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Facts
The assessee, Jatinkumar Patel, was subjected to reassessment for AY 2014-15 based on large bank transactions, with initial assessment made on a presumptive basis. The Pr. CIT invoked revisionary powers under section 263, set aside the initial reassessment, and directed a fresh assessment, leading to a substantial addition of Rs.169.75 crores as unexplained money under section 69A. The CIT(A) upheld the assessment, but the assessee argued that the original reassessment order for the same year had already been set aside by the CIT(A) in a separate appeal for de-novo consideration, rendering the subsequent 263 proceedings and consequential assessment invalid.
Held
The Tribunal acknowledged the existence of parallel proceedings for the same assessment year. To avoid multiplicity and potential inconsistent findings, it set aside both the impugned CIT(A) order and the consequential assessment order passed under sections 144 read with 263 and 144B. The entire matter was restored to the Assessing Officer for fresh de-novo consideration of all factual and legal issues, including the validity of reopening, the scope of revision, and the additions made.
Key Issues
Whether the assessment order arising from revisionary proceedings under section 263 is valid when the original reassessment order for the same year has already been set aside and remanded for de-novo adjudication. Whether parallel proceedings for the same assessment year should be merged to ensure comprehensive and consistent adjudication.
Sections Cited
147, 144, 263, 144B, 148, 142(1), 133(6), 69A, 115BBE, 271(1)(c), 271B, 234A, 234B, 234C, 250
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: DR. B.R.R KUMAR & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the National Faceless Appeal Centre Delhi (in short “NFAC”), vide order dated 11.08.2025 passed for A.Y. 2014-15.
The assessee has taken the following grounds of appeal:-
“1. On the facts and circumstances of the case since Original Assessment order passed u/s 147 rws 144 of the Act has been set aside the revision order passed us 263 as well as consequential orders passed subsequent to revision proceeding are not valid in eyes of law. It is therefore prayed before your honours that order passed by lower authorities be set aside and the necessary directions may please be given to merge this proceeding along with fresh assessment proceeding to be conducted by the assessing officer in view of the directions of Ld CIT(A) in the interest of justice. The same please be held accordingly.
2. On the facts and circumstances of the case, the order passed by Learned CIT (Appeals) is bad in law and is required to be cancelled in view of fact that Jatinkumar Patel vs. ITO Asst.Year –2014-15
- 2– the assessment order passed u/s 144 rws 263 of the Act dated 27-02-2025 is also Null and VOID 3. On the facts and circumstances of the case, the assessment order passed u/s 144 rws 263 of the Act is illegal and invalid in view of the fact that the order passed u/s 263 by Pr. CIT is no more valid in absence of Original Assessment order passed u/s 147 rws 144 of the Act dated 20-3-2023 4. On the facts and circumstances of the case since Original Assessment order passed u/s 147 rws 144 of the Act dated 20-3-2023 has been set aside the revision order passed u/s 263 as well as consequential orders passed subsequent to revision proceeding are Null and VOID and deserves to be quashed and set aside. The same please be held accordingly.
5. The order passed by the learned CIT (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
6. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing of appeal.
The brief facts of the case are that the assessee, Shri Jatinkumar Patel for Assessment Year 2014-15, was subjected to reopening and subsequent proceedings on the basis of information flagged under the Risk Management Strategy of CBDT indicating huge transactions in his bank accounts during Financial Year 2013-14.
The Assessing Officer recorded that notice under section 148 was issued on 27.07.2022 and in the reassessment proceedings it emerged that aggregate credits of about Rs.123.12 crores had appeared in the assessee’s bank accounts, out of which more than Rs.111 crores represented cash deposits. The assessee claimed that he was earning commission income from sale of agricultural produce on behalf of farmers through concerns namely M/s Rut Traders and M/s Avdhoot
- 3– Traders, but despite repeated notices under section 142(1) of the Act calling for books of account, ledgers, vouchers, mandi licence, transport bills and other documentary evidence, he failed to furnish any supporting material. In the original reassessment order passed under sections 147 read with 144 and 144B of the Act on 20.03.2023, the Faceless Assessing Officer nevertheless estimated income at six per cent of the bank credits on a presumptive basis.
Thereafter, the Principal Commissioner of Income-tax invoked revisionary jurisdiction under section 263 on the ground that the reassessment order had been passed without proper enquiry and verification and was prejudicial to the interests of the Revenue. Principal CIT issued notices, but the assessee again did not respond. By order dated 23.03.2024 under section 263, the Pr. CIT set aside the earlier reassessment and directed the Assessing Officer to pass a fresh order after considering the entire bank credits of Rs.123.12 crores. Pursuant to this direction, the case was again taken up in faceless proceedings and several notices under section 142(1) of the Act were issued by the Assessing Officer. Since the assessee again confined himself only to raising objections to jurisdiction and did not explain the nature and source of deposits, the Assessing Officer issued notices under section 133(6) of the Act to ICICI Bank, Punjab National Bank and Axis Bank and obtained statements of all accounts maintained by the assessee and his proprietary concerns. On examination of these statements, it was found that total credits aggregating to Rs.169,75,68,149/- had passed
- 4– through nine accounts, of which Rs.116,48,84,383/- represented cash deposits. The Assessing Officer recorded that the assessee neither maintained books of account nor got his accounts audited despite turnover exceeding the statutory limit, and that the explanation of earning only commission income remained wholly unsubstantiated. Holding that the assessee had failed to discharge the primary onus of explaining the nature and source of the credits and that identity, creditworthiness and genuineness of the transactions were not proved, the Assessing Officer completed the assessment to best judgment under sections 144 read with 263 and 144B and treated the entire sum of Rs.169,75,68,149/- as unexplained money under section 69A. The amount was brought to tax under section 115BBE, and penalty proceedings under sections 271(1)(c) and 271B were initiated, besides levy of interest under sections 234A, 234B and 234C.
Aggrieved, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) and raised several grounds contending that the original reassessment itself was void, that the order under section 263 was invalid, that the notice under section 148 was time-barred, that the ex-parte best judgment order was unjustified, that section 69A was wrongly applied, and that interest and penalties were wrongly levied. He also pleaded that since the legality of the original reassessment order was already under challenge in a separate appeal, the present proceedings arising out of section 263 should be kept in Jatinkumar Patel vs. ITO Asst.Year –2014-15
- 5– abeyance, and sought adjournments stating that he had changed his tax consultant.
While adjudicating the appeal, the Commissioner (Appeals) first noted that the appeal itself had been filed with a marginal delay of about five days but condoned the same in the interest of justice. On merits, he examined the assessment records and observed that the reopening had been triggered by high-risk alerts relating to large bank transactions and that in the reassessment as well as revisionary proceedings the assessee had consistently failed to comply with statutory notices. He recorded that the Pr. CIT had validly exercised jurisdiction under section 263 after finding that the earlier reassessment was completed without adequate enquiry, and that despite fresh opportunities in the set-aside proceedings the assessee did not furnish any explanation or evidence regarding the deposits. The Commissioner (Appeals) rejected the contention that the proceedings under section 144 read with section 263 should be kept in abeyance merely because the original reassessment was separately challenged, holding that the revisionary order had already directed a de-novo assessment and the impugned order was therefore a fresh and independent order.
On the issue of addition under section 69A of the Act, the Commissioner (Appeals) reproduced the findings of the Assessing Officer regarding bank-wise credits and cash deposits and held that the assessee had not discharged the burden cast upon him to explain
- 6– the nature and source of such receipts. Relying upon several decisions of the Supreme Court and High Courts laying down that unexplained credits and money can be brought to tax when satisfactory explanation is not offered, he upheld the Assessing Officer’s action in treating Rs.169.79 crores as unexplained income and taxing the same under section 115BBE. He also approved the best-judgment assessment, observing that when an assessee persistently remains non-compliant, adverse inference is justified, and referred to judicial precedents to the effect that filing an appeal alone is not sufficient and it must be effectively pursued. As regards the levy of interest under sections 234A, 234B and 234C, the Commissioner (Appeals) held that the same was mandatory and consequential and therefore dismissed that ground. The remaining grounds were treated as general in nature and not separately adjudicated.
In sum and substance, while at the assessment stage the Assessing Officer, after revision under section 263 of the Act, completed a best- judgment assessment and added the entire bank deposits of Rs.169.75 crores as unexplained money under section 69A of the Act with consequential taxation and penalties, at the appellate stage the Commissioner (Appeals) rejected all legal and factual objections of the assessee, declined to keep the appeal in abeyance, upheld the reopening and revisionary action, sustained the substantive addition and confirmed the levy of interest, thereby dismissing the appeal in entirety.
- 7– The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
Before us, the Counsel for the assessee submitted that the present appeal deserves to be set aside to the file of the Assessing Officer for de-novo consideration since the original appeal against the original assessment order for the same year has already been allowed by the Commissioner (Appeals) and the matter has been restored to the Assessing Officer for fresh adjudication. It was submitted that in the interest of justice and to avoid multiplicity of proceedings, all consequential proceedings for this year, including those arising out of the order passed under section 263 of the Act and the subsequent order under section 144 read with section 263 of the Act, should be merged and examined together by the Assessing Officer in the fresh round of assessment. The learned Counsel submitted that the case of the assessee was reopened under section 147 for three assessment years, namely Assessment Years 2013-14, 2014-15 and 2015-16, on the basis of information received from the Investigation Wing, and for all the three years the assessments were completed ex-parte as best-judgment assessments under section 144 read with section 147 of the Act. He pointed out that in Assessment Year 2013-14 an addition of Rs.8,34,45,204/- was made as unexplained money under section 69A and no proceedings under section 263 had yet been initiated, while in Assessment Year 2015-16 an addition of Rs.3,59,62,896/- was similarly made by applying presumptive percentages on bank credits and again no Jatinkumar Patel vs. ITO Asst.Year –2014-15
- 8– revision under section 263 had been invoked. For Assessment Year 2014- 15, however, the Assessing Officer had initially added only six per cent of the total credit entries, amounting to about Rs.7.35 crores, by applying a presumptive basis, but later, pursuant to revision under section 263, the entire bank credits were treated as unexplained and a huge addition of Rs.1,69,75,68,149/- was made under section 69A of the Act. The Counsel further submitted that the first notices under section 148 for all the three years had been issued on or after 1-4-2021 and therefore the entire controversy regarding the validity of reopening was governed by the successive decisions of the Hon’ble Supreme Court in the cases of Ashish Agarwal and Rajeev Bansal, which were already forming part of the record before the lower authorities. He stated that the assessee had challenged the reassessment orders for all three years before the Commissioner (Appeals) and that for Assessment Years 2013-14 and 2014-15 the Commissioner (Appeals), by orders dated 20-08-2025 and 14-08-2025 respectively, had already set aside the reassessment orders passed under section 144 read with section 147 and directed the Assessing Officer to frame fresh assessments after proper verification of facts. The appeal for Assessment Year 2015-16, according to him, was still pending before the Commissioner (Appeals), where detailed submissions had already been filed. It was therefore contended that in the interregnum the Principal Commissioner had passed an order under section 263 on 24-03-2024 treating the reassessment order for Assessment Year 2014-15 as erroneous and prejudicial to the interests of the Revenue and directing that the entire bank credits be brought to tax as Jatinkumar Patel vs. ITO Asst.Year –2014-15
- 9– unexplained money instead of the earlier six per cent estimation. Consequent thereto, the Assessing Officer passed a fresh order under section 144 read with section 263 on 27-02-2025 making the addition of Rs.1.69 crores. Though this order was challenged before the Commissioner (Appeals) on the ground that the validity of the original reassessment was itself under dispute and therefore the proceedings pursuant to section 263 should be kept in abeyance, the Commissioner (Appeals) dismissed the appeal by order dated 11-08-2025, and hence the assessee was now before the Tribunal. The learned Counsel urged that once the original reassessment order dated 20-03-2023 for Assessment Year 2014-15 has already been set aside by the Commissioner (Appeals) and is no longer in existence, the subsequent order passed by the Principal Commissioner under section 263 of the Act and the consequential order under section 144 read with section 263 automatically lose their legal foundation and are liable to be cancelled as null and void. He therefore prayed that both the order under section 263 dated 24-03-2024 and the consequential order dated 27-02-2025 be quashed and that suitable directions be issued to merge these proceedings with the fresh assessment to be framed by the Assessing Officer pursuant to the order of the Commissioner (Appeals) dated 14-08-2025, so that the entire controversy is resolved in one composite proceeding. Referring to the chronological sequence of events, the learned Counsel pointed out that notices under section 148 were issued in April 2021 and July 2022, the reassessment order was passed on 20-03-2023, the revisionary order under section 263 followed on 24-03-2024, the Jatinkumar Patel vs. ITO Asst.Year –2014-15
- 10– consequential assessment order under section 144 read with section 263 was passed on 27-02-2025 and the impugned appellate order under section 250 was made on 11-08-2025, all of which, according to him, demonstrate that parallel proceedings have arisen for the same year. On this foundation, the Counsel for the assessee reiterated his request that the present appeal be restored to the Assessing Officer so that all issues for Assessment Year 2014-15 are considered afresh together in the de- novo proceedings already directed by the Commissioner (Appeals), thereby preventing overlapping adjudications and ensuring substantial justice.
We have heard the rival contentions and perused the material on record. Having regard to the peculiar sequence of events in the present case and the fact that parallel proceedings have arisen for the same assessment year, we are of the considered view that the ends of justice would be met if the entire controversy relating to Assessment Year 2014- 15 is examined afresh by the Assessing Officer in one consolidated round of proceedings. Since the reassessment order for this year has already been set aside by the Commissioner (Appeals) in separate appellate proceedings with a direction for de-novo adjudication, and the present appeal arises out of the order passed pursuant to revision under section 263 and the consequential assessment framed thereunder, allowing both streams to continue independently would only lead to multiplicity of proceedings and the possibility of inconsistent findings.
- 11– In order to avoid such a situation and to ensure that all issues are adjudicated comprehensively at one stage, we set aside the impugned order of the Commissioner (Appeals) as well as the consequential assessment order passed by the Assessing Officer under sections 144 read with 263 and 144B of the Act and restore the entire matter to the file of the Assessing Officer for de-novo consideration in accordance with law. The Assessing Officer shall examine all factual and legal issues afresh, including the validity of reopening, the scope of revision under section 263, the additions made on account of alleged unexplained bank credits, the applicability of section 69A and section 115BBE and the consequential levy of interest and initiation of penalty proceedings, after affording the assessee a reasonable and effective opportunity of being heard and after considering such material and evidence as may be produced before him.
Needless to say, we have not expressed any opinion on the merits of the additions or the legal contentions raised by either party and all issues are left open for fresh adjudication by the Assessing Officer.
The appeal is allowed for statistical purposes in the above terms. This Order is pronounced in the Open Court on 13/02/2026