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Facts
The appeals were filed by the revenue challenging the deletion of an addition of Rs. 1,38,00,000 made by the AO, which the CIT(A) held to be business expenditure. The assessee also filed cross-objections challenging the validity of the notice issued under Section 148 of the Act.
Held
The Tribunal held that the addition made by the AO on account of out-of-books cash expenditure (murrum expenses) was unjustified as it was in the nature of business expenditure and the matter was covered by a coordinate bench decision. The Tribunal also held that the notice issued under Section 148 of the Act was validly issued by the jurisdictional Assessing Officer, considering the search and seizure action and subsequent centralization of the case.
Key Issues
Whether the addition made by the AO for out-of-books cash expenditure was wrongly deleted by the CIT(A)? Whether the notice issued under Section 148 of the Act was valid, considering the sanction and issuing authority?
Sections Cited
69C, 148, 151, 151A, 132, 144B, 143(3), 147, 250
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI BIJAYANANDA PRUSETH
The present appeals have been filed by the revenue and cross objections filed by the assessee challenging the different impugned orders dt. 20.02.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment years 2013-14, 2014-15 & 2015-16.
Since all the issues involved in these appeals and cross objections are common and identical and belongs to one assessee therefore, they have been clubbed, heard together and consolidated order is being passed. Firstly we shall take A.Y 2013-14 as lead case and facts narrated therein.
, A.Y 2013-14 The revenue has raised the following grounds of appeal:
1. Whether the Ld.CIT(A) erred in deleting the addition made by the AO for Rs. 1,38,00,000/- u/s 69C of the Act holding them as business expenditure of the assessee on the issue of out of books cash expenditures (murrum expenses) and considering that there are no specific evidences as regards the murrum expenses of the year consideration without appreciating the findings of the assessing officer for making the addition? 2. Whether the Ld.CIT(A) erred in stating that the AO has made addition only on the basis murrum expenses in trial balances ignoring the facts and circumstances of the case established by 2
J Kumar Infraprojects Ltd, Mumbai the Assessing Officer that murrum expenses trial balances supported by the corroborative evidences unearthed during the search which provide project wise murrum expenses in cash. 3. The appellant craves leave to add, delete, modify the grounds of appeal before or at the time of hearing.
3. The only effective ground raised by the department relates to challenging the order of Ld. CIT(A) in deleting the additions made by the AO of Rs. 1,38,00,000/- u/s 69C of the Act.
We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that this issue is squarely covered by the decision of the coordinate bench of ITAT in assessee’s own case for the A.Y 2016-17, dated 03.07.2025 and the operative portion of the order is reproduced here in below:
71 In view of the finding given hereinabove, the entire addition made in respect of out of books expenses gets deleted in all the years. We also hold that this being a search case, there is no justification for making any estimated addition towards out of books cash expenses more so when the figures in the trial balance digital data against the heading murrum could not be assumed and presumed to be wholly and fully depicting out of books expenses in cash for the detailed reasons stated hereinabove. Thus, the estimated addition made for the AY 2016-17, AY 2017-18 and partly in AY 2018-19 is hereby deleted and the Ld. CIT(A) order in this regard is upheld. For 3 J Kumar Infraprojects Ltd, Mumbai all the other years including AY 2018-19, other than estimated addition made by the AO, the out of books expenses are directed to be deleted in its entirety and to this extent, the order passed by the Ld. CIT(A) and the addition made on estimated basis is hereby deleted.
Therefore, respectfully following the decision of the Coordinate Bench of ITAT in assessee’s own case for the A.Y 2016-17 and while adhering to the principles of judicial consistency and considering the fact of the present case. We find no reasons to interfere into or to deviate from the lawful findings so recorded by Ld. CIT(A). Hence respectfully following the decision of the Coordinate Bench in assessee’s own case we dismiss the grounds raised by the revenue.
In the result, the appeal filed by the revenue stands dismissed.
& 2885/Mum/2025, A.Y 2014-15 & 2015- 16.
As the facts and circumstances in these appeals are identical to for the A.Y 2013-14 (except variance in days of delay) and the decision rendered in above paragraph would apply mutatis mutandis for these appeals also. Accordingly, the grounds of appeal of the present appeals also stands dismissed.
J Kumar Infraprojects Ltd, Mumbai CO No. 200/Mum/2025, A.Y 2013-14
The assessee has raised following grounds in cross objection.
The Ld. Commissioner of Income-tax (Appeals) (CIT(A)) failed to appreciate that the Ld. Assessing Officer (AO) erred in issuing a Notice under section 148 of the Act without obtaining a properly signed approval under section 151 of the Act; hence the order is bad in law and without jurisdiction.
Without prejudice to the above the Ld. CIT(A) failed to appreciate that the Ld. AO erred in issuing a Notice under section 148 of the Act in violation of section 151A of the Act read with CBDT Notification 18 of 2022 dated March 29, 2022 as the same has to be issued by the Faceless Assessing Officer; hence the order is bad in law and may be quashed on jurisdictional issue.
Without prejudice to the above, the order of the CIT(A) rightly deleted the addition of Rs. 1.38 Crore under section 69C of the Income-tax Act, 1961 without any evidence. 9. First of all we deal with the legal issues raised in the additional grounds of appeal of the Assessee which relates to challenging the issue of notice u/s.148 of the Act for not taking probably signed approval u/s 151 of the Act by the ‘appropriate authority’. In this regard Ld. AR submitted that this issue is squarely covered by the decision of the coordinate bench of ITAT in assessee’s own case for the A.Y 2016-17, dated 03.07.2025 and the operative portion of the order is reproduced here in below:
On the contrary Ld. DR has placed reliance on the decision of Chattisgarh High Court in the case of Bharat Krishi Kendra v. UOI [2022] 444 ITR 584wherein it is held that in para 14 of the order that unsigned approval granted u/s.151 of the Act could not treated as invalid considering the provision of sec.282A of the Act which provides 5
J Kumar Infraprojects Ltd, Mumbai that notice or other documents to be issued for the purpose of the Act of 1961 by any income-tax authority shall be deemed to be authenticated if name and designation is provided. In approval under Section 151 of the Act of 1961, name, designation and office is printed. Hence, submission of learned counsel for petitioner that approval is not digitally signed is also not sustainable, more so when it bears DIN & Document Number.
However, the decision in Bharat Krishi Kendra, supra, does not refer to the provisions of section 282A(1) of the Act which clearly mandates signing the notice or document prior to issue of the same. In fact, sub-section (2) to section 282A of the Act merely authenticates the notice or document issued after the same is signed and both these provisions of sub-section (1) and sub-section (2) of section 282A of the Act has to be read conjointly and not independent of each other else sub-section (1) to section 282A of the Act would become redundant. Further, this decision of Chattisgarh High Court in Bharat Krishi Kendra, supra, is rendered by single judge bench whereas the decisions of Allahabad High Court in the case of Daujee Abhushan Bhandar, supra, and Vikas Gupta, supra, are rendered by division judge bench. Therefore as per judicial discipline the decisions of Division bench has binding precedent as compared to single –judge bench.
Even otherwise, there is no decision of jurisdictional High Court on the issue at hand and thus, if there are divergent views of non- jurisdictional High Courts on the subject, the view that favour the Assessee needs to be adopted as held by the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd.[1973] 88 ITR 192 (SC)wherein it is held that if the language is capable of more than one meaning, the Court needs to adopt the interpretation that favours the Assessee needs to be adopted.
In view of the above, it is held that the sanction granted u/s.151 of the Act without signing the same is invalid and therefore the Assessing Officer did not assumed jurisdiction to issue notice u/s.148 of the Act. Hence, the notice issued u/s.148 of the Act is held to be bad in law for want of valid assumption of jurisdiction and is hereby quashed. Consequently, the order passed u/s.143(3) r.w.s. 147 of the Act dated 31.03.2024 for AY 2016-17 is bad in law and quashed.
The additional ground of appeal of the Assessee on the issue of validity of unsigned sanction issued u/s.151 of the Act is allowed. 6
J Kumar Infraprojects Ltd, Mumbai
Thus after hearing heard the parties and respectfully following the decision of Coordinate Bench of ITAT in assessee’s own case for the A.Y 2016-17 and adhering to the principles of judicial consistency and considering the fact of the present case. We hold that the sanction granted u/s.151 of the Act without signing the same is invalid and therefore the Assessing Officer did not assumed the jurisdiction to issue notice u/s.148 of the Act. Hence, the notice issued u/s.148 of the Act is held to be bad in law for want of valid assumption of jurisdiction and is hereby quashed. Consequently, the order passed u/s.143(3) r.w.s. 147 of the Act for AY 2013-14 is bad in law and quashed and then the same stands allowed.
The second additional ground of appeal raised by the Assessee relates to challenging the validity of notice issued u/s.148 of the Act by jurisdictional Assessing Officer (JAO in short) instead of Faceless Assessing Officer (FAO in short) as per the provisions of section 151A of the Act read with CBDT notification 18 of 2022 dated March 29, 2022.
12. In respect of this issue, the Assessee has contended that notice u/s.148 of the Act is issued by JAO, which instead ought to have been issued by FAO relying upon the CBDT notification no.18 of 29.03.2022 as also various decisions rendered. However 7
J Kumar Infraprojects Ltd, Mumbai we found that this issue is squarely covered by the decision of the coordinate bench of ITAT in assessee’s own case for the A.Y 2016-17, dated 03.07.2025 and the operative portion of the order is reproduced here in below:
27 We have heard the counsels for both the parties, perused the material placed on record, considered the rival contentions and also considered the submission filed by the Assessee and Ld. DR as also the rejoinders filed by the Assessee. The contention of the Assessee that notice u/s.148 of the Act should be issued by FAO and not by JAO is not acceptable for more than one reason. Firstly, there was search and seizure action carried out u/s.132 of the Act in the case of Assessee on 11.10.2022 and in pursuance to the same, the case of the Assessee was centralised vide order no. CCIT (C-2/Centralisation/J Kumar Grp/2022-23) dated 27.12.2022 and there is no dispute in respect of the same. The CBDT has issued instruction i.e. CBDT Order F. No. 187/3/2020-ITA-1 dated 06.09.2021 (copy of which is placed on record) clearly and explicitly excludes cases assigned to Central Charge from the ambit of faceless assessment u/s.144B of the Act.
28 The decisions relied upon by the Assessee of the Hon’ble Bombay High Court in the case of Hexaware and others, supra, were not relating to search and seizure cases being centralised and being outside the ambit of faceless assessment u/s.144B of the Act. Moreover, the later decision of the Hon’ble Bombay High Court in the case of J D Printers Pvt. Ltd. v. ITO (2024) 468 ITR 178 (Bom) has not followed the decision in the case of Hexaware, supra, in view of the subject matter as to whether the notice u/s.148 of the Act to be issued by JAO or FAO being stayed by Hon’ble Supreme Court in the case of Hexaware, supra, and thus stayed the proceedings arising from notice issued u/s.148 of the Act instead of quashing the same. Thus, the decision of the Hon’ble Bombay High Court in the case of Hexaware, supra, being stayed by Hon’ble Supreme Court,the notice issued by JAO in the present case is held to be valid and not quashed. The Ld. DR has also placed reliance on various other High Court decisions wherein after considering the decision in the case of Hexaware, supra, the Courts have taken the view that notice issued u/s.148 of the Act by JAO and sent to faceless regime was in due compliance of the provisions of the scheme.
J Kumar Infraprojects Ltd, Mumbai 29 Another reason for not following the decision of Hexaware, supra, is that in the present case, search and seizure action was carried out u/s.132 of the Act and the cases were centralised. The case of the Assessee falls in Explanation 2 to section 148 of the Act whereas the case of Hexaware, supra, falls in Explanation 1 to section 148 of the Act. In respect of this, decision relied by the Ld. DR of Hon’ble Gujarat High Court in the case of Talati and Talati LLP v. ACIT [2024] 469 ITR 643 (Guj) applies wherein in para 27 of the said order, distinction is drawn between notice u/s.148 of the Act issued under Explanation 1 and Explanation 2 to section 148 of the Act.
In the light of the above, we hold that the notice u/s.148 of the Act issued by JAO could not be treated as invalid and the said notice is correctly issued by JAO considering the entire gamut of the case and the provisions of the Act and the faceless regime. This additional ground of the Assessee is thus dismissed 13. Therefore, respectfully following the decision of the Coordinate Bench of ITAT in assessee’s own case for the A.Y 2016-17 and adhering to the principles of judicial consistency and considering the fact of the present case. We hold that the notice u/s.148 of the Act issued by JAO could not be treated as invalid and the said notice is correctly issued by JAO considering the entire gamut of the case and the provisions of the Act and the faceless regime. Therefore, this additional ground of the Assessee is thus dismissed.
Ground No. 3, Since we have already adjudicated this ground in revenue’s appeal and given relief to the assessee on merits of additions, thus this ground would become academic in nature and hence thus does not require specific adjudication.
In the result, the CO filed by the assessee stands allowed.
J Kumar Infraprojects Ltd, Mumbai Co. No. 201 & 202/Mum/2025, A.Y 2014-15 & 2015-16.
As the facts and circumstances in these COs are identical to CO No 200/Mum/2025 for the A.Y 2013-14 (except variance in days of delay) and the decision rendered in above paragraph would apply mutatis mutandis for these COs also. Accordingly, the grounds of appeal of the present COs also stands allowed.
In the result, all the appeals filed by the revenue stands dismissed and all the COs filed by the assessee stands allowed.
Order pronounced in the open court on 26/02/2026 Sd/- Sd/- (BIJAYANANDA PRUSETH) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated: 26/02/2026 KRK, Sr. PS
J Kumar Infraprojects Ltd, Mumbai Copy of the order forwarded to:
(1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.