ALI UNJHAWALA ASGAR,SECUNDERABAD V. ITO., WARD-10(1), HYDERABAD

ITA 1241/HYD/2025

AI Insights

The case involves Ali Unjhawala Asgar, who appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the additions made by the Assessing Officer (AO) regarding unexplained cash deposits and credits in her bank account, as well as unexplained investment described as transfer cost. The AO had issued a notice under Section 148 of the Income-tax Act, 1961, based on information from the NMS module of the Insight portal, without conducting a thorough inquiry or verification. The Tribunal admitted an additional legal ground challenging the jurisdiction of the JAO to issue the notice under Section 148, following the decisions of the Telangana High Court in similar cases. The Tribunal's decision to allow the appeal was based on the legal ground that the notice was issued without proper jurisdiction, as per the Faceless Assessment Scheme and related notifications.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790011 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 30-07-2025
• Other Referred Cases: NTPC Ltd. Vs. CIT, Yashnu Yasavi Polucherla Vs. ITO, Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Invalid notice; Reassessment proceedings; Unexplained cash credit; Unexplained investment; Principle of natural justice; Source of fund; Competent authority
• Section: 147; 148; 144; 142(1); 69; 133(6)

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ SMC ‘ Bench, Hyderabad श्री विजय पाल राि, माननीय उपाध्यक्ष एिं श्री मंजूनाथ जी, माननीय लेखा सदस्य SHRI VIJAY PAL RAO, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA G, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.1241/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2018-19) Ali Unjhawala Asgar, R/o. Secunderabad. PAN : ADQPA0819A Vs. The Income Tax Officer, Ward – 10(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri Abbas Gulam Husainwala, C.A. (Appeared through Hybrid Mode) राजस्व का प्रतततितित्व/ Department Represented by : Ms. B. Malathi, Sr.A.R. सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 24.11.2025 घोर्णध की तधरीख/ Date of Pronouncement : 28.11.2025 O R D E R PER MANJUNATHA G., A.M : This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), National Faceless Printed from counselvise.com 2 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar Appeal Centre [in short “NFAC”], Delhi, dated 26.06.2025, pertaining to the assessment year 2018-19. 2. The grounds raised by the assessee read as under : Defect in reassessment proceeding under section 148A: 1) The Ld. Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the AO of issuing notice 148A entirely based on information received from NMS module of Insight portal without conducting any inquiry, verifying material on record and application of mind. 2) The Ld. Commissioner of Income Tax (Appeals) has grossly erred in fact and in law in confirming the action of the AO by not furnishing a copy of the approval granted by the Principal Commissioner of Income Tax (PCIT) under Section 148A(d) of the Income-tax Act, 1961, prior to issuance of notice under Section 148. The failure to provide such approval violates the mandatory procedural safeguards prescribed under the Act and breaches the principles of natural justice, rendering the reassessment proceedings bad in law, void ab initio, and liable to be quashed 3) The Ld. Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the approving authority who has granted approval for issuance of the impugned notice under section 148 and order under section 148A(d) of the Act in a mechanical manner without verifying any material to check the facts. Without prejudice to the above: Violation of Principle of Natural Justice: 4) The Ld. Commissioner of Income Tax (Appeals) erred in fact and in law in passing the order against the principle of natural justice. 5) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by not providing a proper and adequate opportunity of being heard to the Appellant before passing the impugned order. This is in gross violation of the principles of natural justice, rendering the order bad in law. 6)The Ld. Commissioner of Income Tax (Appeals) erred law in passing the erroneous order by not understating the facts of the matter properly and confirming the action of the AD passing order under section 144 of the Act. Printed from counselvise.com 3 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar 7) The Ld. Commissioner of income Tax (Appeals) has passed the order without assigning cogent and sufficient reasons for rejecting the legal submissions and contentions raised by the Appellant. The order suffers from non-application of mind and lacks reasoned adjudication on the specific issues raised. 8) The Ld. Commissioner of Income Tax (Appeals) erred in fact and in law in passing the order without considering and completely Ignoring the submission documents, and evidence furnished by the Appellant. 9) The Ld. Commissioner of Income Tax (Appeals) erred in fact and in law in passing the order and confirming the addition of the AO without giving any reasons of it. Without prejudice to the above: Addition u/s 69A 10) The Ld. Commissioner of Income Tax (Appeals) erred law in confirming the addition of Rs. 14,47,731 without providing proper opportunity. 11) The Ld. Commissioner of Income Tax (Appeals) erred law in confirming the addition of Rs. 2,31,066 without considering submission dated 13 June 2025 properly. Other Grounds: 12) Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal any time before or at the time of hearing. 3. The assessee also raised the additional ground which reads as under : “The Ld. Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the JAO issuing notice 148 without having power and jurisdiction to do so.” 4. The brief facts of the case are that, as per information available, the assessee, who is an individual and partner in firm Printed from counselvise.com 4 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar M/s. TAS Trading Corporation, purchased an immovable property for Rs. 1,15,50,000/-. The assessee’s 1/3rd share in the property came to Rs. 38,50,000/-. The assessee also made cash deposits of Rs. 12,73,700/- in her bank account maintained with Yes Bank. Since the assessee did not file the return of income for the year under consideration, the sources of investment and cash deposits were unexplained. Accordingly, the A.O. issued a Show Cause Notice under Section 148A(b) of the Income-tax Act, 1961. As there was no reply from the assessee, the A.O. passed an order under Section 148A(d) on 08.04.2022 and issued notice under Section 148 of the Act. During the course of assessment proceedings, several notices under Sections 142(1) and 143(2) were issued. The assessee did not comply with most of the notices and furnished only partial details on 04.01.2024 and 19.02.2024. Information was also collected from the Sub-Registrar and Yes Bank under Section 133(6) of the Act. The records showed total credits of Rs. 52,92,897/- in the Yes Bank account of the assessee, including cash deposits of Rs. 12,73,700/-. However, the said cash deposits were not disclosed in the return filed in response to the notice issued under Section 148 of the Act. Printed from counselvise.com 5 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar 5. The A.O., after considering the relevant submissions of the assessee and the information gathered from third parties, observed that, the assessee could not explain the source for the cash deposits of Rs. 12,73,700/-. The A.O. further observed that, the assessee could not explain the unexplained credits of Rs. 1,74,031/- appearing in her Yes Bank account. The A.O. also noted that, an amount of Rs. 2,31,066/-, described by the assessee as transfer cost allegedly paid by TAS Trading Corporation on her behalf, was not supported by any documentary evidence to show the nature of the payment or that the amount was subsequently repaid or adjusted through proper accounting. Since the assessee failed to substantiate the source and nature of the above amounts, the A.O. rejected the explanation offered by the assessee. Accordingly, the A.O. made (i) an addition of Rs. 12,73,700/- towards unexplained cash deposits and (ii) an addition of Rs. 1,74,031/- towards unexplained credits, both under Section 69A r.w.s. 115BBE of the Act. The A.O. further made an addition of Rs. 2,31,066/- towards unexplained investment described as transfer cost, under Section 69 r.w.s. 115BBE of the Act. The A.O. thereafter completed the assessment Printed from counselvise.com 6 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar on 07.03.2024 under Section 147 r.w.s. 144 r.w.s. 144B of the Act and also initiated penalty proceedings separately. 6. Aggrieved with the assessment order, the assessee preferred appeal before the Ld. CIT(A). 7. Before the Ld. CIT(A), the assessee reiterated the submissions made before the A.O. and further stated that, she had furnished all possible details to explain the cash deposits and the credits appearing in the Yes Bank account maintained by her. The assessee submitted that, the cash deposits of Rs. 12,73,700/- were out of accumulated earnings of past years and that the remaining credits were received from TAS Trading Corporation through proper banking channels. The assessee argued that, capital account, profit and loss account, and bank statements were filed to show availability of funds. It was also submitted that, the transfer cost of Rs. 2,31,066/- was paid by TAS Trading Corporation on her behalf and that the same was settled through internal accounting. The assessee contended that, the A.O. had not properly appreciated the documentary evidences filed during the assessment proceedings and made additions without giving Printed from counselvise.com 7 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar proper opportunity. The assessee also challenged the reopening under Section 147, stating that, the notice was issued merely on the basis of Insight/NMS information, that approval was mechanical, that, the notice was issued beyond the time limit prescribed under Section 149(1)(b), and that the A.O. did not have proper jurisdiction and as such, the additions made by the A.O. should be deleted and that the reassessment be annulled. 8. The Ld. CIT(A), after considering the submissions of the assessee and the material available on record, rejected all the grounds raised by the assessee. The Ld. CIT(A) held that, the A.O. had valid information regarding purchase of property and cash deposits and that reopening under Section 147 was valid. He observed that, the assessee was a non-filer and had not explained the source of funds before issuance of notice under Section 148A(b). He held that, the A.O. was not required to conduct further enquiry before reopening and that approval by the competent authority was granted after examining the material and not mechanically. The Ld. CIT(A) also held that, the assessment was not time-barred. On the issue of opportunity, he observed that more than 12 opportunities were given and therefore, rejected Printed from counselvise.com 8 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar the ground. On merits, the Ld. CIT(A) held that, the assessee failed to produce any documentary evidence to explain the cash deposits of Rs. 12,73,700/-, the unexplained credits of Rs. 1,74,031/-, and the transfer cost of Rs. 2,31,066/-. He agreed with the A.O. that the assessee did not establish availability of cash, cash flow, or any evidence of withdrawals. He also held that, the payments made by TAS Trading Corporation on behalf of the assessee were not substantiated and that no evidence was filed to show repayment of the amount. Relying on various judicial precedents, the Ld. CIT(A) upheld the additions under Section 69A r.w.s. 115BBE and Section 69 r.w.s. 115BBE. He also rejected the ground relating to penalty proceedings as premature and dismissed the challenge to jurisdiction. Accordingly, the Ld. CIT(A) upheld the assessment order passed by the A.O. and dismissed the appeal. 9. Aggrieved with the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal. 10. At the time of hearing, the learned counsel for the assessee Shri Abbas Gulam Husainwala C.A. submitted that, the assessee Printed from counselvise.com 9 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar has filed an application for admission of additional ground(s) by taking certain legal ground(s) challenging the assessment order passed by the A.O. in light of the notice under Section 148 of the Act, issued by the jurisdictional Assessing Officer. The learned counsel for the assessee further submitted that, the ground taken by the assessee in the application is purely legal ground which can be taken at any time of the proceedings, including, the pending proceedings before the Tribunal, and the same may be admitted for adjudication. 11. The learned Senior A.R. for the Revenue, Ms. B. Malathi, on the other hand, strongly opposed the application filed by the assessee for admission of additional ground and submitted that, the assessee should not be permitted to raise the legal ground at this stage without there being any facts available on record. Therefore, she submitted that, the additional ground filed by the assessee should be rejected. 12. We have heard both the parties and considered the relevant additional grounds raised by the assessee in the petition filed for admission of additional ground dated 06.11.2015, and we find Printed from counselvise.com 10 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar that, the additional ground filed by the assessee is purely legal ground which go to the root of the matter in assuming jurisdiction of the A.O. in light of the notice under Section 148 of the Act, contrary to law. Therefore, in our considered view, the additional ground filed by the assessee, being legal ground, can be admitted for adjudication at this stage in view of the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. Vs. CIT reported in 229 ITR 383. Thus, we admit the additional grounds filed by the assessee for adjudication. 13. The learned counsel for the assessee, referring to the additional ground filed by the assessee, submitted that, the Ld. CIT(A) erred in confirming the action of the JAO issuing notice under Section 148 of the Act, without having proper power to do so in view of the decision of the Hon'ble Telangana High Court in the case of Yashnu Yasavi Polucherla Vs. ITO, 179 taxmann.com 470, dated 16.10.2025, and the decision in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit, 178 taxmann.com 781. Therefore, he submitted that, the assessment order passed by the A.O. under Section 147 r.w.s. 144 r.w.s. 144B consequent to the invalid notice issued by the JAO is bad in law and liable to Printed from counselvise.com 11 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar be quashed. Therefore, he submitted that, the assessment order passed by the A.O. should be quashed. 14. The learned Senior A.R. for the Revenue, on the other hand, fairly agreed that, the issue is now settled by the decision of Hon'ble High Court of Telangana in number of cases, including the decision relied upon by the learned counsel for the assessee. However, she further submitted that, the issue is now sub judice before the Hon'ble Supreme Court in SLPs, and the matter is pending for adjudication. Therefore, she submitted that, the Bench may decide the issue in accordance with the law, however the liberty may be given to the Revenue or the assessee to revive the appeal in case, the issue is settled in favour of the Revenue/assessee to decide the issues involved in the appeal on merits. 15. We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. We have also carefully considered the relevant case laws relied upon by the learned counsel for the assessee in support of his arguments. We find that, the Hon'ble High Court of Telangana Printed from counselvise.com 12 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit (supra) has considered an identical issue of notice issued by the JAO instead of the Faceless Assessing Officer (FAO), and after considering the relevant provisions of the Act, and also various notifications issued by the CBDT as per Section 151A of the Act, held that, any notice issued under Section 148 of the Act, after 29.03.2022 by the JAO is without jurisdiction and consequently, the assessment order passed in pursuant to the said notice is illegal and cannot be sustained. A similar view has been taken by the Hon'ble High Court of Telangana in the case of Yashnu Yasavi Polucherla Vs. ITO (supra), where the Hon'ble High Court, by following its earlier decision in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit (supra) held that, the JAO does not have the power to issue notice under Section 148 after the introduction of the Faceless Assessment Scheme. 16. In the present case, as per the facts available on record, the A.O., i.e., ITO, Ward 10(1), Hyderabad, issued a notice under Section 148A(b) of the Act, dated 27.03.2022, which was followed by an order under Section 148A(d) of the Act, dated 08.04.2022 by the very same A.O. and further issuance of notice under Section Printed from counselvise.com 13 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar 148 of the Act, dated 08.04.2022 by the ITO, Ward 10(1), Hyderabad. Since the issue is covered by the jurisdictional High Court in the case of Yashnu Yasavi Polucherla Vs. ITO (supra) in our considered view, the assessment order passed by the JAO 147 r.w.s. 144, r.w.s. 144B of the Income-tax Act dated 07.03.2024, consequent to the notice under Section 148 of the Act, dated 08.04.2022 issued by the JAO, is without jurisdiction and cannot be sustained. Thus, we quash the order passed by the A.O. under Section 147 r.w.s. 144 r.w.s. 144B of the Income-tax Act, 1961, dated 07.03.2024. 17. We further noted that, although the issue is now settled by the decisions of the jurisdictional High Court of Telangana in a number of cases, but fact remains that, the above issue is pending for adjudication before the Hon'ble Supreme Court in multiple SLPs filed by the Revenue against orders of various High Courts. We further noted that, both parties, i.e., the learned counsel for the assessee and the learned Senior A.R. for the Revenue, fairly agreed that, the decision rendered by the Hon'ble Supreme Court will be binding on both the parties, and in such cases, a liberty Printed from counselvise.com 14 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar may be given to either parties to revive the appeal, if necessary for adjudication on merits. Since the issue is now pending for adjudication before the Hon'ble Supreme Court, in our considered view, the A.O. is directed to give effect to the order of the Hon'ble Supreme Court as and when the judgment is delivered by the Hon’ble Supreme Court and pass consequential orders, if need arises. We further make it clear that, both parties are at liberty to restore this appeal, if necessary, in case the decision goes against the assessee or in favour of the Revenue to decide the issues involved in the appeal on merits. With these observations, we allow the appeal filed by the assessee. 18. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Open Court on 28th November, 2025. Sd/- श्री विजय पाल राि (VIJAY PAL RAO) उपाध्यक्ष /VICE PRESIDENT Sd/- (मंजूिधथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Hyderabad, dated 28.11.2025. TYNM/sps Printed from counselvise.com 15 ITA No.1241/Hyd/2025 Ali Unjhawala Asgar आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Ali Unjhawala Asgar, 5-5-1/1, Ranigunj, Secunderabad – 500003. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward –10(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "