SHAIK SAIDA,NUZVID vs. INCOME TAX OFFICER, WARD-3(1), VIJAYAWADA

Brief facts of the case are that the assessee is an individual. As per the information available with the Department, the Ld. AO noticed that the assessee has deposited cash of Rs. 45,72,200/- and Rs. 32,02,000/- in the State Bank of India during the year under consideration. However, the assessee has not filed his return of income for the Asst. Year 2015-16. Therefore, case of the assessee was reopened and the order U/s. 148A(d) of the Act was passed on 18/04/2022 and notice U/s. 148 of the Act was issued on 18/04/2022. Later on the Ld. AO also issued notices U/s. 142(1) of the Act. Since, there was no compliance from the assessee, the Ld. AO issued show cause notices dated 12/09/2023 and 21/09/2023. However, the assessee did not respond to any of the notices / show cause notices nor 337 and 338/Viz/2025 Shaik Saida vs. ITO submitted any supporting documents / evidence in respect of the cash deposits. Therefore, the Ld. AO, considering the fact that the assessee has failed to comply with the notices issued and in the absence of any documentary evidence in support of the cash deposits made by the assessee, proceeded to complete the assessment U/s. 147 r.w.s 144 of the Act by treating the cash deposits aggregating to Rs. 77,74,200/- as unexplained money in the hands of the assessee U/s. 69A of the Act. Thus, the Ld. AO determined the total income of the assessee at Rs. 77,74,200/- and passed the assessment order dated 30/01/2024. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A).

The notice issued U/s. 148 of the Act, dated 18/04/2022 is barred by limitation in view of the provisions of section 149(1)(b) of the Act read with the proviso thereto. Since the notice was issued beyond the prescribed time limit of six years, the subsequent assessment order passed U/s. 147 r.w.s 144 r.w.s 144B of the Act dated 30/01/2024 is bad in law, void ab initio, and liable to be quashed.”

We admit the legal grounds raised by the assessee as the same goes to the root of the matter.

At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that notice under section 148 of the Act for the A.Y.2015-16 was issued on 18.04.2022 without following the procedure prescribed by the new provision inserted on 01.04.2021. Ld.AR also submitted that notice under section 148 of the Act dated 18.04.2022 is barred by limitation as per the first proviso to section 149(1)(b) of the Act w.e.f 01.04.2021. Ld.AR pleaded that the legal ground raised by the assessee as above, shall first be addressed before adjudicating the other grounds raised on merits. On this issue, Ld.AR 337 and 338/Viz/2025 Shaik Saida vs. ITO placed heavy reliance on the decision of Co-ordinate Bench in the case of Vaka Ghanta Nageswara Rao v. ITO in dated 10.07.2025.

Per contra, Ld. Departmental Representative [hereinafter in short “Ld. DR”] submitted that the mere procedural mistake cannot invalidate the assessment proceedings. She therefore prayed for upholding the order of the Ld.CIT(A).

We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities and the written submissions made by the Ld. AR. It is an undisputed fact that the assessment was reopened by issuance of notice under section 148 of the Act dated 18.04.2022. The grievance of the Ld.AR is since the notice has been issued after the commencement of new regime wherein the Finance Act, 2021 amended the provisions of section 147 to 151 of the Act, the Ld. AO ought to have followed the procedure prescribed as per the new regime. Ld.AR placed heavy reliance on the decision of the Hon’ble Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal (supra) wherein the Hon’ble Supreme Court has directed vide its order dated 04.05.2022 to treat the notice issued under section 148 of the Act as per the amended provisions of the I.T.

Further, we also observe that in the case of Vaka Ghanta Nageswararao v. ITO in the Co-ordinate Bench of Visakhapatnam held as follows: -

The first proviso of section 149(1)(b) prescribed under section 149(1)(a) of the old regime continues to exist for the A.Y. 2021-2022 and before. Consequently, notice under section 148 of the Act as per amended provisions cannot be issued for the period beyond six years from the end of the relevant assessment year has expired at the time of issuance of notice. In the instant case, the time limit of six years expires on 31.03.2022 and the notice u/s 148 issued on 07.04.2022 is not valid notice for the re assessment proceedings. From the observations of the Hon’ble Supreme Court and also by the Co-ordinate Bench of the Tribunal, it is clear that for the purpose of checking of the validity of the notices issued under section 148 of the Act under the new regime for the A.Y. 2021-2022 or prior years is whether the period of six years has expired at the time of issuance of such notice as per the unamended section to determine the validity of the notice under section 148 of the Act under the amended section. In the assessee’s case, the period of six years expires on 31.03.2022 and therefore notice dated 07.04.2022 under section 148 of the Act for the A.Y. 2015-16 is invalid and barred by limitation. In view of the above findings and in light of binding judicial precedents, we hold that the reassessment proceedings initiated for AY 2015-16 are without jurisdiction, and hence the notice issued under section 148 and subsequent proceedings are 337 and 338/Viz/2025 Shaik Saida vs. ITO quashed. Accordingly, the assessment completed under section 147 of the Act is liable to quashed. Thus the ground raised by the assessee is allowed.”

Further, the Hon’ble Supreme Court in the case of Deepak Steel and Power Ltd., v. Central Board of Direct Taxes [2025] 174 taxmann.com 144 (SC) held as follows: - “4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court inUnion of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- “19. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.”

As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.

Respectfully following the decision of the Hon’ble Supreme Court in Deepak Steel and Power Ltd., v. Central Board of Direct Taxes (supra) and consistently following the view taken in we are of the view that re-assessment proceedings 337 and 338/Viz/2025 Shaik Saida vs. ITO initiated for the A.Y. 2015-16 in the instant case are without jurisdiction and hence the assessment completed u/s. 147 of the Act consequent to the notice issued u/s. 148 of the Act dated 18.04.2022 cannot be sustained and liable to be quashed. Since the legal grounds are adjudicated in favour of the assessee by quashing the re- assessment order the other grounds raised by the assessee on merits are not adjudicated.

In the result, appeal of the assessee is allowed.

Brief facts of the case are that the assessee has not filed his return of income for the AY 2018-19. As per the information available with the Department, the Ld. AO noticed that the assessee sold has sold equity shares of Rs. 8,718/-, made cash deposits of Rs. 26,36,900/- and made cash withdrawals of Rs. 1,28,71,980/- during the Asst. Year under consideration. Thereafter, the case of the assessee was reopened U/s. 147 of the Act and notice U/s. 148 of the Act was issued on 18/04/2022. Thereafter, the Ld. AO issued 337 and 338/Viz/2025 Shaik Saida vs. ITO statutory notices however, the assessee remained non-compliant during the assessment proceedings. Therefore, the Ld. AO completed the assessment U/s. 147 r.w.s 144B of the Act on 26/02/2024 by making addition of Rs. 1,02,35,080/- [Rs. 1,28,71,980 – Rs. 26,36,900 cash deposit) towards unexplained expenses U/s. 69C r.w.s 115BBE of the Act and Rs. 8,718/- towards sale of equity shares. Thus, the Ld. AO determined the total income of the assessee at Rs. 1,02,43,798/- and passed the assessment order. The Ld. AO also initiated the penalty proceedings U/s. 270A of the Act for under-reporting of income. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A).

On appeal, the Ld.CIT(A) passed ex-parte order and dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal:

The proceedings initiated by the local JAO, instead of through automated allocation under faceless assessment, are in violation of the faceless assessment guidelines issued by the Central Board of Direct Taxes (CBDT) on 29/03/2022.

The Ld. NFAC failed to consider that the jurisdictional High Court of Telangana was supported contention raised on Ground No.5 above in a writ petition dated 14/09/2023, stating that proceedings carried out by local officers are void. Therefore, the appellant assets that the proceedings conducted in this case should be deemed void-ab-initio due to non-compliance with faceless assessment guidelines.

At the outset, the Ld. AR submitted before us that the Ld. CIT (A) has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A) in order to provide one more opportunity to the assessee of being heard.

Ld. DR, on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee has appeared before the Ld. CIT (A) nor responded to the hearing notices issued. It was further submitted 337 and 338/Viz/2025 Shaik Saida vs. ITO that the Ld. CIT (A) had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A) does not call for any interference.

We have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case, we find that the Ld. CIT (A) had posted the case on seven occasions. However, there was no response / representation on behalf of the assessee before the Ld. CIT(A) on the dates of hearing nor the assessee filed any details/ submissions with regard to the source of alleged cash deposits before the Ld. CIT(A). Therefore, the Ld. CIT (A) was left with no other option except to adjudicate the appeal ex-parte. In this situation, the Ld. AR prayed for one more opportunity before the Ld. CIT(A). Considering the prayer of the Ld. AR and in the interest of justice, we hereby remit the matter back to the file of Ld. CIT (A) in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard. At the same breath, we also hereby caution the assessee to promptly co-operate before the Ld. CIT (A) in the proceedings failing which the Ld. CIT (A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record with a direction to the assessee to cooperate in the remand proceedings before the Ld. CIT (A) failing which the Ld. Revenue Authorities are at liberty to pass appropriate

In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.

This appeal filed by the assessee against the order of the Ld. CIT(A), dated 25/03/2025 arising out of the order passed U/s. 271AAC1 of the Act.

In this appeal, the Ld. AO completed the assessment U/s. 147 r.w.s 144 r.w.s 144B of the Act on 26/02/2024 determining the total income at Rs. 1,02,43,798/- which includes addition of Rs. 1,02,35,080/- towards unexplained expenditure U/s. 69C of the Act and Rs. 8,718/- towards business income. Further, the Ld. AO also initiated the penalty proceedings U/s. 271AAC(1) of the Act and issued notice U/s. 274 r.w.s 271AAC(1) of the Act, dated 29/02/2024 and the same was served on the assessee. However, there was no response / compliance from the assessee to the penalty notices issued. Therefore, the Ld. AO levied penalty of Rs. 7,99,016/-. Against the said penalty order, the assessee preferred an appeal before the Ld. CIT(A).

On appeal, the Ld.CIT(A) passed ex-parte order and dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the 06 grounds of appeal which revolve around the levy of penalty by the Ld. AO and decision of the Ld. CIT(A) in sustaining the same.