BODDU SAI BABA,TADEPALLIGUDEM vs. INCOME TAX OFFICER, WARD-1, TADEPALLIGUDEM

Succinctly stated, the AO based on information that though the assessee during the subject year had carried out substantial transactions, viz., (i) cash deposits in bank accounts, i.e., ICICI Bank Limited and HDFC Bank Limited Account No.23931530002722: Rs. 67,80,000/-; and (ii) sale of motor vehicle (in excess of Rs.10 lakhs): Rs.13,83,968/-, but had not filed his return of income, initiated proceedings under section 147 of the Act. An Order under section 148A(d) of the Act, dated 01/04/2022 was passed by the AO. Thereafter, the AO issued notice under section 148 of the Act, dated 01/04/2022.

Thereafter, the AO vide his order under section 147 r.w.s 144B of the Act, dated 27/12/2023 determined the income of the assessee at Rs. 80,30,743/- after making certain additions, viz., (i) business income under section 44AD of the Act, i.e., @ 8% of the gross receipts of Rs.58,98,267/-: Rs.4,71,861/-; (ii) amount received on account of Chit Bidding and interest income: Rs.7,78,882/-; and (iii) addition of unexplained cash deposits in bank accounts: Rs.67,80,000/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A).

As the assessee despite having been afforded sufficient opportunity had failed to participate in the proceedings before the CIT(A)

The assessee, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

We have heard the Learned Authorised Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements

Sri GVN Hari, Advocate, the Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the AO had for multi facet reasons grossly erred in law and facts of the case in assuming jurisdiction and framing the assessment vide his order passed under section 147 r.w.s 144B of the Act, dated 27/12/2023, viz., (i) that the AO had grossly erred in law and facts of the case in not obtaining the approval of the prescribed authority as contemplated under section 151(ii) of the Act (as was then available on the statute); and (ii) that notice under section 148 of the Act, dated 01/04/2022 had been issued by the Jurisdictional Assessing Officer (JAO) as against the Faceless Assessing Officer (FAO), which was contrary to the mandate of section 151A of the Act. Apropos the contention that the AO had erred in not granting a clear period of seven days in the notice issued under section 148A(b) of the Act, the Ld. AR submitted that he does not seek to press the same.

Elaborating further on his contention, the Ld. AR submitted that as notice u/s 148 of the Act, dated 01.04.2022 for the subject year i.e. A.Y. 2018-19 had been issued by the A.O. beyond a period of three

Per contra, Dr. Aparna Villuri, learned Senior Departmental Representative (for short “Ld. DR”), on being confronted with the aforesaid factual position as was canvassed before us, failed to rebut the same. However, the Ld. DR submitted that as the A.O., after validly assuming jurisdiction, had issued notice u/s 148 of the Act, dated 01.04.2022, therefore, no infirmity emerges from the assessment order passed by him. The Ld. Sr. DR, submitted that on a conjoint reading of Section 151 and the “5th proviso” to Section 149(1) of the Act, for reckoning the period of three years from the end of the relevant assessment year as envisaged in Section 151 of the Act, based on which the specified authority whose sanction is required to be obtained for issuing notice under Section 148 of the Act is to be determined, the period allowed to the assessee as per the “Show Cause Notice” (SCN) issued under clause (b) of Section 148A of the Act has to be excluded. The Ld. Sr. DR to support her contention had drawn our attention to the “5th Proviso” of Section 149 of the Act.

The Ld. A.R. rebutted the contentions advanced by the revenue’s counsel. The Ld. AR submitted that the “Proviso” to Section 151 of the Act, which, inter alia, contemplates exclusion of the time period provided in the “5th proviso” of Section 149 of the Act for computing the period of three years has been made available on the statute vide the Finance

We have heard the Ld. Authorised Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

As the Ld. AR has confined his contentions qua the validity of the jurisdiction assumed by the AO for issuing notice under section 148 of the Act, dated 01/04/2022, i.e., without obtaining the approval from any of the authorities specified under section 151 of the Act (as was applicable at the relevant point of time), therefore, we deem it apposite to first deal with the said issue.

Ostensibly, we find that as the assessee had failed to participate in the proceedings before the CIT(A), therefore, the latter referring to the non-responsive behavior of the assessee had summarily approved the order passed by the AO under section 147 r.w.s 144B of the Act. The CIT(A), while approving the assessment order, had observed that the same was a well-reasoned and comprehensive order, wherein the issues involved and the reasons behind the rejection of the contentions raised by the assessee were thoroughly discussed. We are unable to persuade ourselves to concur with the summary dismissal of the assessee’s appeal by the CIT(A), who, without properly addressing the respective grounds based on which the impugned assessment order was assailed before him, had dismissed the appeal. We say so, for the reason that though the assessee had vide specific grounds of appeal assailed the validity of the notice issued by the AO under section 148 of the Act, but there is no whisper in the CIT(A) order about the said multi- facet contentions. Rather, we find that the CIT(A) had merely approved the assessment order without referring to any independent observations qua the respective additions that were made by the AO. We would mince no words in observing that the order passed by the CIT(A) falls short of a reasoned order, wherein he has failed to deal with all the specific grounds based on which the impugned order of assessment was

Considering the fact, that the CIT(A) had failed to dispose of the appeal based on a speaking order, i.e., by dealing with the respective contentions based on which the validity of the notice issued U/s 148 of the Act, dated 01/04/2022 was assailed before him, and had also failed to address the respective grounds based on which the impugned

Before parting, we may herein observe that as the assessee has, inter alia, assailed before us the validity of the notice issued under section 148 of the Act on the ground that the AO had failed to obtain the approval of the specified authority as required under section 151(ii) of the Act, which being a legal issue requires no verification of facts beyond those borne on record, therefore, the CIT(A) is directed to adjudicate the same after verifying the factual position by calling for the assessment record.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.