MANGILAL DATLA,BANSWARA vs. INCOME TAX OFFICER, WARD BANSWARA, BANSWARA

3. The ld. AO has also grossly erred in law as well as on the facts of the case in invoking the provisions of Sec. 115BBE and charging the tax on higher rate and the ld. CIT(A) has grossly erred in setting aside the same to the ld. AO without considering the details, submissions material available before him. Hence the provisions so invoked and tax charged by the ld. AO is being totally contrary to the provisions of law and facts on the record and hence the same may kindly be deleted in full.” 2. Succinctly, the facts as culled out from the records are that the assesseehad no taxable income during the year, as his business from plying of buses was closed due to heavy losses. As such he had not filed his ITR. The AO on the basis of information received from ITBA under AIMS that the assessee had deposited cash Mangilal Datla, Banswara. aggregating Rs.1,75,20,300/- in his SB A/c, issued notice u/s 148 on 19.03.2021. This notice was never served on the assessee. During the course of assessment proceedings consequent to notice issued u/s 142(1), the assessee flatly denied having made any such cash deposit in his bank account. The assessee sought time to collect the necessary evidence in support of his stand but the ld. AO denied adjournment and completed the assessment simply on the basis of information available with him, without even verifying the facts of cash deposits from the concerned bank. The ld. AO made addition of the entire amount u/s 69A.

3. Aggrieved from the order of Assessing Officer, the assessee preferred an appeal before the CIT(A)on legal grounds as well as on facts. He challenged the assumption of jurisdiction by the AO and addition made by him. On facts, the assessee pleaded before the CIT (A) that the it was on account of a technical glitch on the part of the bank that cash deposits of Rs.19,46,700/- on nine occasions was reflected in his bank account, whereas he had made no such deposits. The assessee filed all the evidences in support of the appeal before the Ld.CIT(A). The Ld. CIT(A) left the legal issue unanswered. He set aside the case to the AO to decide it afresh.

4. Now the assessee is in appeal before the ITAT. He has made the following submissions- Mangilal Datla, Banswara. “GOA:-1-2: Invalid action u/s 147 rws 148 and Invalid and illegal assessment and invalid set-aside by the ld. CIT(A) and Addition of Rs.1,75,20,300/- on account of alleged cash deposits in the bank account.:

1. 1. The brief facts of the case are that the assessee was a regular IT assessee. But the year he has not filed his ITR being no taxable income. The assessee was having the income from bus hiring and the same was closed due to loss. The ld. AO has issued the notice u/s 148 on 19.03.2021(PB1), on the reason that” Information received from ITBA under AIMS, Multi Year NMS Priority.

1. As per information code SFT 004, the assessee has deposited cash in account other than current account amount of Rs.1,75,20,300/- during the F.Y. 2016-17 assessee has not filed the ITR for A.Y. 2017-18. I have reason to believe that income to the extent of Rs.1,75,20,300/- has escaped assessment u/s 147” (PB3). Then said notice never served upon the assessee (PB 11,19,21). Assessee had received the first notice 142(1) dt. 24.01.2022.

2. In response to this notice u/s 142(1) dt. 24.01.2022 assessee has filed a reply and objection dt. 02.03.2022 (PB 11-12 and 16-17). Thereafter the ld. AO has also issued the notice dt. 09.03.2022 and 25.03.2022. In response thereto the assessee has again filed the detailed objection and repaly (PB18-27). 3.However the ld. AO not considered our reply nor decided our objection, rather he has alleged that “As in this case the assessee was issued notice u/s 148 on 19.03.2021 and first notice u/s 142(1) was issued on 21.06.2021 by JAO and on 24.01.2022 by NeFAC. From above it is evident that the assessee has already availed enough time and ample opportunities, but at the end of the assessment submitted his incomplete reply and asked for Two Months adjournment, which clearly shows that the assessee has nothing to say but to delay assessment proceedings. As the assessee deposited large cash i.e. Rs. 1,75,20,300/- in his bank account held with Indusind Bank and failed to explain source of such cash deposits. Considering all the above facts total cash deposits of Rs. 1,75,20,300/- is hereby treated unexplained money u/s 69A r.w.s. 115BBE of the Act”.

and legal position, validity of proceedings

5. In first appeal assessee challenged the legality, validity andproceeding u/s 147/148 and also challenged the assessment order as invalid illegal and addition on account of cash deposit of Rs.1,75,20,300/- was also challenged. Vide GOA before CIT(A) attached with form

35. During the course of hearing before the CIT(A) we have filed detailed WS(PB32-38) on all the issues and also filed the paper book which is also filed before your honor.

Mangilal Datla, Banswara.

6. The ld. CIT(A) has not considered the same despite all the details, facts, submission, documents and legal position were very well available before the lower authorities. However despite all these the ld. CIT(A) has neither given any finding or decision on the legal issues as well as on the merit of the case rather he setaisde the case to the ld. AO for fresh assessment only by stating as under:- vide page 12 of the CIT(A) order “ In the present appeal, due to the non-providing of the details called for by the Ld.AO, the assessment was completed ex-parte u/s 144 r.w.s.147 rws 144B of the Act. As such, I am of the view that the appellant should be given full opportunity to represent its case, to produce all the necessary evidence which the appellant wishes to rely upon and after considering the entire submissions of the appellant, the Ld.AO should pass the fresh assessment order. Considering the facts and circumstances of the case and the powers vested in me vide proviso in clause (a) of subsection (1) of section 251 of the Act, I hereby set aside the order of the Ld.AO and restore the same back to the file of the Ld.AO with the directions to the Ld.AO to frame the assessment order afresh after giving adequate opportunity of being heard to the appellant. The appellant is also directed to produce all the necessary documentary evidence in support of its claim before the Ld.AO during the set aside assessment proceedings. The order of the Ld.AO is accordingly set aside to the file of the Ld.AO with the above directions.

Hence this appeal.

SUBMISSIONS: 1.1 At the very outset it is submitted that the ld. CIT(A) has wrongly set-aside the assessment order without deciding the legal grounds of appeal when there was no further verification and examination is required on the legal issue’s, when admittedly the ld. AO in the remand report has not disputed our contentions. And it is the settled position that firstly legal issue is to be decided and if on the legal issue the assessee succeed or having good case then there was no need to set- aside or restore the matter to the AO. The matter is to be restored to the AO by the ld. CIT(A) on merit only after deciding the case against the assessee on legal issues. As per new amended provisions, wef 01.10.2024, in our view the matter to be restored to the AO by the ld. CIT(A) those appeals which have been filed after the 01.10.2024 not before it because it is not retrospective amendment. 1.2. Further on the merit the case when it is the admitted facts that all the details and replies have been considered by the ld. AO and now the assessee is not required to file other details/evidences. Then the matter was to be decided by the ld. CIT(A) itself, for which he has failed to do so. Hence it is prayed that the matter on legal issue and on merit may kindly be considered and decided by your honor. As recently this Honble ITAT in the case of Suresh Kumar Saini v/s ITO Ward 7(4), Jaipur in dt. 29.01.2025 has decided the legal grounds of appeal, even not decided by the ld. CIT(A). Copy is enclosed.

5. Mangilal Datla, Banswara.

2. Now on the legal issue and merit we rely upon on our WS, paper book, additional evidence, remand report and comments on remand report etc, which may kindly consider.

1. Incorrect or wrong Reasons: At the very outset it is submitted that the reasons recorded itself was wrong, incorrect and without material on record at the time of recording of reasons. Because in the reasons recorded the ld. AO mentioned that “Information received from ITBA under AIMS, Multi Year NMS Priority.

1. As per information code SFT 004, the assessee has deposited cash in account other than current account an amount of Rs.1,75,20,300/- during the F.Y. 2016-17 assessee has not filed the ITR for A.Y. 2017-18. I have reason to believe that income to the extent of Rs.1,75,20,300/- has escaped assessment u/s 147” (PB3) However the assessee has not deposited these amount in the bank account as we had stated the same from starting vide our letter to Bank Manager dt. 02.03.2022 (PB14-15) letter to AO dt.02.03.2022(PB16-17) 12.03.2022 and 26.03.2022(PB18-27) in support we had also filed the form 26AS original as well as revised from which it is clear that the bank has revised the form 26AS and reversed the entries and correct the entries(PB28 to 31B) hence we had established that assessee has not deposited such cash. Thus, when the very reasons are wrong or incorrect then all the proceedings are invalid.

1.2 Hence when the reason for reopening itself is wrong, incorrect and without material and altogether reverse then all the proceedings are void ab-initio and liable to be quashed. 1.2.1 On this preposition we would like to draw your kind attention on direct decision Honble Gujarat High Court in the case of Mumtaz Hazi Mohamad Memon v/s ITO 408 ITR 268(Guj.) on the very same issue, wherein the Honble Court has held that “11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 1,18,95,000/- and two; that the assessee had not filed the return and that therefore his 1/3rd share out of the sale proceeds was not offered to tax. Both these factual grounds are totally incorrect as is now virtually admitted by the Revenue. It is undisputed that the assessee had actually filed the return of income for the said assessment year and income also offered his share of the declared sale consideration to tax as capital gain. The Assessing Officer may have dispute with respect to computation of such capital gain, he cannot simply dispute the fact that the assessee did file the return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of Rs. 1,18,95,000/- as a sale price of the property. The assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was Rs. 50 lakhs.

2. Notice u/s 148 of the IT Act not properly: 2.1 The Ld. AO has erred in framing there assessment order without serving notice u/s 148 properly to the appellant and therefore assessment is made without jurisdiction and deserved to be quashed. 2.2 In the instant case the notice u/s 148 of the IT act was not served upon the assessee. As the Ld. AO has issued the Notice U/s 148 on dt. 19/03/2021 and in the assessment proceedings we had objected the same during the assessment order vide letter to AO (PB18-22) and the Ld. AO has nowhere stated provided the proof that the Notice has been served upon the assessee. And also on perusal of portal it is cleared that the notice has also not been sent on Email also no proof of service notice, on being demanded the certified copies of documents after assessment the ld. AO in response thereto the ld. AO has given the documents but he has not given the proof of service of notice u/s 148 only one proof of service of notice u/s 142 was given which is dt. 24.02.2022(PB13) and also in the assessment record the same was not available. Thus it has been proved that the notice u/s 148 has not been served, still if your honor is having any doubt the ld. AO may kindly be asked for the same. 2.3 The Ld. AO is silent so far as on its duly served upon the assessee in demand the same and the same notice was not received by the assessee with in time as prescribed by law. Assesseehas come to know about the said notice only on receiving the notice u/s 142(1) dt. 24.01.2022. Hence the assessee has filed the objection regarding the notice u/s 148 not served through letter as above. However the ld. AO has neither decided the objection nor given any rebuttal and reply in Mangilal Datla, Banswara. the assessment order, which proves that the notice has not been served upon the assessee. And it is settled legal position of law that the proper service of the notice u/s 148 on the assessee is mandatory, without service of notice the subsequent proceedings are invalid and illegal and liable to be dropped. Thus the assessment order u/s 144/147 is bad in law and deserved to be quashed as the mandatory condition for reopening of the assessment could not have been fulfilled. Proper service of the notice u/s 148 is mandatory condition upon the assessee but Ld. AO could not have been served the notice as issued u/s 148 admittedly as per record. 2.4 Further, notice issued u/s 148 is primary condition of law to initiate the re-assessment proceedings under section 147 could not have been served properly to the assessee appellant therefore mandatory condition could not have been fulfilled. The proper service of notice u/s 148 is a jurisdictional requirement that must be mandatorily complied with and in the absence of the same, the proceedings should not be initiated on the assessee. 2.5 The same contention is favored by many land mark judgment which are as follows; Honorable ITAT, Agra Bench in M/s K.P. Cold Storage Vs ITO had held that; In the present case AO on basis of information received from the ADIT(Inv.) that there were huge cash deposits in the bank accounts maintained by assessee during the period F.Y 2008-09, had issued notice under section 148 which culminated into assessment framed determining total income at Rs. 2,21,60,400/- as against Rs.12,45,390/- originally returned by assessee. Assessee contended that no notice under section 148 was served upon assessee and ex- parte assessment was completed without serving any notice under section 148 till the completion of assessment which rendered the assessment order to be held void-ab-initio. It was held a valid service of a valid notice under section 148, is not a mere procedural requirement, but is a condition precedent to the validity of any assessment, reassessment or re-computation to be made under section 147 and it is so because of the use of words “shall serve on the assessee” and also the requirement to the effect “before making the assessment, reassessment or re-computation under section 147” in the section itself- meaning thereby that if no notice under section 148 is issued or if the notice so issued is shown to be invalid, or the service of notice so issued, is shown to be invalid, AO could not proceed with the subsequent proceedings for making assessment, reassessment or re-computation under section 147. Unless, the notice was served on the proper person in the manner prescribed under section 282, the service was insufficient and AO did not have jurisdiction to re-assess the escaped income. Thus, the service of notice under section 148 was no service in the eye of law and all subsequent proceedings including the ex parte assessment framed on 21.12.2016 in assessee’s case were illegal and void ab initio. [1999] 238 ITR 694 (CAL.) High Court Of Calcutta in Keshab Narayan Banerjee; Section 148, read with section 147 of the Income-tax Act, 1961 – Income escaping assessment – Issue of notice for – Assessment years 1983-84 to 1987-88 – Whether service of notice is condition precedent for passing orders under section 147 – Held, yes – Whether respondent made attempt Mangilal Datla, Banswara. to serve notice under section 148 to appellant by registered post but it was not shown that either appellant refused to take service of notice or that appellant was not available at his residence or that there was no one willing to accept service on his behalf, service of notice could not be said to be properly effected and, therefore, assessment order passed u/s 147 based on service was also bad in law –Held, yes (In favor of assesee). For taking any action u/s 148 a valid service of the notice is precondition. For reference kindly refer a direct decision of Shri Chetan Gupta vs. ACIT(2014) 160 TTJ 0009 (Del)For valid assumption of jurisdiction to frame a reassessment, a proper and valid service of notice u/s 148 on assessee is mandatory requirement violation thereof will result in quashing of the reassessment proceedings. Assessee has demonstrated that the notice was issued/sent at an address different than the one mentioned in his return of income. Department also admits that the notice was served not on assessee but on one Shri Ved Prakash who according to assessing officer is a responsible person working for the group entities of assessees family and this amounts to a proper service on assessee. These facts are admitted by the department which are evidenced by the remand report and field correspondence mentioned above. Assessee’s contention that said Ved Prakash was neither his employee nor his authorized agent, remains uncontroverted. Merely because he appeared in some other group entities will not detract the fact that notice was not served on assessee. During the course of reassessment AO was intimated about non service of notices u/s 148 and 143(2) but AO failed to take cognizance of assessee’s intimation and objections. From the assessment record, remand reports, field correspondence and oral contentions, department could not demonstrate before us that notice u/s 148 was served on the assessee for A.Y. 2001-02. In the absence of a valid service of notice u/s 148 on the assessee the reassessment proceedings for AY2001-02 are bad in law, consequently they are quashed. CIT vs. Hotline International Pvt. Ltd 296 ITR 333 (Del); Hotel Blue Moon 321 ITR 362 (SC), followed. The above decision has been affirmed by the Honble High Court Delhi refer CIT v/s Chetan Gupta 94 CCH 13(Del). In the case of A.K. Kochandi&Ors.vs. AGRICULTURAL INCOME TAX OFFICER(1975) 43 CCH 0749 KerHC (1976) 1976 CTR 0072 (KER) : (1977) 110 ITR 0406held that Assessment—Best judgment assessment—Validity—Notice not served on assessee in accordance with Order V, rr. 17, 18 & 19 etc.—Ex parte assessment not valid. On this preposition also kindly refer a direct decision of Jodhpur Bench in the case of Sh. Panna Lal Bhil v/s ITO in dt. 11.06.2014. Where it has been held that the notice u/s 148 of the Act is a jurisdictional notice and its service has to be as per law, failing which the entire edifice built on the basis of that notice will crumble down as a pack of card fall. Copy is enclosed.

Mangilal Datla, Banswara.

Before proceeding with the matter, it is not out of place to mention that the law declared by the Supreme Court in GKN Driveshafts (supra) clearly held that the preliminary objection is to be decided as the first, it cannot be decided subsequently. The argument which has been canvassed by the assessee is required to be considered very seriously more particularly in view of the observations made by the Supreme Court in the case of KSS Petron Private Ltd (supra) which is followed in Hotel Blue Moon (supra), the law declared by the Supreme Court is taken in true spirit whether it will open a second inning in his own. Section 153(3) is to be read very cautiously as 153 powers are given to the Department, the Court has to look into whether the law declared by the Supreme Court is given away or protected. In the present case, as the Assessing Officer has clearly ignored the law declared by the Supreme Court, in that view of the matter, the issues which are raised in the matter, the Tribunal ought not to have remitted back for reassessment since period of limitation has already expired as the authority will get extended time of limitation beyond 9 months which is not the object of the Income Tax Act.

In that view of the matter, on issue No. 1 and 2, the order of reassessment passed by the Tribunal is declared null and void. The questions are answered in favour of assessee and against the Department.

Recently this Honble Tribunal in the case of in the case of Yashpal Agrawal the Honble ITAT In dt. 30.06.2023 has quashed the assessment order on the grounds that the objections filled by the assessee against the proceedings u/s 147/148 has not been decided here is also the same position and the also Mahendra Sharma v/s ITO Ward 3(1), Jaipur in dt.25.03.2025.

Thus on the above legal position of law the notice u/s 148 or proceedings u/s 147/148 and consequent assessment order liable to quashed.

4. Non application of mind by the higher authorities:- Further on perusal of the approval and assessment record it has come to know that in the satisfaction the ld. JCIT has mentioned only that “Aprooved”. The ld. JCIT has given the approval and satisfaction in the mechanical manner, he has not recorded his own satisfaction. As on perusal of the reason recorded(PB3-4) and 13 Mangilal Datla, Banswara. approval u/s 151 (PB2) by the without competent authority it is clearly proved that they have not applied the mind on the reasons recorded they have only expressed or mentioned Approved by the JCIT on the reason forwarded. While as per decision of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 DelHC it has been held that Section 151 of the Act clearly stipulates that the CIT, who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression ‘approved’ says nothing. It is not as if the CIT has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. On this preposition kindly also refer Also refer Maruti Clean Coal And Power Ltd. vs. ACIT (2018) 400 ITR 0397 (Chhattisgarh) In the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 TAXMAN 0073 (MP) it has been held that While according sanction, the Joint Commissioner, Income Tax has only recorded so “Yes, I am satisfied” If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 147, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. (para 7) As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. No question of law involved in the matter, warranting reconsideration appeals are, therefore, dismissed. Also refer PAC AIR SYSTEMS P. LTD. vs. ITO (2020) 58 CCH 0001 Del Trib it has been held that Reassessment—Income escaping assessment—Assessee filed present appeal challenging order of CIT(A) wherein, AO’s action was accepted—Assessee contended that AO had erred in assumption of jurisdiction u/s 147/148 based on invalid and mechanical approval granted by Addl. CIT—Held, approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating re-assessment proceedings, because from said remarks, it was not coming out as to which material; information; documents and which other aspects went gone through and examined by Addl. CIT for reaching to satisfaction for granting approval—Thereafter, AO had mechanically issued notice u/s 148—Reopening in assessee’s case for AY in dispute was bad in law and deserved to be quashed—Approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating reassessment proceedings issue of notice u/s 148 and was not in accordance with s. 14 Mangilal Datla, Banswara. 151 thus, notice issued u/s 148 was invalid and accordingly, reopening in this was bad in law and therefore, same was hereby quashed—Assessee’s appeal partly allowed. In the case of Gorika Investment And Export (P) LTD. vs. ITO (2018) 53 CCH 0168 DelTribReopening—Income escaping assessment—Validity thereof—Assessee filed return of income declaring income which was processed u/s. 143(1)—AO issued notice u/s. 148 after recording reasons that income of assessee had escaped assessment—AO framed assessment u/s. 143(3) r.w.s. 147 by making addition—CIT(A) upheld order of AO—Held, in CIT Vs N.C. Cables Ltd., it was held that CIT(A) who was competent authority to authorize reassessment notice had to apply his mind and form opinion—Mere appending of expression ‘approved’ says nothing— Satisfaction had to be recorded of given case which could be reflected in briefest possible manner—Exercise appears to had been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer—AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished by Directorate of Investigation Unit and CIT gave approval without applying his mind in slip-shod manner—As approval/sanction given by CIT was without recording satisfaction, reopening was not sustainable—Assessee’s appeal allowed. TARA ALLOYS LTD. vs. ITO (2018) 63 ITR (Trib) 0484 (Delhi)Reassessment—Income escaping assessment—Validity thereof—Case of assessee was selected for scrutiny as per provisions of section 147 and 151 and accordingly notice u/s 148 was issued to assessee— Proceedings u/s 147/148 were initiated after recording reasons on basis of information received from Investigation Wing of Department on basis of search and seizure operation—During course of assessment proceedings, assessee was specifically asked to explain and justify transaction with G received as share application money/share capital and why same should not be disallowed or added in income of assessee—AO held that it was camouflage just to introduce its own fund through entry operator therefore amount was added in income of assessee company as unexplained u/s 68—CIT(A) confirmed reassessment and addition made by AO of share capital and unexplained cash credit—Held, notice u/s 148 could be quashed if ‘belief’ was not bona fide or one based on vague, irrelevant and non-specific information—Basis of belief should be discernible from material on record which was available with AO when he recorded reasons— There should be link between reasons and evidence/material available with AO—Commissioner had simply affixed “approved” at bottom of note sheet prepared by ITO technical—ITO could not have had reason to believe that income had escaped assessment by reasons of assessee ’s failure to disclose material facts and if Commissioner had read report carefully he could not have come to conclusion that this was fit case for issuing notice u/s 148—Commissioner had simply put “approved” and signed report thereby giving sanction to AO—Nowhere Commissioner had recorded satisfaction note, not even in brief after applying his mind—After expiry of four years from end of relevant assessment year, notice u/s 148 should not be issued unless Commissioner was satisfied that it was fit case for issue of such notice—Reassessment proceedings and notice being bad in law were quashed—Assessee’s appeal allowed. 15 Mangilal Datla, Banswara. Also refer a recent judgment of this Honble ITAT in the case of Sh. Anshuman Singh v/s ACIT Circle-1 Jaipur in & 739/JP/2023 dt. 10.04.2024.

7. The Reasons for Reopeningof the assessment not valid:-

That the learned AO has grossly erred both in law and facts where the assesseehas not deposited the such alleged cash deposited. Hence it cannot be said that the there was any failure on the part of assesse to disclose truly and fully all material facts necessary for assessment. The finding of concealed income has disproved by the 26AS itself. The reopening is based on wrong information provided by the third partystatement , which have No evidentiary value and the ld. AO and Authorities has never made any inquiry before issuing the notice u/s 148.

As the reasons as recorded by the ld. AO for reopening the assessment was totally presumptive/assumptive/surmises and vague in the air only in a mechanical manner because assessee never deposited such alleged cash deposit. Thus the re-assessment proceedings in this case were only based on presumption/suspicion and were thus not validly initiated. The Ld. AO recorded the reasons without pointing out his own any finding regarding concealed income and about how the assessee has failed to disclosed fully and truly material facts while the assesse has done all the compliance on his part in this regard, therefore complete re-assessment proceedings void ab initio and bad in law and deserve to be quashed.

8. Re-assessment is based on borrowed satisfaction; The Ld. AO has issued notice u/s 148 on the basis of borrowed information from the SFT-004 Code, without verifying the correctness of the information and therefore re-assessment proceedings is absolutely bad in law and without jurisdiction and further AO not recorded his satisfaction and re-assessment is based on borrowed satisfaction which was not sufficient to confer power on the AO to initiate reassessment proceedings against assessee.

Sun. Pharmaceutical Industries Ltd. Vs. DY. CIT (2016)287 CTR(Del.)621; The Impugned initiation of assessment proceedings had started by the AO on borrowed satisfaction but not their own which is mandatory condition of the law as provided for re – opening of any assessment. Section 147 of Act clearly specify. In impugned case the Ld. AO had claimed that a certain transaction of bogus LTCG on the basis of statements as recorded of third party and Ld. AO could not have been made any enquiry regarding both the facts and without conducting any enquiry/investigation re-opened the case and issued the notices which is completely based on perverse findings and deserve to be declared as null and void ab initio.

Here in impugned case AO’s self-satisfaction regarding escapement of income is not bringing on record which is mandatory condition of law under section 147 of Income Tax Act, 1961, it could have been come only after conducting enquiry and investigation but Ld. AO did not make such therefore complete re-assessment proceedings come under suspicious circle, various honorable courts propounded and led on this aspect and issue direction to handle such situation.

Similarly in the case of CIT v. Indo Arab Air Services (2016) 130 DTR 78/ 283 CTR 92 (Delhi)(HC) it was held that mere information that huge cash deposits were made in the bank accounts could not give the AO prima facie belief that income has escaped assessment. The AO is required to form prima facie opinion based on tangible material which provides the nexus or the link having reason to believe that income has escaped assessment. The AO was also required to examine whether the cash deposits were disclosed in the return of income to form an opinion that income has escaped assessment.

The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of power. Aventis Pharma Ltd. vs. ACIT (2010) 323 ITR 570 (Bom).

The ld. DR has not stated that what was the sufficient material and not provided the same till date. As per the assessment order and reasons recorded it is clear that the notice has been issued only on the basis of information not on any material (i.e. bank statement) and such material has not been disclosed till date. For that we have already submitted in our WS that the reopening is based on the borrowed satisfaction.

Submissions on GOA-2: Addition of Rs. 1,75,20,300/- on account of alleged cash deposit in the bank account.

3. Further kindly consider our WS before the ld. CIT(A) (PB32-38) as WS before your honor.

Prayer: Therefore in view of the above facts , circumstances of the case and legal position the notice as well as the assessment may kindly be quashed and the addition may kindly be deleted in full.

5. The Ld. AR of the assessee in support of the contention so raised in the written submission, placed reliance on the following evidence / records:

Mangilal Datla, Banswara. S.No. Particulars Page No.

1. Copy of Notice U/s 148 dt. 19.03.2021. 1 2. Copy of approval u/s 151 dt19.03.2021. 2 3. Copy of reasons recorded u/s 148. 3-6 4. Copy of letter to Bank andRBI dt. 15.09.2021 and reply by the 7-10 Bank.

5. Copy of letter to AO dt.02.03.2022 and also to Bank 11-15 6. Copy of Objection against notice and proceedings vide letter to AO 16-27 dt. 02.03.2022, 12.03.2022 and 26.03.2022.

7. Copy of Form 26AS original and revised. 28-31 8. Copy of WS to CIT(A) 32-38

6. The ld. DR is heard who relied on the findings of the Ld. CIT(A).He vehemently argued that as the evidence produced before the CIT(A) needed to be examined, the order was rightly set aside to the AO, and the same may kindly be sustained.

Now, reference is to be made to the relevant statutory provisions in this regard. Firstly, I refer to sub-section (1) of section 148, which reads as under:

148(1) Before making the assessment, reassessment or recomputation under section 147 the Assessing Officer shall serveon the assessee a notice requiring him to furnish within such period, as may be specified in the notice a return of his income or he income of any other person in respect of which he is 20 Mangilal Datla, Banswara. assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, and the provisions of this Act shall, so far as may be apply accordingly as if such return were a return required to be furnished section 139.

Thus, the mandate of section 148 is that notice should be served on the assessee. It is not disputed that the notice under section 148 has not been served on the assessee. There is also nothing on record to suggest that the notice was served on the assessee even after it was pointed out that notice was not served on him. Therefore, the issue to be decided in the instant case is that if the notice is not served on the assessee, who is named in the notice,whether Assessing officer will acquire a legal or valid jurisdiction to proceed in the matter or not. I find that there are plethora of judgements on this particular issue, viz. Hon’ble Supreme Court in Y. Narayan Chetty vs. ITO (1959) 35 ITR 388 (SC); CIT vs. Thayaballi Mulla Jeevaji Kapasi (1967) 66 ITR 147 (SC); and CIT vs. Kurban Hussain IbrahimjiMithiborwala (1971) 82 ITR 821 (SC) which have held that the notice prescribed by section 148 cannot be regarded as a mere procedural requirement. It is only if the said notice is served on the assessee that the ITO would be justified in taking proceedings against the assessee. If no notice is issued/served or if the notice issued is shown to be invalid, then the proceedings taken by the ITO would 21 Mangilal Datla, Banswara. be illegal and void. Hon’ble Delhi High Court in case of CIT vs. Hotline International Pvt. Ltd. (296 ITR 0333) has held that in the absence of a valid service of notice u/s 148 on the assessee, the reassessment proceedings are bad in law. Hon’ble Punjab & Haryana High Court in case of CIT vs. Ceban India Ltd. of 2009, Jul 7, 2009 has held that in absence of notice being served, the AO had no jurisdiction to make assessment. ITAT Visakhapatnam in the case of Smt.Kakarla Guna Vidya Saraswathi vs. ITO, held as under – The requirement of both the issuance and service of such notice upon the assessee for the purposes of Section 147 and 148 of the Act are mandatory jurisdictional requirements. Order passed is liable to be quashed on account of non-service of notice u/s 147/148.

The ratio of the above judgments and those relied upon by the appellant is that there has to be service of notice as per law and mere participation in the proceedings will not validate the assessment proceedings. Acquiescence on the part of the assessee cannot confer jurisdiction which otherwise is lacking from the very beginning. The Assessing Officer can proceed to complete assessment only after proper service of notice in accordance with law and unless such notice had duly been served, the Assessing Officer cannot be said to have been duly clothed with the jurisdiction to pass the assessment order.

Mangilal Datla, Banswara. It is settled law that it is the duty of the revenue to establish that the service of an order or a notice was made on the assessee himself or on somebody duly authorized by him in that behalf. When the assessee pleads that he has not been properly served with any notice, it is for the Department to place the relevant material to substantiate the plea that the assessee was served with prior notice. In the present case, no material is on record to show that the notice was served on the assessee. Till date, despite repeated requests made on behalf of the appellant and even before the proceedings before us, the AO has not been able to provide evidence of service of notice. The most fundamental requirement on service has not been established.

The ratio of the decisions cited above had also been consistent that acquiescence is not going to confer jurisdiction which otherwise is lacking from the very beginning. As observed earlier, the Assessing Officer can proceed to complete the re- assessment only when he issued notice and served the same on the assessee. In view of these findings, the Assessing Officer cannot assume jurisdiction to complete assessment for want of notice even though assessee had appeared before him and also participated in the reassessment proceedings. The procedural irregularities can be waived off by the assessee, but at the same time the conduct of the assessee in participating in assessment proceedings will not be sufficient to confer the jurisdiction on the Assessing Officer, without service of notice on the 23 Mangilal Datla, Banswara. assessee. It was fundamental requirement to get the notice served on the assessee before proceeding to complete the reassessment and as it is lacking, this jurisdictional defect cannot be cured.Therefore, it is held that as there was no service of notice under section 148 of the Act, the re-assessment proceedings are void ab-initio and thus liable to be quashed. As a result, the basic legal issue raised by the appellant vide Ground No. 1 is allowed. The assessee has also raised various other legal grounds, like non-consideration of objection raised, non-application of mind by higher authorities, unsigned notice, reasons based on borrowed satisfaction, etc., which we do not deem proper to delve into, as we have quashed the assessment order on jurisdictional issue.

9. Vide Ground No.2, the assessee has challenged the addition of Rs.1,75,20,300/-. We find that the during the appellate proceedings, complete evidence which clearly established that no cash deposits were made by the assessee in his bank account, were adduced before the Ld. CIT(A). The corrected Form- 26AS and the letter from the concerned bank clarifying the issue were before the Ld. CIT(A), on the basis of which he could have deleted the addition and allowed the ground raised

by the assessee. The Legislature has conferred very wide powers upon the Appellate Commissioner once an appeal is preferred to him by the assessee. An appeal is only a rehearing or a retrial. In the absence of any statutory inhibitions or restrictions, CIT(A) has precisely the same powers, exercisable in the 24. Mangilal Datla, Banswara. same manner and to the same extent, as the AO has, in the first instance. The powers of the CIT(A) are in the nature of reassessment and once an assessment order is brought before CIT(A), his power is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance but his powers range over the whole assessment to correct the AO not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the AO and determined in the course of assessment. Under sec 250(4) of the Income-tax Act, the CIT(A) is competent to make such further enquiry as he thinks fit or cause further enquiries to be made by the Income-tax Officer, under remand. He is further empowered to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment. The CIT(A) ought to have deleted the addition on the basis of Form-26AS or called remand report from the AO, and thereafter decided the issue. But he shunned from his duty. We further observe that the CIT(A) misdirected himself in setting aside the matter to the AO to decide it afresh, taking shelter of the proviso inserted to section 251(1)(a) brought about w.e.f.01.10.20204. The Memorandum explaining the provisions to the Finance Act, 2024 (Clause 77) clearly stated that in cases of Best Judgement Assessment made u/s 144 where the assessee remains unresponsive to the notices issued by AO, the assessment may be set aside. In the instant case, order u/s 144 was passed Mangilal Datla, Banswara. as the assessee had not filed his ITR. From the records, it is observed that the assessee filed replies to all notices received by him. In these circumstances, the CIT(A) ought to have decided the appeal on merits rather than setting it aside to the AO for fresh consideration. As the assessee has already lost a considerable time and money, agitating an issue which was the outcome of inadvertent error on the part of Bank and equally inconsiderate and indifferent approach by the Department saddling him with tax liability for no fault of his, we, after examining the aforesaid documents, delete the addition made, instead of setting it aside to the AO. The ground of appeal, thus stands allowed.