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Facts
The assessee received foreign remittances totaling Rs. 1,58,83,009/- in FY 2017-18. The assessee claimed to have received an export order for textile items and an advance payment of Rs. 1,58,91,562/-. The assessee purchased material worth Rs. 1,75,23,165/- to execute the order and booked sales of Rs. 26,30,620/-. A significant portion of the advance, Rs. 1,32,60,942/-, remained unexplained.
Held
The Tribunal held that the notice u/s 148A(b) was not accessed by the assessee, thus no representation could be made. Citing a Punjab and Haryana High Court order, the Tribunal found the facts similar and concluded that the assessment order and the CIT(A) order deserved to be set aside.
Key Issues
The primary issue was whether the assessment proceedings and the subsequent order were valid, given the assessee's claim of non-service of notice and the reliance on a High Court judgment regarding e-portal service of notices.
Sections Cited
147, 144B, 142(1), 139(1), 69A, 115BBE, 148A(b), 148A(d), 148, 151, 133A, 282(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, G: NEW DELHI
Before: Ms. MADHUMITA ROY & SHRI BRAJESH KUMAR SINGH
This appeal has been preferred by the assessee against the order dated 21.04.2025 of the National Faceless Appeal Centre (NFAC) [hereinafter referred to as the ‘Ld. CIT(A)] Delhi, pertaining to Assessment Year 2018-19, arising out of Assessment order dated 17.03.2023 passed under Section 147 r.w.s.144B of the Income-tax Act, 1961(hereinafter referred to as ‘the Act’).
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin 2. Brief facts of the case: The assessee was in receipt of foreign remittances to the tune of the Rs. 1,58,83,009/- in his bank account maintained with the J & K Bank during the F.Y. 2017-18 relevant to the A.Y 2018-19. The assessee submitted before the Ld. AO that he had received an export order for supply of textile item, against the same the assessee had received advance payment amounting to Rs. 1,58,91,562/- on 17th July 2017 and on 10th August 2017 respectively. Further, it was submitted by the assessee that to execute the sale order, the assessee had purchased material from various parties amounting to Rs. 1,75,23,165/- during the year and against this export order, the assessee had supplied some material to party and booked sale amounting to Rs.26,30,620/- during the year. It was further submitted after the export amounting to Rs.26,30,620/- the party had told the assessee to hold the rest of the order and during the year further no other sale was booked. Further, it was submitted that the assessee had disclosed the amount as received under the advance from customer in ITR filed u/s 139(1) and the amount as received was being used to purchase the material and the material so purchased which was not exported was shown in Inventory in filed ITR.
2.1 The AO issued a notice u/s 142(1) of the Act on 17.02.2023 during the assessee to submit further details as mentioned on page no. 3 of the assessment order.
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin It was followed by further letter dated 02.03.2023 and the relevant extract of the same is reproduced as under:
“It is pertinent to mention here that the details of return of income filed by you in the succeeding years are as follows: Sr. No. A.Y. Type of Head of Income Income ITR shown 1 2019-20 ITR-1 Income from other Rs. sources 2,89,400/- 2 2020-21 ITR-1 Income from salary Rs. 2,65,710/- 3 2021-22 ITR-1 Income from Salary Rs. & PGBP 3,60,721/- & Rs. 2,19,227/- 4 2022-23 ITR-1 Income from salary Rs. 5,50,000/-
As stated by you in your reply dated 02.02.2023 that the balance amount of Rs. 1,32,60,942/- has duly been shown by you in your ROI. In this regard, you are requested to state that when the said transaction was completed with the concerned party. If the above transaction was completed in succeeding years then why the same amount was not offered by you for taxation purpose as per ROI filed by you, it is revealed that you have filed different ITRs forms in different preceding and succeeding years. In this regard you are also requested to clarify that what is the reason behind for filling the different types of ITRs in different years. As per the above table it is evident that you have been showing your income in different heads in different years. In view of the above, it is clear that the said amount of Rs.1,32,60,942/- is left as unexplained income in your hand. You are hereby requested to clarify the discrepancy with the supporting documents. It is hard to believe by stretches of imagination that you have received only one export order during the year under consideration. Please note that non-compliance to this notice may lead to initiation of penalty u/s.272A(1)(d) of the I. T. Act, 1961.
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin 2.2. The AO noted that the assessee did not reply to the said notice and made the addition of Rs. 1,32,66,942/- u/s 69A of the Act. The relevant extract of the said order is replaced as under:
“ The assessee choose not to reply the above mention notice dated 02.03.2023 which clearly indicate that the assessee has nothing to say in this matter. 3.1.1. During the course of assessment proceedings, in his response dated 02.02.2023, the assessee has stated that during the F.Y.2017-18 relevant to the A.Y 2018-19 he received an export order for supply of textile item, against the same the assessee has received advance payment amounting to Rs.1,58,91,562/- 17th July 2017 and on 10th August 2017 respectively. Against this export order, the assessee supplied some material to the party and booked sale amounting to Rs.26,30,620/- during the year which was shown by the assessee in his ITR filed u/s 139(1) of the Act. In response to the notice us/ 142(1) dated 02.03.2023 the assessee failed to provide the details of balance amount received as advance amounting to Rs. 1,32,60,942/- (Rs.1,58,91,562/-In response to the notice u/s 142(1) dated 02.03.2023 the assessee failed to provide the minus Rs.26,30,620/-). Further, on perusal of your ITR for the A.Y.2018-19, the amount of Rs. 1,58,71,460/- is shown as Finished Goods/Traded Goods in Inventories but the amount shown in the ITR for the Α.Υ.2019-20. In this regard, the assessee has also not been able to state that when the said transaction was completed with the concerned party as the details of the same is also not provided in his succeeding ITRs. It is also pertaining to mention here that the assessee has been filing different types of ITRs in different year and the assessee could not explain the reason behind filling the different types of ITRs in different years. In view of the above, it is clear that the said amount of Rs.1,32,60,942/- (Rs.1,58,91,562/-minus Rs.26,30,620/-) is left as unexplained income in the hand of the assessee. Hence, by virtue of provision of the Section 69A of the I.T. Act, 1961, the same are liable to be treated as income of the assessee. …….. Also it is a well established fact that the burden of proof lies on the assessee to prove the sources of each transactions. However, the assessee failed to discharge the duties and failed to furnish any explanation in this regard. Hence, in view of the above facts, the amount of Rs.1,32,60,942/- is treated as income of the assessee u/s 69A r.w.s.
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin 115BBE of the I.T.Act, 1961 and the same is added to the total income of the assessee…...”
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A), who dismissed the appeal of the assessee on merits by observing as under:
“6.1 Ground No.1 to 4: In this ground the appellant has challenged the addition worth Rs. 13260942/- U/s 69A of the Income Tax Act. During the course of scrutiny it was found that the appellant has received foreign remittances worth Rs. 15883009/- in the bank account. The AO found that the appellant had received an export order for the supply of textile item and for that the appellant had received advance payment of Rs. 15891562/-. The AO found that the appellant supplied material worth Rs. 2630620/- during the year. Despite various notices, the appellant failed to provide the details of the balance amount received worth Rs. 13260942/-. Hence the AO made the addition of this amount u/s 69A. 6.1.1 Now before me in the appellate proceedings, the appellant has filed written submission. The appellant has mentioned that the supply of Rs. 2630620/- has been completed during the year. The appellant has mentioned that no business activity has taken place during the year 2018-19 and 2019-20. The appellant has mentioned that it has shown the amount of Rs. 13260942/- as liability in the year 2017-18. The appellant has further mentioned that it has filed ITR for the year 2020-21 but failed to report the stock in hand in the books of accounts. 6.1.2. The contention of the appellant cannot be accepted as no details of purchases, sale, stock has been filed before me. No stock register and the books of accounts have been filed before me. No details of godown where manufacture goods are kept have been filed before me. It is very difficult to believe that someone will send Rs. 13260942/- to a party, and then it will forget the amount for coming years. The matter pertain to A.Y 2018-19, but even in the recent submission, the appellant has not been able to prove that any manufacturing activity of this amount worth Rs. 13260942/- has taken place. Hence it is clear that the amount worth Rs. 13260942/- remained unexplained before the AO and before me in the appellate proceedings. Hence the addition of the AO is confirmed and appeal of the appellant is dismissed.” (emphasis supplied by us)
Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal:
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin “1. On facts and circumstances of the case, the ld. AO has erred in passing the assessment order u/s 147/144B of the Act, based on Invalid notice (SCN) u/s 148A(b) dated 21.03.2022 and invalid order /s 148A(d) dated 30.03.2022 and consequential invalid jurisdictional notice u/s 148 dated 30.03.2022 and there is total non- application of mind at all stages of proceedings.
That the impugned assessment order passed u/s 147/1448 dated 17.03.2023 is invalid as the same is based on illegal and unlawful reopening action made u/s 148/148A contrary to provisions of the 1961 Act and mandatory CBDT guidelines (non-supply of sanction u/s 151 along with notice us 148). 3.That assessment order passed u/s 147/144B dated 17.03.2023 and impugned first appeal order dated 21.04.2025 are both invalid being made without requisite/valid sanction u/s 151 of 1961 Act.
That assessment order passed u/s 147/1448 dated 17 03.2023 is invalid as there is no proper service of the impugned notice issued u/s 148A(b) dated 21/03/2022 and consequential impugned order u/s 148A(d) and notice u/s 148 both dated 30/03/2022 of the Act.
On the facts and circumstances of the case, the learned CIT (Appeals) has erred in law in upholding the addition of Rs. 1.32,60,942/- being made u/s 69A as undisclosed income u/s 69A of the Act, and also erred in holding that the advance amount received from a foreign client as unexplained money u/s 69A.
On the facts and circumstances of the case, the learned CIT (Appeals) has erred in law in sustaining the addition of Rs. 1,32,60,942/- without considering/ appreciating the details of sale, purchase and stocks as submitted along with written submissions, during the assessment as well as appellant proceedings.
On the facts and circumstances of the case, the learned assessing officer and the learned CIT (Appeals) both have failed to appreciate the scope of section 115BBE of the Act, which is not applicable to the facts of case of the assessee.
That the appellant craves leave to add, alter or delete the above grounds of appeal at the time of hearing.”
5. Ground nos. 1 , 2 and 3 of the appeal challenges the proceedings initiated u/s 148A(b) dated 21/03/2022 and the order u/s 148 A(d) and the notice u/s 148 of the ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin Act, both dated 30.03.2022, was done on account of non-application of mind at all stages of the proceedings. It was further contended that the said orders were made without requisite / valid sanction u/s 151 of the Act. Further, it has been submitted the copy of the approval granted u/s 151 of the Act was not supplied to the assessee. In this regard, a report was submitted by the AO, and the relevant extract of replies in respect of ground nos. 1, 2 and 3 are reproduced as under:
“ Ground No. 1: On facts and circumstances of the case, the ld. AO has erred in passing the assessment order u/s 147/144B of the Act, based on invalid notice (SCN) u/s 148A(b) dated 21.03.2022 and Invalid order u/s 148A(d) dated 30.03.2022 and consequential invalid jurisdictional notice u/s 148 dated 30.03.2022 and there is total non-application of mind at all stages of proceedings. Comments: The contention of the assessee is not accepted. The assessment proceedings have been initiated strictly in accordance with the provisions of sections 147, 148, 148A(b), and 148A(d) of the Income Tax Act, 1961. A valid show- cause notice under section 148A(b) was issued on 21.03.2022, providing the assessee sufficient opportunity to present its explanation. However, the assessee failed to file any reply or representation within the stipulated time despite due service of notice through the e-proceedings portal. In view of the assessee's non-compliance, the order under section 148A(d) dated 30.03.2022 was passed after due consideration of the material available on record and with the prior approval of the specified authority. Consequently, the notice Issued under section 148 on 30.03.2022 is valid and in accordance with law. The reasons recorded for reopening were based on tangible Information suggesting income escapement, and the same were duly examined. Therefore, the allegation of invalid notice or non-application of mind at any stage of the proceedings is factually incorrect and devoid of merit. The assessment order under section 147/144B has been passed only after proper analysis of the facts and in compliance with statutory provisions. Ground No. 2: That the impugned assessment order passed u/s 147/144B dated 17.03.2023 is invalid as the same is based on illegal and unlawful reopening action made u/s 148/148A contrary to provisions of the 1961 Act and mandatory CBDT guidelines (non-supply of sanction u/s 151 along with notice u/s 148).
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin Comments: The contention of the assessee is baseless and devoid of merit. The assessment order passed under section 147/144B dated 17.03.2023 is valid and has been framed strictly in accordance with the provisions of the Income Tax Act, 1961. The initiation of proceedings under sections 148 and 148A was made after obtaining the due and valid prior approval of the competent authority under section 151 of the Act. A copy of the order sheet evidencing proper prior approval is enclosed herewith as Annexure-A for reference. Therefore, the allegation that the reopening is "illegal or contrary to law" on account of non-supply of sanction under section 151 is incorrect and untenable. Accordingly, the assessment order passed under section 147/144B is valid, lawful, and sustainable in the eyes of law. Ground No. 3: That assessment order passed u/s 147/144B dated 17.03.2023 and impugned first appeal order dated 21.04.2025 are both invalid being made without requisite/valid sanction u/s 151 of 1:961 Act. Comments: The requisite approval under section 151 of the Income Tax Act, 1961, was duly obtained from the competent authority prior to issuance of order u/s 148 A(d). A copy of the order sheet evidencing the same is enclosed as Annexure-A. Hence, the allegation of absence or invalidity of sanction under section 151 Is unfounded and devoid of merit.”
5.1. We have heard both the parties and perused the material available on record. The AO in the notice u/s 148A(b) of the Act dated 21.03.2022 had provided the following information to the assessee:
“A survey action u/s 133A was conducted on J & K bank corporate Head Quarter MA Road, Srinagar on 11 June 2019. During the analysis of remittances data/information it was observed that the amount reflected in the remittance data (bill IDs) obtained form the bank does not tally with the the bank statement. amounts reflected in Accordingly clarification was sought from the Forex department of J & K bank, corporate HQ, and Srinagar for explaining the differences. The Bank stated that after receiving the bill from party/customers, bill amount is firstly calculated on notional rate (decided by the bank from time to time), however finally at the time of realization of bill, it is calculated on the actual settlement rate/Exchange rate on that day. The assessee is found to have undertaken transaction relating to foreign remittances to the tune of Rs. 15883009/- during the F.Y. 2017-18.” 8
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin 5.2 Thus, it is seen that the assessee had received information in this case pursuant to survey u/s 133A of the Act conducted in the J & K Bank, Srinagar. The assessee also has a bank account in J & K Bank and the AO after verification as per the above noting providing the information to the assessee. Thus, the AO had applied his mind to the information available before him before forwarding to the assessee.
5.3 Further, in respect of ground no. 2, the department has reproduced the relevant ordersheet noting of the proceedings u/s 148 of the Act, dated 30.03.2022, wherein it is noticed that the Ld. PCIT has granted the necessary approval. The relevant extract of the same is reproduced as under:
“ Notings/Remarks: From the examination of the information received and mate rial available on record, it is inferred that there is escapement of income in the hands of the aforesaid assessee for the assessment year under consideration. Accordingly, it is a fit case for issuance of notice u/s 14 8 of the I.T. Act, 1961. Approvals are hereby granted for issuance of order u/s 148A (d) and subsequent issuance of notice u/s 148 in terms of prov iso to section 148 read with section 151.”
5.4 In view of the facts submitted by the AO, in respect of ground no. 1, 2 and 3 and in view of our above discussion, we are satisfied that the notice u/s 148A(d) dated 30.03.2022 and the consequential notice u/s 148 of the Act dated 30.03.2022 were validly issued in this case, after satisfying the requirements of the said sections along with the notice u/s 148A(b) of the Act, which was issued on 21.03.2022. Further, we also note that there is no requirement of supply of sanction of the ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin competent authority along with the notice u/s 148 of the Act as contended by the assessee. Regarding the legal validity of the said proceedings that it was served only on the e- filing portal and not on his e-mail, the matter is being discussed later in this order.
In ground no. 4, the assessee has challenged the validity of the assessment framed u/s 147 /144B of the Act on 17.03.2023, on the ground that there was no service of the impugned notice issued dated 21.3.2022 and consequently impugned order u/s 148A(d) and notice u/s 148 both dated 30.03.2022 of the Act, are invalid. In this regard, the AO submitted a report, which is reproduced as under:
“ Ground No. 4: That assessment order passed u/s 147/144B dated 17.03.2023 is invalid as there is no proper service of the impugned notice issued u/s 148A(b) dated 21/03/2022 and consequential impugned order u/s 148A(d) and notice u/s 148 both dated 30/03/2022 of the Act. Comments: The contention of the assessee is incorrect and baseless. The assessee has been registered on the e-filing portal since 14.04.2017 (Screenshot attached), and all statutory notices were duly issued and served. The system automatically sends email and SMS alerts to the registered email ID and mobile number upon issuance of any notice. It is further noted that the assessee has been regularly responding to notices issued through the same e-filing portal in other proceedings, which confirms that the assessee has full access to and awareness of such communications. Therefore, the notices issued under sections 148A(b) dated 21.03.2022, 148A(d) dated 30.03.2022, and 148 dated 30.03.2022 were validly served, and the allegation of improper or non-service is devoid of merit.”
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin 6.1 In this regard, the assessee has relied upon the order dated 04.03.2024 of the Hon’ble Punjab and Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship, Ludhiana through its Authorized Signatory Sh. Bharat Goel vs. Commissioner of Income Tax Exemption, Chandigarh, CWP- 21028-2023 (O & M) to submit that the notice u/s 148A(b) of the Act dated 21.03.2022 was served only on the e-filing portal of the assessee and not on the email of the assessee as provided u/s 282(1) of the Act r.w.s. 127 of the IT Rules, 1962, where it is mandated that the requisite notice by the AO should be served upon the email of the assessee. In this regard, the assessee referred to page no. 4, 9 and 11 of the paper book, where such notices were issued to the assessee. It was further submitted the Hon’ble Court in the aforesaid case had quashed the proceedings u/s 12A(1)(ac)(iii) of the Act, initiated by the CIT(Exemption), Chandigarh, which was not sent on the petitioner’s email and was only reflected on the e-portal of the Department.
On the other hand, the Ld. Sr. DR, while relying upon the report of the AO, submitted that the Hon’ble Punjab and Haryana High Court in the aforesaid case, while allowing the writ petition and quashing and set aside the impugned order, had given the department an opportunity of hearing to the petitioner to represent its case. In light of these findings of the Hon’ble High Court, the Ld. Sr. DR submitted that ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin the matter may be set aside to the file of the AO for examination of the facts afresh in this case.
We have heard both parties and perused the material available on record. In the aforesaid cited case, the Hon’ble High Court referred to the various methods regarding the services of notice u/s 282(1) of the Act r.w. Rule 127 of the I.T. Rules, 1962. After considering the above provisions, the Hon’ble High Court held that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated in the above section. The Hon’ble High Court further observed that the provisions do not mention of communication to be “presumed” by placing notice on the e-portal and a pragmatic view has to be adopted always in these circumstances. The Hon’ble Court further observed that an individual or a company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. and the principles of natural justice are inherent in the income tax provisions and the same are required to be necessarily followed. The Hon’ble Court further observed that it was of the firm view that the petitioner has not been given sufficient opportunity to put up his pleas with regard to the proceedings under section 12A(1)(ac)(iii) of the Act of 1961 and as he was not served with any notice. Finally, the Hon’ble Court held that, therefore, the petitioner
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter.
8.1 In the present case also, the notice u/s 148A(b), of the Act was issued on the e-portal of the assessee, which was not accessed by the assessee and, therefore, no representation could be made in this case by the assessee. In view of the above findings of the Hon’ble High Court as relied upon by the assessee and considering that the facts of the present case are similar to the that of the cited case, and further, no finding has been given by the AO / Ld. CIT(A) in respect of the documents filed before them, as contained on page no. 61 to 155 of the Paper Book, including the letter from the foreign buyer for holding the further supply (placed at page no. 154 - 155 of the paper book) we are of the considered view that the impugned assessment order and the order of the Ld. CIT(A) deserves to be set aside. Accordingly, the order of the Ld. CIT(A) is set aside and the matter is restored to the file of the AO for deciding the issue afresh in accordance with law, after providing due opportunity to the assessee.
In view of our above discussion, the ground nos. 1 to 4 of the appeal are decided as above. Further, ground nos. 5, 6, and 7 of the appeal of the assessee on merits are allowed for statistical purposes.
ITA No.- 3958/Del/2025 Rajput Mohammadmuntasim Tashbihuddin 10. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 28th January, 2026.