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Judgment
PER AMITABH SHUKLA, AM
This appeal filed by the Revenue is directed against the order of Ld. Commissioner of Income Tax(Appeals)/NFAC, Delhi, dated 30.10.2023 arising out of assessment order dated 13.12.2022 passed under section 143.(3) r.w.s. 144B of the Act for the Assessment Year 2020-21. The word ‘Act’ herein this order would mean Income Tax Act, 1961. The assessee has also filed Cross Objection.
The Revenue has raised following grounds of appeal:-
1.Whether on the facts and circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs.1 ,15,38,729/-made by AO on account of un-explained sources of Purchases without appreciating the fact that the assessee was given ample opportunity to produce the documents/evidences to prove genuineness of transaction with M/s Krishna Enterprises.
2.Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting addition of Rs.30,00,000/- made by AO on account of unexplained source of Time Deposit considering the additional document/evidences produced by the assessee during the appeal proceedings.
The Appellant/assessee has raised following grounds of appeal:-
1)That on facts and circumstances of the case and in law, the assessment order dated 13.12.2022 passed by the assessing officer under section 143(3) of the Income Tax Act, 1961 (the Act) is without jurisdictional, illegal and bad in law. (Ground No. 1)
2)That on the facts and circumstances of the case and in law, the jurisdictional notice issued under section 143(2) is bad in law as not being in the mandatory/ statutory format as prescribed by binding CBDT Instruction F No.225/157/2017/ITA-II dated 23.06.2017 and consequentially, the assessment order passed is rendered without jurisdiction and liable to be quashed. (Ground No. 1.1)
We have noted that the Cross Objection raised by the assessee is a legal ground, which aims to strike at the root of the matter. The appellant is contesting the validity of notice u/s 143(2) and consequent assessment order u/s 143(3). We accordingly would take the Cross Objection of the appellant first.
The Cross Objection of the assessee is accompanied with request for condonation of delay of 83 days. It is the case of the appellant assessee that it was served with a copy of valid Form-36 qua appeal filed by the Revenue on 29.09.2025 and consequently the Cross Objections ought to have been filed by 29.10.2025. The appellant assessee has submitted that the delay of 83 days occurred on account of extra time consumed in filing the appeal. In support of its contentions, the appellant has relied upon a catena of judgments including of Hon’ble Apex Court in Collector, Land & Acquisition vs. Mst. Katiji & Others. For the reasons stated in the Assessee’s condonation petition attributing delay for 83 days to the circumstances beyond its control, we quote Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC) to condone the delay and admit the appeal of the assessee.
Cross Objection No.14/Del/2026
A perusal of the above alludes that the appellant is contesting the validity of notice u/s 143(2) as being bad in law being not in conformity with the prescribed guidelines mandated vide CBDT Instruction No.F No.225/157/2017/ITA-II dated 23.06.2017. It has been argued that consequently, the assessment order dated 13.12.2022 deserves to be quashed.
Heard rival parties and perused the material available on record. We have noted that the subject matter was a matter of consideration of the Special Bench constituted for deciding the issue. Thus, Hon’ble Special Bench vide their order dated 13.07.2026 in the case of M D Sons, Bangalore, in ITA No.1413/Bang/2025 have held as under:-
“….12.4 Accordingly, we hold that non-conformity of a notice under section 143(2) with the format prescribed in CBDT Instruction dated 23.06.2017 does not by itself render the notice invalid nor does it vitiate the consequential assessment proceedings. The alleged defect is procedural in nature and stands cured by section 292B of the Act.
12.5It was contended on behalf of the assessee/interveners that the decision is distinguishable on facts. It was also submitted that if two views are possible, one in favour of the assessee must prevail, particularly in the matter of assumption of jurisdiction. We are unable to accept any of these contentions. Firstly, in the absence of any decision of the jurisdictional High Court on the point, decision of Delhi High Court binds us. The decision of the Delhi High Court unequivocally held that the instructions issued by CBDT and the department are only with a view to determine as to the case of category of cases to be taken up for scrutiny assessment and the nature of scrutiny which the High Court has held to be “totally an interdepartmental matter”. Thus, in the absence of any other acceptable view, there is no question of preferring a view which is favourable to the assessee.
13.In result the question referred is thus answered in negative and in favour of the revenue. The appeals shall be placed before the regular bench for disposal according to law….”
Thus, we have noted that the issue of validity of notices u/s 143(2) on account of their non-conformity to CBDT Instruction dated 23.06.2017(supra), stands decided in favour of Revenue, therefore, is no more res integra. We have also noted the decision of Hon’ble Delhi High Court dated 17.02.2026 in Writ Petition No.WP(c) 2238/2026 in the case of Bharat Bansal, wherein, Hon’ble Court have decided the issue in favour of Revenue while dismissing the Writ Petition filed by the assessee.
“….9. According to us, the first notice under Section 143(2) of the Act of 1961 is only an intimation to the assessee that his/her case has been selected for scrutiny assessment and during the course of assessment proceedings, the AO is definitely required to issue a specific notice eliciting the necessary information and documents. In the instant case, the AO has exactly done what is expected of him.
10.For the reasons aforesaid, the writ petition is hereby dismissed…..”
Accordingly, in respectful compliance to the decision of Hon’ble Delhi High Court in the case of Bharat Bansal (supra) and of Hon’ble Special Bench of the Tribunal in the case of M D Sons, Bangalore(supra), we are of the considered view that there is no merit in the grounds of appeal raised by the appellant assessee. The appeal of the assessee is therefore dismissed.
ITA No.3531/Del/2023
Brief factual matrix of the case is that the case was taken up for scrutiny to verify large payments made u/s 194C of the Act to two persons who were non-filers. The assessee had filed a return of NIL income showing sales/gross receipt at Rs.40,21,821/- and claiming current year loss for carryforward amounting to Rs.15,32,081/-. The ld. Assessing Officer had noted that the assessee had made sale/purchase transactions of Rs.111.24 lakhs and Rs.115.38 Lakhs from a party called Krishna Enterprises and who was a non-filer. The ld. Assessing Officer further noted that the assessee had deposited fresh time deposits of Rs.32,02,459/-from Bandhan Bank. The ld. Assessing Officer attempted to conduct enquiries into the affairs of the assessee including enquiries from the verification unit (VU). The ld. Assessing Officer was informed by the VU that M/s Krishna Enterprises was not operating from the given address. Similarly, the assessee did not make satisfactory compliance to the Assessing Officer’s query for the time deposit in Bandhan Bank. The ld. Assessing Officer consequently proceeded to add an amount of Rs.1,15,38,729/- and Rs.30 lakh u/s 69 r.w.s. 115BBE of the Act. The ld. CIT(A) deleted the additions made by the ld. Assessing Officer while observing as under:-
“5.Adjudication:
5.1Ground 1 is general in nature and hence does not need adjudication.
5.2Vide ground 2 the appellant has submitted that “Because the Learned Assessing Officer has ignored the facts. Work contact for construction of Civil work etc was awarded to M/S Krishna Enterprises, work order Agreement was executed through Tender Document on 22nd of October 2019. Earnest Money Deposited by Party. Construction were completed by M/S Krishna Enterprises. Accordingly Bills issued TDS deducted and all the payment was made through bank only by the Assessee.
The appellant has submitted complete record of its dealing with Krishna Enterprises. He has submitted the details of bills raised, TDS deducted and also GST details of Krishna Enterprises. The appellant has also submitted that the partner of Krishna Enterprises Mr Krishan Chand Sharma passed away due to Covid in 2021 and hence the firm was closed. In view of the reply filed and documents submitted the ground is allowed.
5.3The appellant has taken Ground 3 “Because the Learned Assessing Officer wrongly made an addition of Fixed Deposit of Rs. 30 Lakh and ignored the Bank Statement submitted by Assessee.”
The appellant has submitted copy of bank statement in support of his contention and also submitted details of source of the money. In view of the reply filed the ground of the appellant is allowed.
5.4.The appellant has taken Ground 4 “Because the Learned Assessing Officer wrongly made an addition of Rs. 9,221/-as interest accrued, which was already declared in the Income Tax Return.” The appellant has submitted copy of ITR along with computation in support of his contention and in view of the reply filed the ground is allowed.
5.5Ground number 5 is consequential in nature and hence allowed.
6.In result, appeal of the appellant is allowed.”
The Revenue through its grounds of appeal no.1 and 2 is contesting the decision of Ld. CIT(A) to delete the additions of Rs.1,15,38,729/- u/s 69C and of Rs.30 Lakhs u/s 69, respectively. It is the case of the Revenue that the Ld. CIT(A) has given relief to the assessee without correctly appreciating the facts of the case. The ld. DR vehemently argued that the Ld. Assessing Officer had requested details from the assessee which were not provided and that the assessee provided documents and details to ld. CIT(A) which in turn were not provided to Assessing Officer for consideration. It was accordingly requested that the ld. CIT(A) has violated Assessing Officer’s rights to natural justice. The ld. DR argued that the ld. Assessing Officer has categorically brought out in his order that the deficient compliance of the assessee as well as the party Krishna Enterprises to its statutory notices.
The ld. Counsel for the assessee placed a paper book comprising details provided to Ld. CIT(A). The ld. Counsel reiterated the same set of arguments which were taken before the ld. CIT(A). It was submitted that the ld. Assessing Officer has merely relied upon the report of the VU unit.
We have heard rival submissions in the light of material placed on records. We have noted that the ld. Assessing Officer indeed attempted to enquire into the affairs of the assessee with reference to transactions done with M/s Krishna Enterprises as well as time deposit in Bandhan Bank. We have noted that there was no satisfactory response to the ld. Assessing Officer’s enquiries. The case of clear non-compliance by the assessee to the notices of the ld. Assessing Officer is clearly made out. From the perusal of order of ld. CIT(A), we have noted that the ld. CIT(A) has clearly recorded in paras 5 to 6 reproduced hereinabove that he is relying upon details and documents produced during the appellate proceedings. There is nothing on record to allude that the ld. Assessing Officer was given an opportunity to consider the impugned documents. The rights of ld. Assessing Officer available under Rule-46A were therefore violated. We have also noted that the order of Ld. CIT(A) (supra) is a cryptic, summary order and non-speaking order. There is nothing on record as to how the ld. First Appellate Authority has arrived at his conclusion. Thus, it is a pure case of non-application of mind by the ld. CIT(A). Be that as it may be, we are of the view that the matter deserves to be remitted back to the ld. AO for re-adjudication de novo. Accordingly, we set-aside the order of the lower authorities and remit the matter back to the file of the ld. AO for assessment de novo in accordance with law and by way of passing a speaking order. The Ld. AO shall give opportunities of being heard to the assessee and it shall be bounden upon the assessee to comply with the notices issued by the Ld. Assessing Officer. Any non-compliance on the part of the assessee can be adversely viewed. The decision to remit it back to the Ld. AO is taken in view of the fact that an Assessing Officer is the fulcrum of assessment proceedings. He possess the first right and responsibilities to examine facts of a case before arriving at his decision qua determination of taxable income in a particular case. We have noted with respectful deference the decision of Hon’ble Apex Court in the case of TIN box 249 ITR 216 on the subject matter. Accordingly, the appeal of the Revenue is allowed for statistical purposes.
Finally, the appeal of the Revenue is allowed for statistical purposes and Cross Objection of the assessee is dismissed.