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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 26.11.2025, passed by Ld. CIT(A)-NFAC, Delhi u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”). In this case, the assessee is engaged in imparting school education. However, it was noticed by the Ld. AO that the assessee did not file any return of income for AY 2017-18 and thereafter, the Ld. AO issued a notice u/s 142(1)(i) of the Act requiring the assessee to file a return of income (ROI). It is recorded in the Ld. AO’s order dated 30.12.2019 that the assessee failed to furnish ITR in response to the said notice u/s 142(1)(i) of the Act. Thereafter, the Ld. AO utilized information gathered from dedicated Income Tax resources to discover that Rs.18,96,500/- was deposited in cash during the demonetization period. The Ld. AO has recorded that notices u/s 142(1)(i) and 142(1)(ii) of the Act issued between 6.3.2018 and 21.12.2019 were delivered but there was no response from the side of the assessee. Thereafter, the Ld. AO proceeded to pass a “best judgment” assessment order and added Rs.71,45,110/- u/s 69A of the Act, representing cash deposits and other credit entries in the bank accounts of the assessee.
The assessee approached the first appellate authority, where also he could not succeed on the basis of findings given on pages 4 to 6 of the impugned order. Briefly, the assessee filed fresh evidence before the Ld. CIT(A) which was admitted under Rule 46A but after a remand report from the Ld. AO it was held by the Ld. CIT(A) that the assessee has failed to produce any books of account or any document in support of his claim about the cash and other deposits representing fees collected from students. It has been held by the Ld. CIT(A) that the new evidence filed before him could not be independently verified. The Ld. CIT(A) has adversely commented on the documentation available with the assessee in para 6.7 to 6.10 of the impugned order.
Further aggrieved, the assessee has approached the ITAT with grounds of appeal which are detailed and argumentative, hence, are not extracted here. However, the assessee has also filed additional grounds of appeal which were requested to be considered. These additional grounds may be extracted as under: -
1.“That on the facts and in the circumstances of the case and in law, the impugned assessment is illegal, void and non-est as it being a case of escaped income, the AO ought to have framed assessment by issuing notice u/s 148 followed by notice u/s 143(2) which is sine qua non to assume jurisdiction.
2.That the illegal and ad hoc additions of cash and other deposits u/s 69A by the Ld. AO and upheld by Ld. CIT(A)-NFAC, Delhi were incorrect under the law and to the facts of the case as the correctness, completeness and bona fides of books of accounts maintained on basis of which audited financials were prepared and held on record were neither doubted nor controverted nor rejected by AO u/s 145(3) while making assessment of the Income Ax Act, 1961 or during remand proceedings.
Explanation 2(1) of section 147
Where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax.”
Before us the Ld. AR argued that once an assessee had not filed the return of income then the only recourse available with the AO would be to issues a notice u/s 148 of the Act. In this case, this was not done and therefore the assumption of jurisdiction was illegal. The Ld. AR further argued on merit and stated that the assessee was under a genuine belief that it was not required to file any return of income since his income would be exempt under the Act. It was the submission that the assessee was maintaining records and other documents which would be required for establishing the veracity of the income/expenditure. The Ld. AR relied on a number of authorities ostensibly in support of his claim and alleged illegal assumption of jurisdiction.
The Ld. DR argued that the AO had issued a notice on 6.3.2018, which for AY 2017-18 would be covered u/s 139(4) of the Act since it was within AY 2017-18. Since the AO had issued the 142(1)(i) notice within the assessment year under consideration, hence, there was no requirement to initiate proceedings u/s 147/148 of the Act. Regarding the merit it was mentioned that neither was any ROI filed nor was any compliance made before the Ld. AO. Even the new evidence filed before the Ld. CIT(A) was not capable of being independently verified.
We have considered the Ld. AR/DR. We find that the additional ground 1 is not maintainable on the ground that notice u/s 142(1) was issued appropriately by the Ld. AO and thereafter, since no compliance whatsoever was made, hence, the Ld. AO correctly passed an order u/s 144 of the Act. Regarding additional ground no.2 it is felt that there is inadequate fact finding at the level of Ld. CIT(A) to enable any meaningful adjudication at our level. In the interest of substantive justice, we set aside the impugned order and remand this matter back to the file of Ld. AO for fresh assessment. The assessee would be expected to provide complete set of accounts to the Ld. AO and all other relevant documents so that the correct income of the assessee can be determined. It may also be mentioned that the Ld. AR has pointed out that the ITO, Ward 60(7), Delhi was his Assessing Officer and to avoid any confusion, the matter may be remitted back to this Officer. On this issue, we need to only mention that it is a settled position that an Assessing Officer having jurisdiction must frame the assessment order. We would expect the Revenue Authorities to be mindful of this fact in this case.
In the result, appeal is allowed for statistical purposes.