INCOME TAX OFFICER, KAKINADA vs. ANDHRA PRADESH UNITED TEACHERS FEDERATION, KAKINADA
Facts
The Assessing Officer initiated reassessment proceedings under Section 147 r.w.s. 144B for A.Y. 2018-19, adding Rs. 79,76,913/- as unexplained cash deposits under Section 69A, as the assessee had made significant cash deposits but had not filed an Income Tax Return. The CIT(A) subsequently set aside this assessment to the AO for fresh adjudication, citing natural justice and the newly inserted proviso to Section 251(1)(a) of the Act.
Held
The ITAT held that the CIT(A) exceeded their jurisdiction by setting aside an assessment order made under Section 147 r.w.s. 144B. The first proviso to Section 251(1)(a), which grants powers to set aside an assessment for fresh adjudication, is specifically limited to orders made under Section 144 (best judgment assessment), not those under Section 147/144B. The ITAT set aside the CIT(A)'s order and restored the matter to the CIT(A) for re-adjudication based on the assessee's grounds of appeal.
Key Issues
Whether the CIT(A) has the jurisdiction under the first proviso to Section 251(1)(a) of the Income Tax Act to set aside an assessment order made under Section 147 r.w.s. 144B, or if this power is limited only to orders made under Section 144.
Sections Cited
147, 144B, 251(1)(a), 144, 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION BENCH”, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI OMKARESHWAR CHIDARA, HON’BLE
आदेश /O R D E R
PER RAVISH SOOD, JM:
The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 21.08.2025, which in turn arises from the order passed by the
I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation Assessing Officer (for short, “A.O”) under section 147 r.w.s. 144B of the Income- Tax Act, 1961 (for short, “the Act”), dated 22.03.2024 for Assessment Year 2018-19. The revenue has assailed the impugned order on the following grounds of appeal before us:
“1. The order of the Ld.CIT(A), National Faceless Assessment Centre (NFAC) is erroneous both on facts and in law. 2. The Ld. CIT(A) had erred in setting aside the order of the assessment completed u/s.147 r.w.s. 144B of the Income Tax Act, dated 22-03-2024, in contravention to the provisions of section 251(1)(a) of the Income Tax Act, 1961. 3. The Ld. CIT(A) failed to appreciate the fact that the assessment was not made u/s.144 of the Income Tax Act and erroneously set aside the assessment to the AO for fresh assessment. 4. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and/or at the time of hearing of appeal. 5. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that all these above additions be restored.”
Succinctly stated, the A.O., based on the information that the assessee during the subject year had made cash deposits in its bank account of Rs. 1,03,40,243/- but had not filed its return of income for the year under consideration, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act dated 02.04.2022 was thereafter served upon the assessee. In compliance, the assessee filed its return of income for the A.Y. 2018-19, declaring an income of Rs. 2,49,450/-.
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation 3. During the course of the assessment proceedings, the A.O. observed that the assessee, during the subject year, had made cash deposits of Rs. 79,76,913/- in its bank account nos. 000555 and 000059 held with Kakinada Cooperative Town Bank Limited. On being queried, the assessee failed to come forth with the requisite details as were called for by the AO and sought further time. The A.O. based on the fact that the assessee had failed to come forth with any explanation regarding the source of the cash deposits of Rs. 79,76,913/-, made an addition of the entire amount by treating the same as having been sourced out of its unexplained money under section 69A of the Act. Accordingly, the A.O., vide his order passed under section 147 r.w.s. 144B of the Act, dated 22.03.2024, determined the income of the assessee-society at Rs. 82,26,363/-.
Aggrieved, the assessee-society carried the matter in appeal before the CIT(A), who set-aside the matter to the file of the AO with a direction to frame a fresh assessment, de novo, after taking into account the submissions filed by the assessee. For the sake of clarity, we deem it apposite to cull out the observations of the CIT(A), which read as under:
“7. Decision: I have carefully considered the ex-parte assessment/reassessment order, statement of facts, grounds of appeal and submissions furnished during the appellate proceedings. The appellant is a registered society engaged in the welfare of its members. During the relevant previous year, it received Rs 79,76,913/- in the form of donations for the specific purpose of constructing its building "Employees Home." The AO held that these donations were unexplained money within the meaning of section 69A and accordingly added them to the total income. The AO further applied section 115BBE to tax the same at a higher rate.
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation The appellant contended that all donations were duly receipted, routed through banking channels, collected by authorised committees, and supported by resolutions and utilisation details. It was also submitted that the donations were for a specific sanctioned purpose and could not be treated as unexplained money. The appellant further submitted that due to unavoidable academic duties of the executive committee, it could not submit a full response to the final notice. (i) It is observed that: • The appellant has produced prima facie evidence to demonstrate the source, purpose, and utilisation of the donations. • There is nothing on record to indicate that the AO has examined the donation receipts, resolutions, or bank statements in detail before concluding the addition. • The principle of natural justice requires that adequate opportunity be granted to the assessee to furnish explanations and supporting evidence. The record shows that although the first notice under section 142(1) was issued much earlier, the crucial final notice came during a period when the appellant's office-bearers were engaged in official examination duties. • The submissions made earlier under section 142(1) appear to have been disregarded without discussion in the assessment order. (ii) Considering the above and in the interest of justice, I am of the view that the matter requires fresh examination at the level of the AO after granting adequate opportunity to the appellant to produce all relevant evidence. It would best serve in the interest of justice if the appellant gets another chance to represent his case before Ld. AO and thereupon Ld. AO can verify the submission of the appellant and conduct necessary enquiries to gather material for a true and correct estimation of income of the appellant. (iii) As per the newly inserted proviso to section 251(1)(a) of the Act, Commissioner (Appeals) in case of order of assessment made u/s. 144 of the Act, may set aside such assessment and refer the case back to the Ld.
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation AO for making a fresh assessment. This proviso has been inserted in the Act w.e.f. 1.10.2024. The said proviso to section 251(1)(a) of the Act is reproduced as under: "251. (1) In disposing of an appeal, the Commissioner (Appeals)] shall have the following powers— in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; [Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment; (iv) Thus, as per the new provisions coming into effect from 01.10.2024 the CIT(A) have been granted powers to set-aside assessments to Ld. AO in cases where assessment order has been issued u/s 144. As in the present case the assessment order has been issued u/s 144 by the Ld. AO and there are issues which need to be further examined and investigated by the Ld. AO, it's a fit case for set-aside of assessment made by the Ld. AO. In view of the above facts and changes in the Act, as enumerated above, it is felt that the consideration of the submissions filed by the appellant for the first time in the appellate proceedings, are germane to the correct appreciation of the issues under deliberation. (v) Therefore, the assessment order passed by the Ld. AO dated 22.03.2024 passed u/s. 147 r.w.s 144 is hereby set aside for making fresh assessment, de-novo, after taking into account the above submissions filed by the appellant. Needless to say that the Ld. AO should, while conducting the set aside proceedings, give proper opportunities of representation to the appellant in view of principles of natural justice and take into account any further submissions which it has to file during the course of the said proceedings. The Ld. AO should also conduct all necessary enquiries to verify the submissions filed by the appellant. The appellant is also directed to comply with all the notices/correspondences issued by the Ld. AO. (vi) Therefore, all grounds filed by the appellant are thus remanded to the Ld. AO and the case is set aside for re-adjudication by the Ld. AO afresh. 8. In the result, the appeal is hereby set aside.”
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation 5. The Revenue, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below, and considered the material available on record.
Shri K. Prasad, Learned Senior Departmental Representative (for short, “Ld. DR”), at the threshold of hearing of the appeal, submitted that the CIT(A) has grossly erred in law and in the facts of the case by setting aside the order passed under section 147 r.w.s. 144B of the Act, dated 22.03.2024 to the file of the AO for framing a fresh assessment. Elaborating on his contention, the Ld. DR submitted that though the legislature in all its wisdom had vide the Finance No. (2) Act, 2024 w.e.f. 01.10.2024 vested with the CIT(A) the power to set-aside the order of assessment, but the same is limited only to cases where such an order of assessment had been made by the A.O under section 144 of the Act. Carrying his contention further, the Ld. DR submitted that as the assessment in the case of the present assessee was framed by the A.O under section 147 r.w.s. 144B of the Act, dated 22.03.2024, and not by way of an ex parte/best judgment assessment order under section 144 of the Act, therefore, the CIT(A) was divested of his jurisdiction to set-aside the matter to the file of the A.O. with a direction to frame a fresh assessment. The Ld. DR to buttress his contention had drawn our attention
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation to the “first proviso” to Section 251(1)(a) of the Act. The Ld. DR submitted that as the CIT(A) had grossly erred in law and facts of the case in traversing beyond the scope of his limited jurisdiction as contemplated in the “first Proviso” of section 251(1)(a) of the Act, which circumscribed his jurisdiction to set-aside the assessment order back to the file of the A.O for framing of a fresh assessment only in a case where the order of assessment was made under section 144 of the Act, therefore, the order so passed by him wherein he had set-aside the assessment order passed by the AO under Section 147 r.w.s 144B of the Act cannot be sustained and is liable to be set-aside.
Per Contra, Shri P. Subrahmanyam, Advocate, Learned Authorized Representative (for short “Ld.AR”) for the assessee, relied upon the orders of the CIT(A).
We have given thoughtful consideration to the contentions advanced by the learned authorized Representatives of both parties regarding the sustainability of the impugned order passed by the CIT(A).
Admittedly, the legislature in all its wisdom had vide the Finance No. (2) Act, 2024, w.e.f. 01.10.2024 made available in the statue “first Proviso” to section 251(1)(a) of the Act, as per which the CIT(A) has been vested with a limited jurisdiction to set-aside the order of the assessment made by the A.O under section 144 of the Act, and refer the case back to his file for making a fresh
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation assessment. Insofar, the vesting of jurisdiction with the CIT(A) for setting aside the assessment order passed by the A.O under section 144 of the Act, back to his file with a direction to frame a fresh assessment is concerned, there is no dispute. The controversy involved in the present appeal hinges around the aspect that the CIT(A) had set-aside the order passed by the A.O under section 147 r.w.s. 144B of the Act, dated 22.03.2024, to his file with a direction for making a fresh assessment, de novo, after taking into account the submissions that would be filed by the assessee in the course of the set aside proceedings before him.
In our view, the CIT(A) had clearly exceeded his jurisdiction, and despite not being vested with any jurisdiction to set-aside the assessment and refer the case back to the AO for making a fresh assessment, except for in a case where the same has been framed vide by the AO to the best of his judgement under section 144 of the Act [as per the powers made available in the statute vide the “first Proviso” to section 251(1)(a) of the Act], had wrongly set-aside the impugned order of assessment passed by the A.O under section 147 r.w.s. 144B of the Act, dated 22.03.2024 to his file with a direction to frame a fresh assessment.
We find that the CIT(A) in his order had wrongly observed that the AO had framed the assessment under section 147 r.w.s. 144 of the Act, dated 22.03.2024. We are of the view that a wrong factual observation on the part of
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation the CIT(A) had formed the genesis for the setting aside of the order of the assessment to the file of the AO with a direction to frame a fresh assessment.
Be that as it may, we concur with the Ld. DR that as the CIT(A) had exceeded his jurisdiction and wrongly set-aside the order of assessment passed under section 147 r.w.s. 144B of the Act, dated 22.03.2024 to the file of the AO with a direction to frame a fresh assessment, therefore, the same cannot be sustained and is liable to be set-aside. Accordingly, we herein set-aside the order passed by the CIT(A) dated 21.08.2025 and restore the matter to his file with a direction to re-adjudicate the same based on the specific contentions raised by the assessee before him vide grounds of appeal nos. 1 to 4.
Resultantly, the appeal filed by the Revenue is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 18th February, 2026.
Sd/- Sd/-(ओंकारेश्वर धिदारा) (रिीश सूद) (RAVISH SOOD) (OMKARESHWAR CHIDARA) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य /ACCOUNTANT MEMBER Dated: 18.02.2026 *Giridhar, Sr.PS
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I.T.A.No.609/VIZ/2025 Andhra Pradesh United Teachers Federation
आदेश की प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : Andhra Pradesh United Teachers Federation 2-46-26/26, Bhaskar Nagar (SO) Kakinada – 533003 Andhra Pradesh 2. रधजस्व/ The Revenue : Income Tax Officer – Ward -1 3rd Floor, Sri Deepthi Towers Main Road, Kakinada – 533001 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax गधर्ाफ़धईल / Guard file 6. आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam
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