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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of learned
CIT(A)/National Faceless Appeal Centre, Delhi dated 04.09.2025 for assessment year (AY) 2016-17. The assessee has raised following grounds of appeal:
“1. That on the facts and circumstances of the case and the provision of law, the Ld. CIT(A) has failed to appreciate the fact that the initiation of proceeding u/s 147 is illegal, bad in law, without jurisdiction and time barred and thus assessment order passed requires to be quashed.
That on the facts and circumstances of the case and the provision of law, the notice issued under section 148A(b), the order passed under section 148A(d), and the consequential notice issued under section 148 of the Income-tax Act, 1961 is illegal, bad in law, time barred and without jurisdiction and thus assessment order passed requires to be quashed.
That on the facts and circumstances of the case and the provision of law, the notice issued under section 148A(b), the order passed
under section 148A(d), and the consequential notice issued under section 148 of the Income-tax Act, 1961, by the Jurisdictional Assessing Officer (JAO), are illegal, bad in law, time barred and without jurisdiction, since as per the Faceless Assessment Reassessment Scheme and CBDT Notification No. 18/2022 dated 29.03.2022, such notices and orders are required to be issued only by the Faceless Assessing Officer (FAO). That accordingly, the entire proceedings initiated are void ab initio and liable to be quashed.
That on the facts and circumstances of the case and the provision of law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 7,25,000/- u/s 69 of the Income Tax Act with regard to investment made in purchase of immovable property.
5. That on the facts and the circumstances of the case and the provisions of the law, the learned CIT(A) has erred in forming an incorrect opinion without confronting the same and in using the same adversely without providing the reasonable opportunity of defending, which inaction of the AO makes the assessment proceedings and consequential assessment order as null and void.
That on the facts and circumstances of the case and the provision of law, the Ld. AO has erred in initiating the penalty proceeding u/s 271(1)(c) and 271F of the IT Act.”
2. Rival submissions of both the parties have been heard and record perused. The learned Authorized Representative (AR) of the assessee submits that the assessee has raised legal grounds of appeal
challenging the validity of notice issued under section 148 as well as addition on merit. The ld. AR of the assessee while referring the notice under section 148 dated 25.03.2023, a copy of which is filed at page no.1 to 14 of the paper book, submitted that case of the assessee for AY 2016-17 was reopened beyond the period of three years from the end of the relevant assessment year. The Assessing Officer while passing the assessment order made addition of Rs.7,25,000/- and Rs.93,287/- only, hence, the income allegedly escaped from assessment was admittedly less than Rupee fifty lacks. Thus, no notice under section 148 for AY 2016-17 could be issued on 25.03.2023. Time period of three years from the end of relevant assessment years expired on 31.03.2020. The ld. AR of the assessee while explaining the facts submits that the initially notice under section 148A(b) was issued on 15.02.2023 inter alia stating that the assessee made investment in property of Rs.70 lakhs and there was another transaction with regards to sale of equity share of Rs. 93,560/- and sale of futures option of Rs.13,71,438/- and that assessee has not filed the return of income. In response to said show- cause notice, the assessee filed reply vide reply dated 15.02.2023 and explained that investment in property of Rs.62 lakhs was made her husband Shri Krishnan Subramanium through account payee cheque and balance payment was made by assessee out of her past accumulated savings and gifts received from time to time from close relatives. The assesses further submits the details of sale of 400 equity of shares of SBI, wherein, there was a loss of Rs.40. Similarly, with regard to sale of futures complete details were provided and there was loss of Rs.32,192/- on this type of transactions. So the assessee submitted that there was no escapement of income and prayed for dropping the reassessment proceedings. The assessee also furnished a copy of bank statement along with return of income of her husband. The ld. AR of the assessee while showing return of income of husband to submit that her husband has shown income of Rs.48.87 lakhs in AY 2015-16 and Rs.72.25 in AY 2016-17. The Assessing Officer despite taking all such details on record disregarded the reply of assessee. The Assessing Officer held in absence of sale deed of property it cannot be established that payments to seller was paid by other family members. However, while passing the assessment order, Assessing Officer accepted the same explanation and no addition was made in respect of payment made through bank account of her husband. The ld. AR of the assessee also explained the source of additions of Rs. 7.25 Lakhs from the entry in her bank accounts, copy of which is placed on record. In support of legal issue, the ld AR of the assessee relied on the following case laws; Shri Malkiat Singh vs ITO in dated 08.10.2025, Ms. Sonali Dharmendra Mhatre vs ITO [2025] 174 taxmann.com 699 , Abdul Majeed vs Income Tax Officer [2022] 140 taxmann.com 485 , Santosh Creations Pvt. Ltd. vs ACIT W.P.(C) 17570/2022
3. On the other hand, learned Senior Departmental Representative ( Sr DR) for the Revenue supported the orders of lower authorities. On specific submission of the ld. AR of the assessee that escaped income is less than Rs.50 lakhs, the ld.
Sr. DR for the revenue submits that no such ground of appeal was raised by the assessee before the learned CIT(A). Thus, the issue may be restored back for consideration of such issue.
4. In the rejoinder submission, the ld. AR of the assessee carried me through para 7.2 of the impugned order, wherein, the assessee specific objection raised by the assessee is recorded by ld CIT(A) that Assessing Officer has erred in assuming jurisdiction under section 148 as the amount involved and property transaction was less than Rs.50 lakhs.
I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. I find that initially notice under section 148A(b) dated 15.02.2023 was issued to the assessee, copy of such notice is placed at page 1 to 3 of the paper book. In response of such show- cause notice, the assessee furnished a reply dated 15.02.2023. In response to such show-cause notice, the assessee explained that payment purchase of immovable property by her husband Shri Krishnan Subramanium in two assessment years i.e. for AY 2015-16 and 2016-17. Such purchase was made to secure family future by her husband, copy of bank statement, bank account, cheque number and date of payment were furnished. The assessee stated that Rs.62.00 lakhs was paid by her husband and remaining amount was paid by her from the past saving and gift received from close relatives. The assessee also explained about sale of equity share of SBI, wherein, the assessee suffered a loss of Rs.40. The assessee also sold futures of Rs.13.70 lakhs, wherein, the assessee suffered a loss of Rs.32,912/- and the bank statement along with return of income was also furnished. Thus, the assessee clearly explained the facts that assumption by Assessing Officer about the escapement of income of more than rupee fifty lakhs is wrong. The Assessing Officer simply brushed aside all the explanation and passed the order under section 148A(d) of the Act.
Notice under section 148 dated 25.03.2022 was also issued simultaneously. In response to notice under section 148, the assessee filed her reply dated 23.04.2023 declaring income of Rs.1,60,382/-. The assessment was completed on 09.02.2024 in making addition of Rs.7,25,000/- under section 69 on account of unexplained investment and Rs.93,287/- on account of other credit in the bank account. Before the learned CIT(A), the assessee made similar submissions as explained before me. The assessee challenged the validity of notice under section 148 as well as addition on merits. The learned CIT(A) upheld the action of the Assessing Officer by referring the decision of Hon’ble Apex Court in the case of Raymond Woollen Mills Ltd. vs Income-Tax Officer And Ors reported in 236 ITR 34(SC), wherein it was held that sufficiency or correctness of the material is not a thing to be considered at the stage of reopening. In my view the ratio of decision of the Hon’ble Apex Court in the case of Raymond Woollen Mills Ltd., is not applicable on the facts of the present case. In the present case, the mute question is if the escapement of income is less than Rs.50 lakhs or more when the assessee furnished complete details of investment in property which was made by her husband. I find that Mumbai Bench of the Tribunal Ms. Sonali Dharmendra Mhatre vs ITO [2025] 174 taxmann.com 699 while considering the similar set of facts that when Assessing Officer issued notice under section 148 about time deposit / cash deposit of Rs.90.64 lakhs had escapement, later on while passing the assessment order accepted the investment in time deposit and no addition in assessment was made, however made additions on account of variation qua unexplained money wherein amount did not exceed of Rs.50 lakhs, the notice under section 148 after expiry of three years from the end of the relevant assessment was held time barred. I also find that Hon’ble Delhi High Court in Sonash Creations Private Ltd. vs ACIT (supra) also held that if the total value of transaction which was allegedly suggested of income escaping was less than Rs.50 lakhs during AY 2014-15, no notice under section 148 can be issued in term of clause (a) of section 149(1), unless case falls under Clause (b) of section 149(1). It was also held that first and foremost question to be addressed is whether on the basis of the material available on record, the Assessing Officer could conclude that income chargeable to tax amounting to Rs. 50.00 lakhs or more had escaped assessment. Thus, in view of the aforesaid factual and legal position, I find that notice under section 148 dated 25.03.3023 is not valid, when the assessee has brought sufficient material on record to show that assumption of escapement of income for AY 2016-17 of more than Rs. 50.00 lakh, is wrong and the case of assessee falls under clause(a) of section 149(1), hence, subsequent action initiated thereon is void-ab-initio. Hence, the assessee succeeded on preliminary submission of ld. AR of the assessee.
Considering the fact that I have accepted the preliminary submission of the assessee and held that notice under section 148 is invalid therefore adjudication on merit have become academic. Order was pronounced in the open Court on 01st December, 2025.