Loading judgment…
No AI summary yet for this case.
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1069602044(1) dated 10.10.2024 for the I.T.A.No.15/VIZ/2025 Ananda Aqua Exports A.Y.2017-18 arising out of order passed under section 143(3) r.w.s. 147 of Income Tax Act, 1961 (in short ‘Act’) dated 23.05.2023.
Brief facts of the case are that, assessee filed its return of income declaring a loss of Rs.2,22,563/-. The case was selected for scrutiny, for the reason, that the assessee has made cash deposits amounting to Rs.69,43,000/- during the demonetization period into the bank account of the assessee. Further, it was also observed that the total credits in the bank account is Rs.7,94,44,149/- whereas turnover declared by the assessee is Rs.5,59,44,879/-. Initially notice under section 148 of the Act was issued under un-amended provisions of the Act on 30.06.2021. Consequent to the directions of the CBDT vide Instruction 1/2022 dated 11.05.2022, notice issued under section 148 of the Act dated 30.06.2021 was deemed to be considered as show-cause notice under section 148A(b) of the amended Act. Considering the reply of the assessee dated 15.06.2022 order under section 148A(d) was passed on 26.07.2022 and notice under section 148 was issued on 26.07.2022. On a perusal of the submissions made by the assessee during the re-assessment proceedings, the Ld. AO did not accept the reply of the assessee with respect to the cash deposits made by the assessee during the demonetization period. Ld. AO observed that assessee has declared cash deposits during demonetization period while filing the income tax return at Rs.42,03,000/- whereas the actual cash deposits during demonetization period as per bank account was Rs.69,43,000/-. The Ld. AO not being satisfied
Page. No 2
I.T.A.No.15/VIZ/2025 Ananda Aqua Exports with the explanation furnished by the assessee, proceeded to add a sum of Rs.27,40,000/- (Rs.69,43,000/- - Rs.42,03,000/-) under section 69A r.w.s. 115BBE of the Act.
3. Aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld.CIT(A). Ld. CIT(A) dismissed the appeal of the assessee, as the assessee has not responded to any of the notices issued during the appellate proceedings.
On being aggrieved by the order of the Ld. CIT(A) assessee is in appeal before us by raising various grounds as follows: - “1. On the facts and circumstances of the case and in law, the order passed u/s 143(3) r.w.s 144B of the Income Tax Act, 1961, dt.23.05.2023, as upheld by the Ld. Commissioner of Income Tax (Appeals) "NFAC", vide order u/s 250 dt. 10.10.2024, is contrary to the facts of the case and the provisions of law.
2. The Ld. CIT(A) disposed of the appeal ex-parte without granting a reasonable opportunity to the assessee, thereby violating theprinciples of natural justice.
3. The disposal of the appeal in limine by the Ld. CIT(A) is against theprovisions of Section 250(6) of the Income Tax Act.
4. The learned CIT (A) ought to have appreciated the fact that when assessee has explained the sources before the AO for the deposits made in bank account, with cogent reasons, the learned CIT(A) should have deleted the addition made u/s 69A of the IT Act ofRs. 27,40,000/-.
5. The Ld. CIT(A) ought to have held that the AO having accepted the books of accounts and has disclosed the subject cash deposits in bank in the books of account could not have invoked the provisions of section 69 of the IT Act.
It is crucial and relevant to take note that the income escaping assessment is less than the threshold limit of Rs.50 lacs, therefore,it impacts the determination of income escaping assessment and theapplicability of statutory provisions such as Section 149(1)(b) of the Income Tax Act, 1961.
Page. No 3 I.T.A.No.15/VIZ/2025 Ananda Aqua Exports 7. The Ld. CIT(A) ought to have taken into cognizance that the proceedings conducted by the local jurisdictional officer i.e. ITO, WARD - 1, Bhimavaram by issuance of notices u/s 148 of the Income Tax Act, were not in accordance with the provisions of the law.
Without prejudice to ground No.6, the Ld. jurisdictional officer i.e.ITO, WARD - 1, Bhimavaram failed to follow the procedure laid down under law before issuing notice u/s 148 of the IT Act, in view of this,the impugned notice suffers from legal infirmities.
The appellant contends that the notices issued by the Income Tax Officer, Ward-1, Bhimavaram, were contrary to the statutory provisions governing the time limitation for assessment, as well as the requirements of faceless assessment. Therefore, the appellant asserts that the proceedings conducted by the local jurisdictional officer are void-ab- initio.
10. Without prejudice to ground no. 6- 9 the jurisdiction of the assessee falls under ITO, Tanuku but whereas, the notice issued u/s 148 was by ITO, Bheemavaram which is a violation considering the jurisdiction under which the assessee was to be assessed.
The appellant respectfully prays that, for the reasons outlined above and additional arguments that may be advanced at the time of hearing, the order passed u/s 250 of the IT Act, 1961, be quashed and the addition made by the Assessing Officer be deleted.
The solitary issue emanating from the above grounds is with respect to addition made under section 69A of the Act for Rs.27,40,000/-. In addition to the above grounds / issues, the assessee raised two additional grounds as follows: - “1. The notice issued u/s 148 of the IT Act, 1961 dt. 26.07.2022 is barred by limitation in view of the provisions of section 149(1)(b) of the IT Act, 1961 read with the proviso thereto. Since the notice was issued beyond the prescribed time limit of three years, the subsequent assessment order passed u/s 143(3) r.w.s 144B of the IT Act 1961 Dt. 23.05.2023 is bad in law, void ab initio, and liable to be quashed. 2. The Finance Act 2017 introduced an amendment to Section 115BBE of the IT Act, which set a higher tax rate of 60% through the Taxation (Second Amendment) Act, 2016. This amended rate is applicable only for assessments conducted from 01.04.2017 onward. Therefore, it is not permissible to apply the revised rate to the assessment year in question.”
Page. No 4
I.T.A.No.15/VIZ/2025 Ananda Aqua Exports 6. Ld. Authorised Representative [hereinafter “Ld.AR”] pleaded that before adjudicating the case on merits, the case may be heard on the legal grounds raised by the assessee by way of additional grounds challenging the jurisdiction of the Ld. AO which is barred by limitation in accordance with the provisions of section 149(1)(b) of the Act.
On this issue, Ld.AR submitted that notice under section 148 of the Act was issued on 26.07.2022 beyond the prescribed time limit of three years and therefore order passed in consequent to such invalid notice is bad in law. He therefore prayed for quashing the assessment order.
8. On the contrary, Ld. Departmental Representative [hereinafter in short “Ld. DR”] through written submissions furnished the following: - “1. The Hon'ble SR.Authorised Representative, ITAT, Visakhapatnam has directed to submit written clarification along with relevant supporting evidences, in the case of M/s.Ananda Aqua Exports (PAN: AANFA6551D) for the A.Y.2017-18, stating that during the bench proceedings the appellant has raised the following additional grounds i.e "The notice issued u/s 148 of the Act, 1961 dt. 26.07.2022 is barred by limitation in view of the provisions of section 149(1)(b) of the IT Act, 1961 read with the proviso thereto. Since the notice was issued beyond the prescribed time limit of three years, the subsequent assessment order passed u/s143(3) r.w.s 144B of the IT Act 1961 dt. 23.05.2023 is bad in law, void ab initio, and liable to be quashed"
2. In view of the above grounds, it is to submit that as per the information available with the department, the assessee firm M/s. Ananda Aqua Exports (PAN: AANFA6551D) is having bank account No. 00000011334179634 in SBI in which during the F.Y. 2016-17, the assessee made credit transactions of Rs.31,93,09,660/- which includes cash deposits to the tune of Rs.69,43,000/- were made by the assessee firm
Page. No 5 I.T.A.No.15/VIZ/2025 Ananda Aqua Exports during the demonetization period and debit transactions to the tune of Rs.30,87,40,537 / - were made by the assessee firm. The above information suggests that income chargeable to tax in this case for theAY 2017-18 has escaped assessment as per the provisions of the Act, for which a notice u/s.148 of the Act was issued vide DIN and Notice No. ITBA/AST/S/ 148/2021-22/ 1033877149(1) dated 30.06.2021 after obtaining approval u/s 151 of the IT Act, 1961 from the competent authority on 30.06.2021. Note: In view of Notification No. 38/2021 (F. No. 370142/35/2020-TPL] / SO 1703(E) dtd.27.04.2021 issued by Hon'ble CBDT, for the purposes of issuance of notice under section 148 as per time-limit specified in section 149 or sanction under section 151 of the Income-tax Act was extended upto 30th June 2021. Hence, Notice U/s148 dtd.30.06.2021 is valid and provisions of Sec. 148A do not apply in the case.
However, the CBDT vide Instruction No. 1/2022 dated 11.05.2022 in F.No. 279/Misc./M-51/2022-ITJ has clarified that the Hon'ble Supreme Court, vide its judgment dated 04.05.2022 (2022 SCC Online SC 543), in the case of Union of India Vs. Ashish Agarwal, has held that notice u/s 148 of the Act, issued during the period beginning on 1stApril, 2021 and ending 30th June, 2021 are deemed to be considered as show cause notices issued under clause (b) of the Section 148A of the Act and has directed the Assessing Officers to follow the procedure with respect to such notices.Hence, in view of the CBDT Instruction as cited above, it is to be construed that an opportunity was provided to the assessee, in terms of clause (b) of section 148A, to explain why notice u/s.148 should not be issued on the basis of information which suggests that income chargeable to tax, has escaped assessment. It has also held that all the defences available to the assesses under section 149 of the new law and whateverrights are available to the assessing officer under the new law shall continue to the available.
4. During subsequent proceedings with reference to section 148A(b) in consequence to Hon’ble Supreme Court Order dated 04.05.2022 in the case of Union of India Vs. Ashish Agarwal, letter was issued on 27-05- 2022 (CBDT Time limit: Before 02.06.2022) providing to the assessee- firm, the information relied upon for issuance of extended reassessment notice, which was duly served on the assessee-firm through electronic mode on 30.05.2022. Later, order u/s 148A(d) was passed on 26.07.2022. After considering the information submitted by the assessee vide reply dated 15.06.2022 and basing on the material available on record which suggests that the income chargeable to tax, has escaped assessment, the AO opined that it is a fit case to issue notice u/s. 148 in this case for the A.Y. 2017-18 and obtained approval u/s 151 of the IT Act, 1961 from the competent authority on 25.07.2022. Accordingly, passed order u/s 148A(d) on 26.07.2022 (CBDT Time limit: One month from the end of the Page. No 6 I.T.A.No.15/VIZ/2025 Ananda Aqua Exports month in which assesses replv received i.e. before 31.07.20221 and again issued notice u/s.148 on 26.07.2022.
5. It is to conclude that the initial notice u/s. 148 of the Act was issued to the assessee on30.06.2021 and in consequence to CBDT Instruction No. 1/2022 dated 11.05.2022 and Hon,ble Supreme Court Order dated 04.05.2022, again notice u/s.148 was issued on 26.07.2022 and the assessee also filed their reply to notice u/s.148A(b) and the assessee has not contested any objection against the said notices even during the CIT(A) proceedings. Further, there is no lapse in the procedures as per section 148A(b), 148A(d) and 148 notices and timelines as per CBDT Instructions are duly followed. Hence, the assessee's contention that the notice issued u/s 148 of the Act, 1961 dt. 26.07.2022 is barred by limitation in view of the provisions of section 149(1)(b) of the IT Act, 1961 is not acceptable.”
9. She therefore pleaded that the Ld. AO has rightly followed the procedure laid down as per the unamended Act / Amended Act, in accordance with the Instruction of the CBDT and hence notice issued u/s 148 dated 26.07.2022 cannot be considered as invalid.
We have heard both the sides and perused the material available on record. Initially notice under section 148 was issued on 30.06.2021. The time limit for extension for issuance of notice under section 148 of the Act was extended up to 30.06.2021 vide notification No 38/2021 dated 27.04.2021. Further, we also find that the Ld. AO has followed CBDT Instruction 1/2022 dated 11.05.2022, consequent to the decision of the Hon’ble Supreme Court dated 04.05.2022 in the case of Union of India Vs. Ashish Agarwal, has issued notice under section 148A(b) of the Act on 27.05.2022. Considering the reply furnished by the assessee, order under section 148A(d) of the Act was passed on 26.07.2022. Subsequently, notice under section 148 of the Act was also issued
Page. No 7
I.T.A.No.15/VIZ/2025 Ananda Aqua Exports on 26.07.2022. We are therefore of the considered view that the Ld. AO has duly followed the procedure prescribed vide CBDT Instruction 1/2022 and was well within his jurisdiction within the extended time lines while issuing notice under section 148 of the Act on 26.07.2022. We therefore reject the arguments of the Ld.AR while dismissing the additional grounds challenging jurisdiction of the Ld. AO.
11. Further, on merits, Ld.AR submitted that Ld. CIT(A) has not provided adequate opportunity to the assessee and has passed an exparte order while dismissing the appeal in limine, without considering the provisions of section 250(6) of the Act. He therefore prayed for remitting the matter back to the file of Ld.CIT(A) by providing one more opportunity to the assessee, following principles of natural justice.
Per contra, Ld. DR submitted that Ld. CIT(A) has provided various opportunities but the assessee failed to respond to any of the notices issued by the Ld. CIT(A). She strongly objected for remitting the issue back to the file of Ld.CIT(A).
We have heard both the sides and perused the material available on record. It is an admitted fact that the Ld. CIT(A) has provided three opportunities i.e., on 09.09.2024, 17.09.2024 & 26.09.2024. The assessee has never responded to any of the opportunities provided by the Ld. CIT(A).
Page. No 8
I.T.A.No.15/VIZ/2025 Ananda Aqua Exports However, considering the prayer of the Ld.AR and following principles of natural justice, we consider it deem fit to provide one more final opportunity to the assessee to represent its case before the Ld. CIT(A). The Ld. CIT(A) is directed to provide one more opportunity of being heard to the assessee and the assessee is directed for furnishrelevant documents before Ld. CIT(A) without seeking unnecessary adjournments, failing which the Ld. CIT(A) is at liberty to pass order based on the material available on record. Further, we also direct, assessee to raise the additional ground with respect to the tax rate of 60% through the Taxation (Second Amendment) Act, 2016, before Ld. CIT(A). Accordingly, the ground raised by the assessee is partly allowed for statistical purposes.
Since the issue is remanded back to Ld.CIT(A), the other grounds assailing the jurisdiction of ITO are not adjudicated and thus kept open.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 13th October, 2025.