POLICE WELFARE SOCIETY, RAJNANDGAON,RAJNANDGAON vs. INCOME TAX OFFICER, WARD- RAJNANDGAON, RAJNANDGAON

आदेश / O R D E R Per Arun Khodpia, AM:

The captioned appeals are filed by the assessee against the separate orders of Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”], both dated 28.02.2025, u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2017-18 & 2018-19, which in turn arises from the order of Addl / Joint / Deputy / Asstt. Commissioner of Income Tax / Income Tax Officer, NFAC, Delhi, (in short “Ld. AR”), u/s 147 / 144 r.w.s. 144B of the Act and u/s 147 r.w.s. 144B of the Act, respectively for the Assessment Year 2017-18 & 2018-19, both dated 29.03.2022.

& 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon 2. Since both the aforesaid appeals pertain to the same assessee, these appeals are heard together and taken up for adjudication under this common order. However, the issues involved therein are found to be assailed under varied contentions having uncommon features, therefore, our decisions on the respective appeals are narrated hereunder:

3.1 Brief facts of the case are that the assessee herein is an Association of Person (AOP) had not filed its Return of Income (ROI) for the AY 2017-18. However, as per information available with revenue the assessee has cash/credit entries to the tune of Rs. 24,88,95,987/- in its State Bank of India A/c during the relevant year. Having reason to believe & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon that the aforesaid transactions has escaped assessment, the statutory notice for reopening assessment u/s 148, after obtaining necessary approvals of the authority, was issued on 27.03.2021. In response to the notice u/s 148, the assessee filed ROI on 10.03.2022, declaring a total income of Rs. 37,77,120/- and claimed a refund of Rs.1,80,860/-. Meanwhile, the case of the assessee was transferred to ReAC(AU) on 08.12.2021. A letter and notices u/s 142(1), along with a questionnaire, were issued to the assessee on 27.12.2021, but the assessee remained non-responsive towards the same. Further, the assessee remain non- responsive towards the notices dated 05.02.2022 and 17.02.2022. In continuation, a show cause notice dated 22.02.2022 was issued to the assessee, in response to which the assessee uploaded its reply on 02.03.2022, requesting further time to upload the details. In due course of proceedings, a letter dated 07.03.2022 was issued for compliance. Thereafter, before the Ld. AO, the assessee submitted its ITR, Computation, SBI Bank Statement, Cash Book, etc. On examination of the said information, Ld. AO observed a difference in deposit entries for Rs. 5,61,84,239/-, as the gross receipts of the assessee as per records of the department were Rs. 24,88,95,987/-, whereas as per return, the turnover shown by the assessee was Rs.19,27,11,748/-, to enquire about the said difference, Ld. AO asked the assessee to furnish reconciliation & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon of the same. In compliance, the assessee uploaded the ledger copies of sales, purchases of diesel, petrol etc. and stated that the assessee society has maintained regular books of accounts on a day-to-day basis but failed to furnish the explanation qua the difference. In absence of proper explanation by the assessee, a show cause was issued, why the amount of the difference of Rs. 5,61,84,239/- should not be added to the total income. In reply, the assessee vide letter dated 26.03.2022 had requested for video conferencing, which was provided to the assessee on 28.03.2022, but the assessee did not attend. Consequently, the Ld. AO concluded that, the assessee has not shown the complete amount deposited in its bank account as its sales. The difference of Rs. 5,61,84,239/- (24,88,95,987 – 19,27,11,748), therefore, would be undisclosed sales of the assessee and, therefore, estimated profit @ 8% amounting to Rs. 44,94,740/- (Rs. 5,61,84,239 x 8%) is being treated as undisclosed business income of the assessee and thereby the total assessed income of the assessee has been determined at Rs. 82,71,860/-.

3.2 Aggrieved with the aforesaid estimated addition by the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A), wherein the appeal of the assessee has been partly allowed.

& 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon 3.3 While deciding the appeal of the assessee, Ld. CIT(A) had decided the legal grounds no. 4 & 5 against the assessee, whereas ground no. 1, 2, and 3 are allowed and consequential grounds 6, 7, 8 & 9 are rendered as infructuous.

3.4 The observations of Ld. CIT(A) while deciding ground no. 1, 2, 3 are as under:

8.3 I have considered the facts and circumstance of the case and submission of the assessee. It is found that as per the information available with the assessing officer the total credits in the bank account maintained with SBI of the assessee is Rs.24,88,95,987. The AO has based its findings on the basis of total credits in such bank account. Further, the AO has found that the turnover disclosed by the assessee is less than that of alleged total credits in the bank account. Therefore by the assessing officer at the rate of 8%.

8.4 On the other hand, it is contested by the assessee that as per the form No. 26 AS the total credit in the bank account maintained with SBI is not Rs.24,88,95,987/- as claimed by the AO.

8.5 On perusal of the form No. 26 wherein the SFT (Specified Financial Transaction)are mentioned, it is found that the contention of the assessee is true. As per the Form No. 26 AS the details of the total credits in state bank of India are as under-

8.6 Further, after the perusal of bank statement of the assessee for the year under consideration maintained with State Bank of India with Collectorate, Rajnandgaon Near Microwave Tower, G.E. Road, Rajnandgaon branch, total credits in such account are found to be as under: April, 16 1,21,43,406.00 May, 16 13098274 June, 16 2,23,93,275.50 July, 16 1,53,53,583.00 August, 16 1,53,83,627.00 Sept., 16 1,23,13,940.00 Oct,16 1,31,43,479 Nov,16 2,12,13,426 Dec, 16 1,52,18,743 January, 17 1,66,46,79 Feb, 17 1,55,18,110.40 March-17 2,16,44,089.11 Total 17,74,23,953.01

8.7 Therefore, the contention of the assessee is found to be true. The assessing officer’s action based on the information in SFT with respect to the credits of Rs.24,88,95,987/- is found to be factually incorrect. 8.8 Therefore, considering the facts and circumstance of the case, record available on the assessment folder it is found that the estimation of income computed by the assessee by considering the total credits in the bank account of the assessee at Rs.24,88,95,987/- is found to be factually incorrect.

& 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon 3.5 Referring to the aforesaid observations, it was the submission by Ld. Sr. DR representing the revenue that the order passed by Ld. CIT(A) is only commenting and concluding that the findings of Ld. AO are factually incorrect, whereas the difference in deposits of Rs.5,61,84,239/- which was treated as unexplained receipts of the assessee and an estimation @ 8% i.e., Rs.44,94,740/- was added to the income of assessee as undisclosed business income was not deliberated upon. Ld. CIT(A) also erred in accepting the contention of the assessee without dislodging the information available in SFT (Specified Financial Transaction) regarding credit entries of Rs. 24,88,95,987/- for which no satisfactory explanation was furnished by the assessee. Ld. Sr. DR further explained that the information received from the assessee is not confronted to the Ld. AO nor any remand report called from the Ld. AO. Ld. CIT(A) also failed in specifying the points for determination and specific reasons to arrive at a conclusive finding, as mandated under the provisions of Act, such action of the First Appellate Authority found to be in violation of provisions of Section 250(4) & (6), therefore, in all fairness the matter needs to restore back to the file of Ld. CIT(A) to revisit the issue decided, without specifying proper reasons for such decision.

& 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon 3.6 On the other hand, Ld. Counsel of the assessee (in short “Ld. AR”), submitted that there are certain legal contentions of the assessee which are not decided in justified manner by the Ld. CIT(A) qua the jurisdiction of Ld. AO for non-issuance of notice u/s 143(2) of the Act and qua the expired digital signature of Ld. AO on the assessment order. It was the request to take up such issues and quash the assessment.

3.7 We have considered the rival submission and perused the material available on record. On a thoughtful consideration of the facts of the present case, we find force in the contention raised by the Ld. Sr. DR, though the present appeal belongs to the assessee, however, being a final fact finding authority, we observe that the order passed by Ld. CIT(A) is not in accordance with the mandate of law as specified under the provisions of Section 250(4) & (6). The findings of Ld. CIT(A) (extracted supra) while deciding the ground of appeal no. 1, 2, 3 before him are abruptly concluded without specifying the point of determination and the reasons for allowing the grounds of appeal. We observed that the order of the First Appellate Authority lacks deliberation upon the facts and the reasons based on which the authority reached such a conclusion. In the factual matrix of the present case, the first appellate authority had accepted the contentions of the assessee but had not discussed the & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon information available with the department and had not brought on record the reason for the difference in the amount of turnover, which was the main allegation and foundation of the addition made by Ld. AO. However, since the present appeal has been filed by the assessee and there is no information qua any cross appeal being filed by the revenue on records brought before us, therefore, we are unable to accede to the contention raised by the Ld. Sr. DR on behalf of the revenue, as accepting such request of the revenue would put the assessee in a disadvantageous or worst position than it was before filing of this appeal. Under such circumstances, we are constrained to deal with the issue raised by the revenue and, therefore, the findings of Ld. CIT(A) qua the merits of addition cannot be interfered. Consequently, we refrain ourselves to offer any comments or adjudication on the aforesaid issue, thus, the decision of Ld. CIT(A) towards ground no. 1,2, 3 before him shall remain unaltered.

3.8 Adverting to the legal issue raised by the assessee before us that the Ld. AO had not issued a notice u/s 143(2) and the signing on the assessment order with an expired digital signature, we observed that the Ld. CIT(A) had dealt with both the issues and dismissed the contentions of the assessee. Herein, it would be pertinent to mention that while deciding the issues on merits the First Appellate Authority had already & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon allowed grounds of appeal No. 1, 2 & 3 and rendered ground no. 6, 7, 8 & 9 as infructuous being consequential in nature, thereby the addition on quantum has been vacated and the said view of the Ld. CIT(A) cannot be modified being not challenged by either the appellant or the revenue. In view of such facts and circumstances, it is surprising to note that once the issue of quantum addition has been decided in favour of the assessee, the legal issues raised by the assessee would not be of any further help to the assessee in reducing the additions imposed by the Ld. AO, such contentions of the assessee, therefore, are uncalled for and need not be adjudicated. We, thus, without alluding upon the legal issues raised by the assessee in the present appeal, upheld the order of Ld. CIT(A).

Ground No. 1. That on the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) NFAC, erred in not adjudicating upon the additional grounds of appeal raised by the assessee, which challenged the legality and validity of the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO). Ground No.

2. That the Learned Commissioner of Income Tax (Appeals) NFAC, erred on facts and in in not invalidating the notice & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon under section 148 as the show cause notice issued u/s 148A(b) was issued with an incorrect time limit for filing the response, allowing only 6 days instead of the prescribed minimum seven days as per the provisions applicable from 01.04.2021, making the entire reassessment proceeding void ab initio. Ground No.

3. That the Learned Commissioner of Income Tax (Appeals) NFAC, erred on facts and in in not invalidating the reassessment proceedings initiated under section 148 of the Income-tax Act, 1961 which are bad in law as the notice was issued by the Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO), in violation of the provisions of Section 151A and CBDT Notification 18/2022 dated 29.03.2022, which mandates that reassessment proceedings should be carried out by Faceless Assessment Unit. Ground No.

4. That the Learned Commissioner of Income Tax (Appeals) NFAC, erred on facts and in in not invalidating the notice under section 148 as it was issued with an incorrect time limit for filing return of income, allowing only 30 days instead of the prescribed three months from end of the month in which notice u/s 148 was issued as per the amended provisions applicable from 01.04.2021, making entire reassessment proceeding void ab initio. Ground No.

5. That the Learned Commissioner of Income Tax (Appeals) NFAC, erred on facts and in failed to appreciate that the failure to issue notice by the correct authority and the correct time limit response are jurisdictional defects, rendering the reassessment proceedings null and void in light of judicial precedents made by the Honorable Courts and Tribunal. Ground No.

6. That the learned Commissioner of Income Tax (Appeals) NFAC ought to have admitted additional grounds of appeal

raised by the assessee since they pertain to pure questions of law and do not require fresh evidence. Ground No.

7. The appellant craves leave to add, amend, modify any ground(s) of appeal with due permission.

4.1 From the submission of assessee, it is transpired that ground no. 1, 3, 5 & 6 are requested to be treated as withdrawn, accordingly, these

4.2 Referring to the ground no. 2 of the appeal in ITA 256/RPR/2025, at the threshold, it is contended that Ld. AO failed to provide reasonable opportunity of being heard to the assessee as mandated under the provision of section 148A(b), as only 6 days’ time was provided to the assessee to respond. On a perusal of the copy of notice under clause (b) of section 148A placed before us at page no. 25 of the paper book submitted by the assessee, we observed that the notice under clause (b) of section 148A of the Income Tax Act, 1961 is dated 17.03.2022, wherein the assessee was requested to submit its response with supporting documents on or before 23.03.2022 i.e. within next 6 days only.

4.3 The aforesaid issue is decided by this tribunal in its earlier orders and have restored the matter back to the files of Ld. AO, since the matter is squarely covered, therefore, dehors any contrary information or submission by the parties herein, having no reason to deviate from our earlier stand, we find it appropriate to restore the matter back to the file of Ld. AO without deliberating upon the remaining grounds of appeal assailed by the assessee.

& 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon 4.4 Our aforesaid view is supported by the decision of ITAT, Raipur in the case of New Rajdhani Honda Vs. CIT in dated 12.12.2024. The observations of ITAT in the said decisions following the ratio of law emerging from the order of Hon’ble Jurisdictional High Court in the case of M M Wonder Park Pvt. Ltd. Vs. Union of India & Othrs. WP(T) No. 172/2022 dated 17.06.2022, are extracted as under:

8. Shri Veekaas S Sharma, learned authorized representative (for short, Ld. AR) for the assessee, at the threshold, submitted that as the AO had failed to adhere to the provisions of section 148A(b) of the Act, therefore, the assessment order passed by him u/s 147 r.w.s. 144B of the Act, dated 03.03.2023 was liable to be struck off. Elaborating on his contention, the Ld. AR submitted that though section 148A(b) of the Act contemplates that the AO shall provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notices is issued, or such time, as may be extended by him on the basis of application in this behalf, as to why a notice u/s 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a). The Ld. AR submitted that the AO in the present case had issued "Show cause notice" (SCN) u/s 148A(b) of the Act, dated 20.03.2022, Page No. 1 & 2 of APB, wherein the assessee firm was called upon to put forth an explanation on or before 26.03.2022 as to why & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon the notice u/s 148 of the Act be not issued to him. The Ld. AR, submitted that contrary to the mandate of section 148A(b) of the Act, which contemplates allowing of a time period of not less than seven days, the A.O. in the case of present assessee had effectively allowed to him a time period of only 5 days to explain that as to why the notice be not issued under clause (b) of section 148A of the Act. The Ld. AR, submitted that as the time period allowed to the assessee firm for putting forth an explanation to the notice issued by the AO u/s 148A(b) of the Act was not in conformity with the mandate of law, therefore, due to invalid assumption of jurisdiction the assessment framed by him vide order passed u/s 147 r.w.s. 144B of the Act, dated 03.03.2023 cannot be sustained and is liable to be struck down on the said count. The Ld. AR to support his contention had relied upon the decision of Hon'ble Jurisdictional High Court of Chhattisgarh in the case of MM Wonder Park Private Limited vs. Union of India & Others, passed in Writ Petition (T) No.172/2022, dated 17.06.2022 (copy placed on record). Alternatively, the Ld. AR assailed the validity of the assessment order on the basis of his other multi-facet contentions, viz., (i). that no notice u/s 143(2) of the Act was issued by the AO; (ii) that the notice u/s 148 of the Act, dated 30.03.2022 which ought to have been issued by the "Faceless Assessing Officer" (FAO) was in fact issued by "Jurisdictional Assessing Officer" (JAO), and thus, was violative of and contrary to the Notification No.18/2022 dated 29.03.2022; and (iii) that the conditions precedent for invoking section 69A of the Act were not satisfied in the preset case. Apart from that, the assessee had placed his contentions as regards the merits of the case.

"5. I have heard Learned Counsel appearing for the parties and perused the above referred to documents/Annexures and other material available with due care.

7. Accordingly, the instant writ petition is allowed" (emphasis supplied by us) 13. As the facts and issue involved in the present appeal before us, i.e., allowing of unreasonably short period of time by the AO vide notice u/s 148A(b) of the Act remains the same as was there before the Hon'ble High Court, therefore, we respectfully follow the same. We, thus, in terms of our aforesaid observations quash the order passed by the A.O. u/s 148A(d) of the Act, dated 29.03.2022 and also notice u/s 148 of the Act, dated 29.03.2022, and restore the matter back to the file of the A.O. with a direction to afford a proper opportunity of being heard to the & 256/RPR/2025 Police Welfare Society vs. ITO, Ward, Rajnandgaon assessee firm as per the mandate of section 148A(b) of the Act, and thereafter, decide the matter afresh in accordance with law.

4.5 Respectfully following the aforesaid decision New Rajdhani Honda Vs. CIT (supra), the order of First Appellate Authority and the Ld. AO are set aside and the matter in is restored to the file of Ld. AO with the directions to re-adjudicate denovo after affording a reasonable opportunity of being heard to the assessee. Consequently, ground no. 2 of the present appeal stands allowed for statistical purposes.

4.6 As the matter is restored to the file of Ld. AO, we refrain ourselves to deliberate upon and to deal with the remaining grounds of appeal in the present matter.

4.7 In result, the appeal of the assessee in is partly allowed for statistical purposes.

4.8 In combined result, & 256/RPR/2025 of the assessee for the AY 2017-18, 2018-19, respectively, are dismissed / partly allowed for statistical purposes, in terms of our observations hereinabove.

Order pronounced in the open court on 20/06/2025.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (ARUN KHODPIA) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 20/06/2025 Vaibhav Shrivastav आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant- Police Welfare Society, Rajnandgaon 2. ��थ� / The Respondent- ITO, Ward, Rajnandgaon 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाड� फाईल / Guard file. // स�ािपत �ित True copy //