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Judgment
ORDER
Per Raj Kumar Chauhan, Judicial Member:
The appeal is directed against the order dated 03.11.2025 of Learned Co mmissioner of Income Tax (Appeals)/National Facele ss Appeal Centre (hereinafter referred to as the “CIT(A)/NFAC”), passed u/s 250 of the Income T ax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made u/s 69 of the Act, vide assessment order dated 26.03.2025 was confir med.
Delay of 361 days in filing of the instant appeal is condoned in the larger interest of justice in light of Collector Land Acquisitio n vs. Mst. Katiji & Ors (1987) 167 ITR 471 (SC) .
The facts of the case are that the assessee filed his return of income for A.Y. 2022-23 declaring total income of Rs.12,05,290/-. Subsequently, the assessment was reopened by issuance of notice issued u/s 148 dated 27.03.2024 on the basis o f information received from the Investigation W ing regarding alleged unexplained cash transactions with M/s Omaxe Ltd. The reopening w as based on a search conducted u/s 132 in the case of O maxe Gr oup on 14.03 .2022, wherein a hard disk seized from the premises of Omaxe Ltd. allegedly contained excel sheets reflecting unaccounted cash transactions with customer s. As per the information gathered, the assessee was alleged to have made unexplained cash payments aggregating to Rs. 1,00,00 ,000/- to M/ s Omaxe Ltd. in relation to Chandigarh Plotted Colony- II and investment Project-Palwal during F.Y. 202 1-22 relevant to A.Y. 2022-23. During the reassessment proceedings, no tices u/s 142(1) and 143(2) were issued and the asse ssee furnished replies from time to time. The asse ssee submitted that the transactions relating to Chandigarh Plotted Colony-II were through banking channels and denied having made any cash payments to M/s Omaxe Ltd. The assessee also fur nished co nfirmation letters issued by Omaxe Ltd. reg arding transfer/ adjustment of earlier booked units. However, the Assessing Officer relied upon the data found in the seized hard disk, state ments recorded during search proceedings in the case of Omaxe Group, and the investigation report to conclude that the assessee had made cash payments amounting to Rs. 1,00,00,000/- for purchase of immovable properties in the projects of Omaxe Ltd . at Chandigarh and Palw al. Accord ingly, the Assessing Officer treated the amount of Rs. 1 ,00,00,000/- as unexplained investment u/s 69 of the Income Tax Act and added the same to the income of the assessee.
Aggrieved by the assessment order, assessee filed appeal before the ld. CIT(A) which was dismissed ex-pate on the ground that the appellant has failed to respond to the various notices sent as find mentioned in paragraph 7.1 of the impugned order.
Aggrieved by the impugned appellate ex-parte order, the assesse is in ap peal before us and has raised the fo llowing grounds of appeal:
“1 . T hat the Ld. C ommissioner of Income Tax (Appeal s), Na tional Fac eless Appeal Centre , New Delhi (herei naft er ref erred as Ld. CIT(A)) has er red bot h i n law and, on facts in uphol ding the income determined at Rs. 1,12,05,290/ as agai nst declar ed i nco me at Rs. 12,05,290/ in impugned order of ass ess ment dated 26.03.2025 passed u/s 147 of The I ncom e Tax Ac t, 1 961 (hereinaft er refer red as the act ).
2.That the Ld. C IT(A ) had er red both i n law a nd on facts by upholdi ng the i nitiatio n of i mpugned ass essme nt proc eedi ng initia ted u/s 147 of the act wi thout appr eciati ng the fact that im pugned st atutory noti ce dat ed 27.03.2024 issued u/s 148 of t he ac t is no n est and void bei ng said notice has been iss ued i n gross contraventio n of e Assessment of Incom e Esc aping Assessment Sc heme, 2022 notified by Ho nbl e CBDT u/s 151A of the Act on 29.03.2022 vide CBDT Notification No. 18/2022 as t he aut hority prescribed a nd empo wered to issue s uch statutory notice u/s 148 o f the ac t lies w ith Fa celess Assessi ng Officer a nd not with the Jurisdi ctional Assessi ng Officer. As such, impugned ass es sme nt proc eedi ng deserves t o be quas hed at the threshold.
3.That the Ld. C IT(A ) had er red both i n law a nd on facts by upholdi ng the i nitiatio n of i mpugned ass essme nt proc eedi ng initia ted u/s 147 of the act wi thout appr eciati ng the fact that im pugned st atutory noti ce dat ed 27.03.2024 issued u/s 148 of the act is invalid bei ng said notic e is purely ambiguo us a nd fail s to indicate under what s pecific insta nce , Cla use (iv) of Explanati on 2 of Section 148 of the ac t is invoka ble but to the contrary, each and eve ry limb has been extr acted in notic e its elf in generali zed f ormat witho ut identifying the extrac ts actually claimed t o be applicable to t he case of the appell ant. As s uch, impugned ambiguous statuto ry notice issued u/s 148 of t he act is i nvalid and non est.
4.That the Ld. C IT(A ) had er red both i n law a nd on facts by upholdi ng the i nitiatio n of i mpugned ass essme nt proc eedi ng initia ted u/s 147 of the act wi thout appr eciati ng the fact t hat impugned noti ce dated 27.03.2024 issued u/s 148 of the act is invalid bei ng Ld. Income Tax Offic er, Ward 59(3), New Del hi (her einaft er ref er as L d. AO) had invalidly invok ed Claus e (iv) of Explanati on 2 of Secti on 148 of the act without bei ng i n possession of proper appr oval u/s 151 of the ac t as t he copy of appr oval confronted to t he appellant alo ngw ith said notice is an unsi gned document, renderi ng any subsequent acti on based upon said non est approv al as invalid. As s uch, impugned initiation of ass essment proc eedi ng is itsel f non est and deserves to be quas hed.
5.That the Ld. C IT(A ) had er red both i n law a nd on facts by uphol di ng impugne d ass essment pr oceedi ng u/s 147 of the act without appreciating t he fac t that im pugned assessment order dated 26.03.2025 pass ed u/s 147 of the act, has been passed i n gross contraventi on of Fa celess Ass essme nt Sche me prescr i bed u/s 144B of t he act r ead wit h CBDT Order dated 22.09.2021 beari ng F. No . 187/3/2020 ITA I, whe reby, it has been prescri bed tha t all ass essments exc ept speci fi call y prescribed i n said order shall be co mpleted in fac eless manner. As such, impugned assessment bei ng nowhe re specifically covered by exc epti ons pr escribed i n aforesaid CBDT Order 0R exempted by way of pr ovisions pres cribed u/s 144B(8) of the act, has been c ompl et ed in pure c ontravention of applicabl e stat ute and thereby, deserves to be quas hed.
6.That the Ld. C IT(A ) had er red both i n law a nd on facts by upholdi ng the i nitiatio n of i mpugned ass essme nt proc eedi ng on the basis of borro wed sati sfacti o n being Ld. AO had sol ely relie d on the i nfor mati on rec eived from the office of Ld. DDIT (Inv.) 2, Chandi garh (her einafter ref erred as Ld. DDIT (Inv. )). As such, impugned assessment proceedi ng is bad i n law and deser ves t o be quashed.
7.That the Ld. CIT(A) had er red i n law and facts of t he mat ter by confirming the additi on of Rs. 1 ,00,00,000/ made u/s 69 of the act on acco unt of alleged cas h pay ment to M/s. Omaxe Ltd. without appreci ati ng t he fact that t he Ld. AO had made said additi on without confr onti ng appel lant with complete mat erial relied upon incl udi ng seized material namely Hard dis ks A35/A27 seized duri ng t he search operations on Omaxe Group, whic h is in contr aventi on of t he decision of t he H onble Apex Co urt in the case of U OI v . Ashish Agarwal repor ted in 444 ITR 1, whe rei n i n cas e of proceedi ngs -initiat ed u/s 148 of the Act has i ssued a cate gorical directi on i n Para 8(i) that the Ld. AO is duty bo und t o provide all the informati on and material to the assesse e and t herefore, impugned proceedings ar e i nitiated without j urisdicti on.
8.That t he Ld. CIT(A), has erred bot h i n law and on facts i n upholding an additi on of Rs. 1,00,00,0 00/ repres enti ng al leged cas h payment to M/s. Omaxe Ltd and brought to t ax u/s 69 r.w.s. 115BBE of the act without appr eciati ng the fa ct of the matter that actually, no cash payment has been made but relied upon mate rial itself i ndicate that Adjus tme nt has been made i.e. funds alre ady invested in earlier years i n other pr oject of said group has been adjus ted against indicated unit and thereby, in no case, section 69 of the act is invokabl e in the matt er i n hand bei ng no cas h has act ually been paid duri ng t he period under co nsi deration. As such, impugned additi ons made u/s 69 of the ac t dese rves to be del et ed.
9.That the L d. CIT(A ) had erred in law by p assing impugned appellate order dated 03.11.2025 in gr oss contraventio n of pri nciple of natural justic e without appr eciati ng t he fact that the appella nt was prevented by reasonable ca use in no n-filing of detailed submission before Ld . CIT(A) as he was under undue str ess due to health iss ues co ncerni ng his fathe r. As such, t his appeal may please be res tored bac k to the file of Ld. C IT(A) for adj udication of matter on merits of t he case. ”
We have heard the lear ned AR and the learned DR. The Ld. AR would submit that the impugned order has resulted into miscarriage of justice as principle of natural justice has no t been fo llowed because no effective opportunity of hearing was given as the assessee had never received the notice after 15.09.2025 when ad journment was sought and therefore the matter may be restored to the file of the Ld. CIT(A) for deciding afresh. Learned DR on the other hand while supporting the judgment of the learned CIT(A) has left to the discretion of the court to consider the submissions of the assessee as per law.
We have co nsidered the rival submission and examined the record, Section 250(2)(a) lays down as under:
“250(2 ) The fol lo wing shall have the right to be heard at the heari ng o f the appeal-
(a)the appellant, either i n person or by an authori zed repres entative;”
Thus, the hear ing mandated by Section 250(2)(a) of the Act is no t a mere formality but a mandatory statutory requirement for following the principle of natur al justice by the quasi-judicial authority.
In view of the ab ove facts and circumstances, it is evident that the impugned order has been passed w ithout effective hearing and principle of natural justice has no t b een followed For these reaso ns, the impug ned order is not maintainable and according ly set aside. T he end of justice shall be met in case the matter is restored to the file of the Ld. CIT(A) for deciding the issue afresh by affording an effective o pportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Ld. CIT(A) w ithin the period of 60 days of this order.
In the result, the appeal of the assessee is allowed for statistical purposes.