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Judgment
PER VIMAL KUMAR, JM:
The application for condonation of delay of 245 days in filing appeal and appeal filed by the Assessee are against order dated 11.10.2024 of Learned Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘the Ld. CIT(A)’] passed u/s 250 of the Income Tax Act, 1961, [hereinafter referred to as ‘the Act’] arising out of assessment order dated 30.03.2022 of the Ld. Assessing Officer/ Assessment Unit u/s 147 r.w.s 144B of the Act for Assessment Year 2017-18.
Brief facts of the case are that the assessee is a partnership firm engaged in the business of trading of Iron and Steel on wholesale and retail basis. Assessee filed its ITR on 31.03.2018 at business loss of Rs.68,98,172/-. Assessment u/s 143(3) was completed on 16.12.2019 at an income of Rs. 56,60,67,770/- after making an addition on account of unexplained bogus creditors, cash deposit, advance from customers, disallowance u/s 40(a)(ia)/40A(3)/43B. Information was received from ITO, Ward-3(2), Saharanpur vide letter dated 27.07.2020 that assessee in his account had deposited of cash during the demonetization period by Mr. Manoj Kumar. Out of cash deposited amount, Mr. Manoj Kumar has transferred an amount of Rs.15,00,000/- to the assessee. The case was reopened u/s 147/148. Notice u/s 148 dated 28.03.2021 was issued. Assessee filed return of income on 27.05.2021. Notice u/s 143(2) dated 22.11.2021 was issued. On 08.12.2021 assessee filed objections against notice u/s 148 which were disposed off vide order dated 11.03.2022. Notice u/s 142(1) was issued. The Assessee filed replies dated on 14.01.2022, 05.02.2022 and 15.03.2022. On completion proceedings, Ld. AO vide order dated 30.03.2022 made addition of Rs.25,95,000/-. Against order dated 30.03.2022 of Ld. AO, assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 11.10.2024.
Being aggrieved, the appellant assessee filed application for condonation of delay of 245 days in filing appeal and appeal on following grounds:
“1.That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred both in law and, on facts in upholding the determination of income made by the learned Additional/Joint/Deputy/Assistant Commissioner of Income tax/Income Tax Officer, National Faceless Assessment Centre, Delhi of the appellant at Rs. 56,86,62,770/- as against assessed income of Rs. 56,60,67,7701/- as assessment order passed u/s 143(3) of the Act in an order of assessment dated 30.3.2022 u/s 147/144B of the Act.
2.That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in disposing off the appeal ex-parte without granting any fair opportunity of being heard to the appellant.
2.1That the finding that notices remained un-complied during the appellate proceedings is not based on correct appreciation of facts and circumstances of the case of the appellant and hence could not have been made a ground to deny an effective opportunity of being heard to the appellant firm.
2.2That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was reasonable cause for the appellant for not causing appearance on the dates fixed for hearing and as such disposal of the appeal without granting fair, meaningful and proper opportunity is untenable.
3.That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147/144B of the Act without appreciating that the same were without jurisdiction and hence deserved to be quashed as such.
3.1That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no specific relevant, reliable and tangible material on record to form a "reason to believe" that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable.
3.2That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that reasons recorded mechanically without application of mind do not constitute valid reasons to believe for assumption of jurisdiction u/s 147 of the Act.
3.3That in absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147/144 of the Act are invalid and deserve to be quashed as such.
4.That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an addition of Rs. 25,95,000/-representing alleged unexplained cash credits in the bank account of the appellant brought to tax u/s 69A of the Act read with section 115BBE of the Act
4.1That while upholding the above addition, the learned Commissioner of Income Tax (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so upheld is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable.
5 That without prejudice to the above and in the alternative, even otherwise, the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that amount credited in the bank by the appellant is taxable as income under section 69A of the Act and thereafter computed the demand in accordance with the rates specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016.
5.1That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the amendment made by the Taxation Laws (Second Amendment) Act, 2016 was w.e.f. 1.4.2017 and thus applicable from financial year 2017-18 onwards and not from the financial year 2016-17 relevant to assessment year 2017-18 and therefore, demand computed was not only arbitrary but highly excessive.
5.2That the learned Commissioner of Income Tax (Appeals) Tax ought to have therefore applied the income tax at best @ 30% of the income determined under section 69A of the Act and not at the rate of 60% as specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016, more particularly when no such section has been invoked in the body of the order of assessment u/s 143(3) of the Act.
5.3That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that substitution of provisions by Taxation Laws (Second Amendment) Act, 2016 w.e.f. 1.4.2017 was not retrospective in nature but was prospective and only application from financial year 2017-18 relevant to assessment year 2018-19.
6.That even otherwise the learned Commissioner of Income Tax (Appeals) passed the order without granting sufficient proper opportunity to the appellant firm and therefore the same is contrary to principle of natural justice and hence vitiated.
7.That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the levy of interest of Rs. 2,07,68,127/- u/s 234A of the Act and, interest of Rs. 13,80,07,791/-u/s 234B of the Act Act which are not leviable on the facts of the instant case.”
Ld. Authorized Representative for appellant assessee submitted that there is delay of 245 days in filing appeal due the latches on part of counsel. Affidavit dated 18.01.2026 mentions inadvertent omission to notice uploading the order dated 11.10.2024 of Ld. CIT(A). The Explanation for delay of 245 days in filing of appeal due to inadvertence does not smack of malafides as the appellant has not gained anything by not filing appeal within period of limitation. Therefore, delay of 245 days in filing the appeal is condoned.
Ld. Authorized Representative for appellant assessee submitted that Ld. CIT(A) while passing the order failed to appreciate that various notices for filing of submissions remained un-complied with by the assessee. Ld. CIT(A) failed to appreciate that the assessee for reasonable cause could not be cause appearance in the appeal. The Ld. CIT(A) passed ex-parte order in violation of principle of natural justice. Ld. CIT(A) failed to appreciate that notice u/s 148 was issued to assessee on 28.03.2021. The assessee had not filed any return in response to notice. Notices u/s 142(1) of the Act were issued. The assessee filed replies dated 14.01.2022, 05.02,2022 and 15.03.2022. The assessment order dated 30.03.2022 was passed treating amount of Rs.25,95,000/- as unexplained. The Hon’ble ITAT Delhi in ITA No.4110/Del/2024 titled as Suresh Chand vs. ITO vide order dated 30.07.2025 decided in favour of the assessee.
Ld. Departmental Representative submitted that objections of assessee were disposed of vide order dated 11.03.2022. Notice u/s 142(1) including show cause notice was issued by NFAC. On the contrary faceless regime of income escaping assessment stood notified only on 29.03.2022. The Faceless Assessment Scheme was significantly launched in the year of 2019 and notices u/s 142(1) have been issued to the assessee mentioning that “Kindly refer to ongoing assessment proceedings in your case for A.Y. 2017-18 under Faceless Assessment Scheme, 2019”.
From examination of record in light of aforesaid rival contention, it is crystal clear that Ld. CIT(A) in ex-parte order dated 11.10.2024 held that the appellant/ assessee despite several notices failed to submit submissions in respect of grounds of appeal. Ld. CIT(A) failed to appreciate that substitution of provisions by Taxation Laws (Second Amendment) Act, 2016 w.e.f 01.04.2017 was not retrospective in nature but was prospective and only applicable from Financial Year 2017-18 relevant to Assessment Year 2018-19.
A Co-ordinate Bench in ITA No.4110/Del/2024 titled as “Suresh Chand vs. ITO in order dated 30.07.2025 in para No.5 to 7 held as under:
“5 . W e n ow c o m e t o th e b as ic rel ev ant fa c ts . Th ere is ha rdl y any disp ut e b et w een th e pa rti es that th e l ea rn ed a ss es sing auth o rit y h ad is su ed s ecti on 14 8 noti c e t o th e a ss es s ee on 31 .0 3. 2021 . H e did n o t fil e an y retu rn in resp on s e th eret o. A l l th is f oll o w ed th e As s e s sin g O ffi c er’ s s ecti on 142(1 ) twi n n o ti c es dat ed 24 .1 2.2 021 an d 11. 02 .20 22 f oll ow ed by h is a ss es sm ent in qu esti on f ram ed on 21. 03 .20 22 treatin g th e a ss es s ee’s all eg ed ca sh d epo sit s of Rs .4 ,22 ,2 5, 229/ - a s unexpl ain ed , whi ch sta nd uph eld t o th e ext ent o f Rs .2 ,00 ,0 0, 000/ - on ly in t h e l o w er app ellat e di s cus si on .
It i s in thi s f ac tual b ack d ro p th at t h e a s s ess ee’ s ca s e b ef o re us i s that giv en th e fa ct th at th e fa c el es s regim e in qu es ti on g ot n oti fi ed on 29. 03 .20 22, th e fa c el es s as s es sm ent fra med in h is ca s e on 2 1.0 3. 202 2 is n on - est in t h e ey es o f la w.
6.Th e R ev enu e h as d rawn st rong su pp o rt f ro m th e l ea rn ed l o w er auth o riti es resp ectiv e findin gs f ra ming t he fa c el es s a ss es sm ent h erei n in th e a ss es s ee’ s ca s e. W e find n o rea s on t o exp ress ou r c on cu rrenc e to th e R ev enu e’ s f o reg oing a rgu m ent s . A p erus al o f th e c a s e fil e indic at es th at thi s t ribu nal rec ent l ea rn ed c o -o rdinat e b en c h o rd er in ITA N o . 1 328 /K ol/2 024 dat ed 15 .1 0.2 0 24 in N abiul Indu st ria l M etal Pvt . Lt d. V s. I T O h a s d eci d ed th e v ery i s su e ag ain st th e d epa rtm ent as und er:
“1 .1 . Th e b ri ef f ac ts of t he c as e of th e app ellant a re th at th e as s ess ee N abiu l In d ust ria l M etal P vt . Lt d. did n o t fil e th e return o f in c om e f o r th e A Y 2 017 - 18 a s a res ult of w hic h ca s e o f th e as s ess ee w a s re - o pen ed u/ s 14 7 o f the A ct . Th e A ss es sing O ffi c er (h erei na ft er referred t o a s l d. 'A O ') rec eiv ed in f orma tion f ro m th e in v estig ati on wing , K olka ta w herein it wa s m ent i on ed that in cou rs e of th e in v est igat io n i n t h e ca s e of M /s . Da rsh C ok e T radi ng Pv t. Ltd ., i t w as rev eal ed th at th e s aid c o mpa ny is a pap er c om pan y th rough whi ch ent ry o perat o rs p rovi d e b o gus ent ri es an d la y er m on ey in ex chan g e o f c omm is si on . It wa s al s o f ound th at th e on e o f th e b en efi cia ri es i s th e as s es s ee c o mp any whi ch h a s rec ei v ed R s. 1 5, 00 ,00 0/ - f rom a p ap er c on c e rn nam el y T ani shi C o m mo trad es P vt . L td. Durin g th e c ou rs e o f r e -as s ess m ent , th e a s s ess ee w a s a sk ed t o expla in th e t ran s act ion s with Tan ish i C o mm o tra d es P vt . Ltd . In resp on s e, th e a s s es s e e sub mitt ed tha t in th e cu rrent y ea r i . e. F Y 2 016 - 17 th e as s es s e e to ok a l o an / ad van c e f ro m t hi s p a rt y ag ains t sa l e o f g o od s and in th e im m edia t ely su cc eeding y ea r i . e. FY 2 017 - 18 s al es w er e mad e t o Tan is hi C o mm ot ra des Pv t. Lt d a nd sai d s al e wa s duly c redit ed in th e Pro fi t an d L o ss a c c ount o f th e c omp any and ta x wa s dul y p aid . H ow e v er, th e A O w as not c on vin c ed w ith th e sub mis si on fil ed by t he a s s ess ee a nd a c c o rding ly , ad d ed th e sum o f Rs . 1 5, 00 ,000 / - t o th e in c om e o f th e a s s es s ee u/ s 6 8 o f the Act . Th e s aid a s s es s men t o rd er ha s b een ch all eng ed b ef o re th e ld. CI T( A) wh erein in ab s enc e of a ny resp on s e f rom th e app ell ant th e c as e o f t he as s es see h as b een di sm is s ed .
Being agg ri ev ed an d di s sat is fi ed with t he im pugn ed ord er, th e pres ent ap p eal ha s been p ref erred.
1.2. Th e ld . C oun s el f o r t he a s s es s ee chal l en ges th e im pugn ed o rd er by taki n g s ev eral g round s b ut h e, in c ou rs e o f h eari ng, to ok an a ddit io nal g round b ein g th e l eg a l g round an d h e p res s ed onl y l egal g round w hich a re a s f oll o w s:
“Th at th e Nati on al F ac el es s A ss es sm en t C ent re erred in ha vi ng as sum ed ju ri sdi cti o n u/s 15 1A r.w . s 144B of th e A ct f rom 29. 11 .20 21 wh en they w ere no t emp ow ered und er any noti fi ca ti on ab out t he app li cabi lit y of t he fa c el es s s ch em e f or making as s ess m ent in fa c el ess m ann er pri o r t o 29 .03 .2 022 . ”
1.3. Ld . C ou ns el f o r th e a s ses s ee sub mitt ed t hat th e p rovi si on s o f S ecti on 151 A o f the Ac t ca me in th e st atut e on 01 .11 .2 021 but i t wa s n oti fi ed wi th ef f ect f rom 29. 03 .20 22. But in the pres ent ca s e, a s s es sm ent p roc eeding s to th e N FAC st a rt ed on 29. 11 .20 21 whi ch i s evid ent f ro m th e n oti c e u /s 142 (1) o f the Act . Ld . C oun s el f o r th e as s es s ee fu rth er sub mit s that th e s ho w cau s e n oti c e h as als o b een i ssu ed and t h e d at e ha s been men ti on ed a s 2 8. 0 3.2 022 th at i s p ri o r t o 29 .0 3. 202 2. Ld . Co uns el f o r th e a s s es see fu rth er sub mit s that th e a s sump ti o n of juri sdi ct io n b y th e N FAC w as w i th out ju ri sdi cti on . C on s equ en tly , the wh ol e as s es sm ent is with ou t ju ri sdi cti on and un su sta in abl e in law . Ld . C oun s el f or th e a s s es s ee fu rther d rew th e att en tion o f th is B en ch on the i s suan c e o f s ho w cau s e n oti c e an d sub mitt ed tha t i t wa s s erv ed on 29 . 03. 20 2 2 a nd as k ed th e as s ess ee t o fu rn is h expl anat io n on o r b ef o re 29 .0 3. 20 22,i t mean s with out gi vi ng th e as s es s ee a ny opp o rt unit y b ef o r e f ram ing o f th e a s s es sm ent o rd er. L d. C oun s el f o r th e a s s es se e has f il ed th e f ol lo wi ng pa p ers :
a)N oti fi cat io n o f Mi nist ry o f Finan c e da ted 2 9. 03 .20 22 .
b)N oti c e is su ed u/ s 14 2(1) of th e A ct .
c)Sh ow cau s e n oti c e dat ed 28 .03 .2 022 .
1.4. Ld . D/R th ough sup po rt s th e i mpugn ed o rd er but d id n ot rai s e an y o bj ec ti on on th e l egal g round .
2.W e h av e p erus ed th e rec o rd s a nd th e p ap ers fi l ed b y th e as s ess ee. It ap p ea rs tha t N o tif ic ati on with resp ect t o S ec tion 151A of th e A ct ha s b een ma d e with eff ect fro m 29 .03 .2 022 whi ch i s a s und er:
“S .O . 14 66( E) . —In ex erci s e of th e p o w ers c on f erred by su b -s ec ti on s (1) and ( 2 ) o f s ec ti on 1 51A o f th e I nc o m e-ta x A ct , 1961 (43 of 196 1) , the C ent ral G o vern men t h ereb y m ak es the f oll ow ing S ch em e, n am el y: -
1.Sh o rt titl e an d c om m en c em ent . —(1) Th is S ch em e ma y be cal l ed th e e -A s s es sm ent o f In c om e Es capin g As s es sm e nt Sch em e, 20 22 .
(2)It sh all c om e in to f o rc e wit h ef f ect f rom th e dat e o f i ts publi cat io n in th e Of fi cial Gaz ett e.
2.D efinit io ns . —(1) In thi s S ch em e, unl es s th e c on te xt oth erwi s e requ ires , —
(a)“ Act ” m eans th e Inc o m e -ta x A ct, 1 96 1 (4 3 o f 19 61);
(b)“ aut om at ed all o c ati on” m eans an al g o rith m f o r ran d o mi s ed all oc ati on o f ca s es , b y u sing suit abl e t echn ol og ic al t o o ls , inclu ding a rt ifi ci al i ntel lig en c e an d ma chin e l ea rning , wi th a vi ew t o opti mi s e th e us e o f res ou rc es .
(2)Wo rds an d exp ress i ons u s ed h erein and n ot d efin ed , but defin ed in th e A ct , s hall h av e th e meaning resp ecti v e ly as sign ed t o th em in th e Ac t.
3.S c op e o f th e S ch em e. —F o r th e purp o s e o f thi s Sc hem e, —
(a)a s s es s m ent, rea s s es s m ent o r re - c om putati on und er s ect i on 147 o f th e A ct,
(b)i ssu an c e o f n o ti c e und er s ecti on 1 48 of th e A ct, shal l b e th roug h aut om at ed al l oc ati on , i n a c c ordan c e wit h ri sk manag em ent st rat egy f o rmul at ed by th e B oa rd a s ref erred to in s ecti on 14 8 of t he A ct f o r is sua nc e o f n oti c e, an d in a fa c el ess ma nn er, to the ext en t p ro vid ed ins ecti on 144 B o f t he Act with ref e ren c e t o makin g a s s es s m ent o r reas s es sm ent o f tot al in co m e o r l o s s of a s s es s ee.”
2.1. W e h av e al s o g on e through th e n oti c e u/s 142( 1) o f th e Act da t ed 29 .11 .2 02 1 w hi ch i s a s f ol lo w s:
2.2.We further find the show cause notice issued that also reflects the date 28.03.2022 which is as follows:
………………………………
2.3.It appears from the show cause notice issued on 28.03.2022 that at the bottom of the page it was digitally signed thereby giving date 29.03.2022 at 00:20:37 I ST.
2.4.We further find that in the show cause notice the assessee has been directed to furnish explanation on or before 29.03.2022. It is surprising that when it was issued on 29.03.2022 at 00:20:37 IST and directed the assessee to explain the explanati on before 29.03.2022.
3.Keeping in view the entire facts and discussions made above, we find substance in the argument of the ld. CIT(A) that assumption of jurisdiction prior to 29.03.2022 by the ld. AO is to be held to be without jurisdiction. Accordingly, the assessment order, passed, is to be deemed without jurisdiction. Subsequently, all the orders passed are hereby held to be without jurisdiction.”
7.We adopt the above detailed discussion mutatis mutandis to accept the assessee’s instant additional/legal ground in very terms to quash the assessing authority’s assessment framed in his case on 21.03.2022. Ordered accordingly .”
In view of above material facts and well settled principle of law the orders of Ld. CIT(A) dated 11.10.2024 and Ld. AO dated 30.03.2022 are set aside.
In the result, application for condonation of delay of 245 days in filing appeal and the appeal filed by the Assessee are allowed.
Order is pronounced in the Open Court 06.03.2026.