Notice of Demand u/s 156 against “Shri Harish Kumar S/o Late Shri Bherumal”, Chairman of Society, who is the assessee/appellant in present case. The AO created a hefty demand of Rs.

6,97,51,190/- payable by assessee/appellant. The Notice of Demand so issued by AO is scanned and re-produced below for an immediate reference:

Page 6 of 11 Harish Kumar Chandnani – AY 2012-13 Page 7 of 11

Harish Kumar Chandnani – AY 2012-13 5. Ld. AR invited our attention to the provision of section 156 under which the impugned Notice of Demand has been issued, reading as under:

“Notice of demand. 156.(1) When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.” [emphasis supplied] 6. Ld. AR thereafter contended that the expressions “in consequence of any order passed under this Act” and “the assessee” used in above section 156 clearly refer to the “assessment-order” which had been passed and the “person” whose assessment-order had been passed. Therefore, when the aforesaid assessment-order was passed in the case of Society, how could the AO issue Notice of Demand against assessee/appellant. Ld. AR contended that there is no provision or authority prescribed in Income-tax Act, 1961 under which the AO’s action of issuing Notice of Demand against assessee/appellant could be said to be legal. Therefore, Ld. AR contended, the assessee/appellant is seriously prejudiced by AO’s action. He submitted that the assessee/appellant raised this serious grievance in Ground No. 2 of first-appeal before CIT(A) also but the Ld. CIT(A) has not adjudicated assessee’s ground; the CIT(A) has merely gone into the merit of assessment- order of Society passed by AO and upheld the same.

7.

Ld. AR pointed out a further fact that the Society has filed an independent appeal against the impugned assessment-order passed by AO

Harish Kumar Chandnani – AY 2012-13 against Society and the same is pending before CIT(A). He submitted that the present assessee/appellant is not concerned with the impugned assessment-order, he is making a limited prayer that the Notice of Demand issued by AO against him is not legal and must be quashed.

8.

Ld. DR for revenue filed AO’s letter dated 03.11.2025 in the matter.

He attempted to justify the action of AO by referring to Pages 3,4 & 6 of assessment-order and stating that the AO issued notices for/during assessment-proceeding to “Shri Harish Kumar S/o Late Shri Bherumal” i.e. the assessee/appellant in present case. However, Ld. DR was not against the fact that the assessment-order pertains to “Society” and not to assessee/appellant. Further, when the Bench raised a specific query as to what is the legal authority enabling the AO to issue Notice of Demand against assessee/appellant, he only submitted that it is a matter of record but, however, he could not show any such authority.

9.

We have considered rival submissions of both sides and carefully perused the Assessment-order as well as the Notice of Demand; both of these documents are scanned and re-produced in earlier para. There are two undisputed facts, namely (i) the assessment-order pertains to and has been passed in the name of Society but (ii) the Notice of Demand has been issued in the name of assessee/appellant. On a careful consideration of provision of section 156, which we have re-produced earlier, we find that the identity of the assessee in the Assessment order and corresponding Notice of Demand demand-notice must be identical. There is no provision in section 156

Harish Kumar Chandnani – AY 2012-13 enabling the AO to issue Notice of Demand in the name of any person other than the person in whose name Assessment-order has been made. Further, the Ld. DR for revenue has not been able to show any other provision in Income-tax Act, 1961 to justify AO’s action. Accordingly, we hold that the Notice of Demand issued u/s 156 in the name of the name of assessee/appellant instead of the Society is invalid and unsustainable in the eyes of law. Consequently, we quash the impugned Notice of Demand issued by AO.

10.

We, however, make it clear that we are not expressing any opinion qua the assessment-order which is issued in the correct name of the Society and therefore, the AO may, if permissible under law, issue a fresh Notice of

11.

There was a delay of 266 days in filing present appeal by assessee.

The assessee has filed a condonation-application supported by affidavit. The assessee has explained the reasoning of delay and making a prayer for condonation of same. Ld. DR for revenue initially sought to oppose the assessee’s prayer but when the bench pointed out that the Notice of Demand issued by AO creating a hefty demand of Rs. 6,97,51,190/- against assessee/appellant is illegal, Ld. DR understood the illegality of AO’s action and decided to drop his objection/opposition. Therefore, having regard to facts of case; the averments made by assessee in condonation-application/ affidavit and dropping of objection by Ld. DR, the delay is condoned.

Page 10 of 11 Harish Kumar Chandnani – AY 2012-13 12. Resultantly, this appeal is allowed. Order pronounced in open court on 11/11/2025

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