DEEPAK KUMAR GUPTA,KANPUR vs. ITO WARD 2(1), MORADABAD, MORADABAD

That the source of deposits (credit entries) in Bank Account from where the payment towards purchase of property has been made is fully explained and proved. Ld. A.O as well as Ld. CIT(A) has wrongly and arbitrarily held that the appellant failed to explain the source of the entries in the HUF Bank Account.

That if the source of deposit in HUF Bank Account is proved and explained, it won't matter whether the payment is made from Individual Bank Account or HUF Bank Account. Ld. CIT(A) has factually as well as legally erred in dismissing the appeal and in confirming the addition of Rs. 40,23,000/- made by A.O(NFAC).

That under the facts and circumstance of the case the addition of Rs. 40,23,000/- deserves to be deleted.

That the appellant craves leave to add, alter, amend, delete any of the grounds of appeal before or at the time of hearing of appeal.”

Appellant/assessee through application dated 17.02.2025, prayed for admission of following additional grounds: “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not quashing the impugned reassessment order passed by Ld. AO u/s. 147/144B without assuming juri iction as per law and without complying with mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961 and without obtaining valid approval/sanction u/s 151 of the Act.

That in any case and in view of the matter, action of Ld. CIT(A) in not quashing the impugned reassessment order passed by Ld. AO u/s. 147/144B, is bad in law and against the facts and circumstances of the case and not sustainable on various legal and factual grounds.

That having regard to the facts and circumstances of the case, assumption of juri iction in passing the impugned reassessment order by Ld. AO vide order dated 29.03.2022 is illegal, bad in law and void-ab- initio as the same has been passed without issuing the mandatory and statutory notice u/s. 143(2) upon the assessee and that too in accordance with law.”

Appellant/assessee through application dated 16.05.2025, prayed for filing of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963. 7. Learned Authorized Representative for the appellant/assessee submitted that the appellant/assessee filed ITR electronically on 25.01.2022, copy of which is available at page 1 of the paper books. Reassessment order dated 29.03.2022 was illegal as notice under Section 143(2) of the Act was not issued. Copies of screen shot downloaded from portal of the assessee are at pages 72 & 73 of the paper books. Certified copy of order sheet entries is at Annexure B of reply

“That having regard to facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned re-assessment order and that too without issuing the mandatory notice u/s 143(2) within the statutory time and in accordance with law.”

The Ld. Counsel for the assessee submits that the ground raised by the assessee is purely legal and does not require fresh facts to be investigated and goes to the root of the matter and therefore prayed that the additional ground be admitted in view of the decision of the Hon’ble Supreme Court in the case of NTPC Ltd. vs. CIT 229 ITR 383. 4. Heard rival contentions. The additional ground raised by the assessee goes to the root of the very validity of the assessment framed by the 6 ITA No. 3426/Del.2024 Assessing Officer u/s 144B r.w.s. 147 of the Act and is a purely legal ground and thus the same is admitted for adjudication.

The Ld. Counsel for the assessee submitted that assessee has filed return on 28.10.2021 in response to notice issued u/s 148 dated 30.03.2021. However, the Assessing Officer did not issue notice u/s 143(2) of the Act. Ld. Counsel invited our attention to 21 to 22 of the PB which contains the notice issued u/s 148 dated 30.03.2021 and a copy of return filed on 28.10.2021 in response to the notice issued u/s 148 of the Act. Therefore, the Ld. Counsel submitted that non issuance of notice u/s 143(2) makes the impugned assessment order as bad in law. Reliance is placed on the following decisions in support of his contentions:

CIT vs. Laxman Das Khandewal 417 ITR 325 (SC); 2. Rajender Kumar Sehgal vs. ITO 414 ITR 286 (Del.); 3. PCIT vs. Paramount Biotech Industries Ltd. 398 ITR 701 (Del); 4. PCIT vs. Jai Shiv Shankar Trading P. Ltd. 388 ITR 448 (Del.); 5. CIT vs. Rajiv Sharma 336 ITR 678 (All.); 6. PCIT vs. Staunch Marketing Pvt. Ltd. 404 ITR 299 (Del).

On the other hand, the Ld. DR submitted that the assessee did not file return within the time specified in the notice issued u/s 148 of the Act and therefore the Assessing Officer treated the return as invalid return and since the return was treated as invalid the Assessing Officer need not issue notice u/s 143(2) before completion of assessment.

In rebuttal the Ld. Counsel for the assessee submitted that the Hon’ble Ltd. (supra) held that even in ex parte assessment when once return is filed by the assessee in response to notice issued u/s 148 of the Act issuance of notice u/s 143(2) is mandatory even though the assessee failed to furnish return u/s 139 of the Act. Ld. Counsel submits that the Hon’ble High Court held that once return is filed in response to notice u/s 148 of the Act even ex parte assessment cannot be made without issue of notice u/s 143(2) of the Act.

Heard rival contentions, perused the orders of the authorities below and the case laws relied on by the assessee. In this case, the assessee filed return on 28.10.2021 in response to notice issued u/s 148 of the Act dated 30.03.2021. The Assessing Officer completed the assessment on 30.03.2022 u/s 144 r.w.s. 147 of the Act determining the income of the assessee at Rs.84,32,240/-. While computing the income the Assessing

The Hon’ble Juri ictional High Court in the case of PCIT vs. Staunch Marketing Pvt. Ltd. (supra) considered almost an identical situation examined “whether the Tribunal fell into error in holding that the assessment for the concerned year was not effective because of lack of notice u/s 143(2) of the Income Tax Act in the given facts of the case” the Hon’ble Juri ictional High Court decline to answer the question on an appeal filed by the Revenue. The Hon’ble High Court further affirming the order of the Tribunal held as under:

For all the aforementioned reasons, the question framed does not arise in the present appeal and is declined to be answered. In any event, the court does not find any substantial question of law arise from the impugned order. The appeal is, accordingly, dismissed.”

In all the case laws relied on by the Ld. Counsel for the assessee which are referred to above, it was held that assessment/reassessment

Since we have quashed the reassessment allowing the additional ground of appeal filed by the assessee, all other grounds are not adjudicated as they become only academic at this stage.

In the result, appeal of the Assessee is partly allowed as indicated above.”

In view of above material facts, following judicial precedents, additional ground of appeal no.3 raised by the assessee which goes to the root of the matter being purely legal ground is admitted. The reassessment order dated 29.03.2022 passed by the Ld. AO without issuing statutory notice under Section 143(2) of the Act is declared as illegal. Additional ground no.3 is allowed. The other additional grounds of appeal nos. 1 and 2 and grounds of appeal nos. 1 to 5 being academic in nature are left open. 11. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 17th October, 2025. (S RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: 17th October, 2025. Mohan Lal