ASSISTANT COMMISSIONER OF INCOME-TAX, MADURAI V. RAMASUBBU MINNALKODI, TIRUNELVELI

ITA 1632/CHNY/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the additions made by the AO on account of undisclosed business income and unexplained unsecured loans for the Assessment Year 2020-21. The AO had made these additions following a survey under section 133A of the Income-tax Act, 1961, where discrepancies in the assessee's declared income and the income admitted during the survey were noted. The CIT(A) found that the AO had not relied on any incriminating evidence from the survey to substantiate the additions. The Tribunal also noted a procedural irregularity in the issuance of the notice under section 143(2) by a non-jurisdictional officer, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778036 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Appeal Filed On: 03-06-2025
• Other Referred Cases: Peter Vaz v. CIT, Asstt. CIT v. Hotel Blue Moon, CIT v. Gitsons Engineering Co., Mukesh Kumar Agrawal v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R. VENKATA RAMAN
• Assessee Lawyers: GOUTHAMI MANIVASAGAM; J. C.I.T
• Keywords: Set aside; Business income; Question of law; Corroborative evidences; Unexplained cash credit; Depreciation; Assessment record; Procedural lapse; Bogus
• Section: 142(1); 68; 131; 133A

Judgement Text

"अपीलीय अिधकरण,‘बीʼ \u0010ायपीठ,चे\u0015 IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI \u0001ी एस एस िव\u0007ने रिव, ाियक सद\u0011 एवं \u0001ी एस. आर. रघुनाथा, लेखा सद\u0011 क े सम\u001a BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं/.ITA No.: 1632/Chny/2025 िनधा रणवष / Assessment Year: 2020-21 Assistant Commissioner of Income tax, Central Circle -2, Madurai – 625 002. v. Ramasubbu Minnalkodi, 7/10, Ambasamudram Road, Alangulam S.O, Tirunelveli – 627 851. (अपीलाथ!/Appellant) [PAN: AJIPM-6492-P] (\"#थ!/Respondent) अपीलाथ! की ओर से / Appellant by : Ms. Gouthami Manivasagam, J.C.I.T. \"#थ! की ओर से/Respondent by : Shri. R. Venkata Raman, C.A. सुनवाई की तारीख/ Date of hearing : 11.09.2025 घोषणा की तारीख /Date of Pronouncement : 07.10.2025 आदेश / O R D E R PER S. R. RAGHUNATHA, AM: The present appeal filed by the Revenue is directed against the order dated 25.03.2025 passed by the Learned Commissioner of Income Tax (Appeals)-19, Chennai [hereinafter referred to as the “ld. CIT(A)”], arising from the assessment order dated 29.09.2022 passed by the Assistant Commissioner of Income Tax, Central Circle-2, Madurai [hereinafter referred to as the “AO”], u/s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year 2020-21. Printed from counselvise.com :-2-: ITA. No: 1632/Chny/2025 2. At the outset, we observe that the appeal filed by the Revenue is barred by limitation by a period of three days. Upon consideration of the reasons furnished by the Revenue in support of the delay, we are satisfied that sufficient cause has been shown. Accordingly, the delay of three days in filing the appeal is hereby condoned and the appeal is admitted for adjudication on merits. 3. The brief facts of the case are that the assessee, an individual, is the proprietrix of the concern M/s.Maries Blue Metals, which is engaged in the business of quarrying and crushing of blue metals. A survey action u/s.133A of the Act was conducted at the business premises of the assessee on 26.02.2020, during the course of which certain books of account and documents were impounded, as per Annexure ANN/EJ/B&D/IMP dated 26.02.2020. 4. Subsequently, the assessee furnished her return of income u/s.139(1) of the Act on 24.12.2020 declaring a total income of Rs.20,99,500/-, which comprised income from business of Rs.20,64,120/- and income from other sources of Rs.35,375/-. The said return of income was selected for compulsory scrutiny assessment in view of the survey action conducted u/s.133A of the Act. Accordingly, notice u/s.143(2) of the Act was issued on 29.06.2021, followed by notice u/s.142(1) of the Act. 5. During the course of survey, one Shri S.Isakkiraja, who was present at the assessee’s premises for the purpose of purchasing gravel stone, deposed that he had purchased one unit of ½ inch gravel stone and was issued a credit Printed from counselvise.com :-3-: ITA. No: 1632/Chny/2025 bill for Rs.800/- as against the actual sale price of Rs.1,450/-. He further stated that it was the regular practice of the assessee to issue bills for a lower value. In her sworn statement recorded during the survey, the assessee admitted the total turnover for the relevant assessment year, as on the date of survey, at Rs.6,64,76,379/-, and further agreed to offer 8% thereof, amounting to Rs.53,18,110/-, as her business income. 6. In addition, it was noted during the course of survey that the assessee was unable to substantiate unsecured loans aggregating to Rs.57,59,900/-. Consequently, in her sworn statement, the assessee accepted the said sum as income on account of unexplained unsecured loans for the A.Y.2020-21. 7. The AO noticed from the return of income filed by the assessee that she had disclosed a total income of Rs.20,99,500/-, comprising income from business of Rs.20,64,120/- and income from other sources of Rs.33,375/-. However, this declaration was not in consonance with the statement made by the assessee during the course of the survey, wherein she had undertaken to offer a total sum of Rs. 1,10,78,010/- which included estimated business income of Rs.53,18,110/- and unsecured loans of Rs.57,59,900/-. Accordingly, the AO noted a shortfall of Rs.87,78,510/- between the income admitted in the return of income and the amounts indicated by the assessee during the survey proceedings. In view of the foregoing, the assessee was issued a show cause notice calling upon to explain as to why the said difference should not be brought to tax under the provisions of the Act. Printed from counselvise.com :-4-: ITA. No: 1632/Chny/2025 8. In response, the assessee submitted before the AO that there was no variation in the actual sales turnover. It was contended that the figure of Rs.6,64,76,379/-, as noted at the time of survey, did not represent the actual sales but was merely a rough noting comprising of advances, realization from debtors, and other related entries. The assessee further explained that, upon reconciliation of advances and debtor realizations, the GST returns were duly filed, reflecting the true and correct turnover. Accordingly, it was submitted that the turnover disclosed in the GST returns should be accepted as the correct turnover and not the figure noted during the course of the survey proceedings. 9. The assessee also stated that she had voluntarily agreed to offer 8% of the turnover, prior to allowing depreciation, as her business income. On this basis, the assessee submitted that the business income of Rs.20,64,120/- as disclosed in the return of income filed for the relevant assessment year was in line with the statement furnished during the course of survey. It was, therefore, requested that no addition be made to the returned income and that the proposed addition be dropped. 10. The AO, however, did not accept the submissions of the assessee. According to the AO, statements were recorded from one of the purchasers, Shri Isakkiraja, who confirmed that the assessee was resorting to under- invoicing of sales. Furthermore, the turnover of Rs.6,64,76,379/- had been computed in the presence of the assessee, based on the noting made by her, and not on any estimate prepared by the Department independently. The AO Printed from counselvise.com :-5-: ITA. No: 1632/Chny/2025 observed that the assessee failed to substantiate her claim that the said noting represented advances/debtor realizations, as no reconciliation supported by credible evidence was produced. 11. In view of the above, the AO determined the total turnover of the assessee at Rs.6,64,76,379/-. Applying the rate of 8% thereto, the AO computed the business income at Rs.53,18,110/-. Since the assessee had already admitted Rs.20,64,120/- as business income in the Return of Income, the AO treated the difference of Rs.32,53,990/- as undisclosed business income and made an addition to that extent for A.Y.2020-21. 12. In the return of income filed, the assessee had disclosed unsecured loans amounting to Rs.92,20,000/-. During the course of survey proceedings, however, the AO found unsecured loans aggregating only to Rs.57,59,900/-. Consequently, the AO issued a show cause notice requiring the assessee to substantiate the genuineness of the unsecured loans disclosed in the return. 13. In response, the assessee submitted that the said loans were received from her daughter and her spouse. It was contended that a sum of Rs.22,50,000/- was received from her daughter through banking channels during the Financial Year 2012-13. Further, it was explained that out of the aggregate amount of Rs.69,70,000/- stated to have been received from her spouse, Rs. 40,27,000/- was received in the Financial Year 2017-18 and Rs.29,43,000/- was received in the Financial Year 2018-19. Printed from counselvise.com :-6-: ITA. No: 1632/Chny/2025 14. In order to verify the veracity of the above submissions, the AO issued summons to the assessee’s daughter and spouse, both of whom appeared before the AO and tendered their statements. 15. Smt. Subathra, daughter of the assessee, deposed that she had advanced the funds in her capacity as a partner in M/s AV Tiles Company, Chennai, and that the amounts were transferred to the bank account of the assessee. She stated that Rs.9,00,000/- was transferred on 19.01.2013 and Rs. 13,50,000/- on 21.01.2013. However, on examination, the AO observed that Smt. Subathra had not advanced any loan during the Financial Year 2012-13, and further, that M/s AV Tiles Company was a partnership firm with Shri L.D.Thilak and Shri L.D. Vijay as its partners. Shri L.D.Thilak, son-in-law of the assessee, in his statement, admitted that he had advanced the money on the above dates from the firm M/s. AV Tiles Company. The AO noted that the alleged loans were not reflected either in the return of income of M/s. AV Tiles Company or in the return of income of the assessee for the A.Y.2013-14. Accordingly, the AO rejected the explanation of the assessee with respect to the unsecured loan of Rs.22,50,000/-. 16. With regard to the funds stated to have been received from her spouse, Shri Ramasubbu, it was submitted that the amounts were advanced out of the proceeds of a Mortgage Term Loan availed from M/s Shriram Transport Finance Company Limited. The AO verified and noted that the said loan had been availed to the extent of Rs. 50,00,000/- on 22.12.2017 and Rs. 20,00,000/- on Printed from counselvise.com :-7-: ITA. No: 1632/Chny/2025 26.09.2018. The AO further observed that only Rs.20,00,000/- had been directly transferred to the assessee on 07.03.2018. Accordingly, the AO accepted the assessee’s explanation only to the extent of Rs.20,00,000/-, while holding the balance sum of Rs.49,70,000/- purportedly received from her spouse as unsubstantiated. 17. In view of the foregoing findings, the AO held that unsecured loans amounting to Rs.72,20,000/- out of the total sum of Rs.92,20,000/- remained unexplained. The same was, therefore, treated as unexplained cash credit u/s.68 r.w.s 115BBE of the Act, and accordingly brought to tax for the impugned assessment year. 18. The assessment was thus completed by the AO u/s.143(3) of the Act on 29.09.2022 assessing the total income at Rs.1,25,73,490/- making the additions of (i) Rs.32,53,990/- towards undisclosed business income and (ii) Rs.72,20,000/- treating unsecured loans as unexplained cash credits u/s.68 r.w.s 115BBE of the Act. Aggrieved of the said order, assessee preferred appeal before the ld.CIT(A). 19. The ld.CIT(A) vide order dated 25.03.2025 deleted the additions made by the AO. The relevant observations of the ld.CIT(A) in deleting the addition towards undisclosed business income are as under:- “6.2.6 In the case of the appellant, a survey was conducted under section 133A of the Income Tax Act on 26.02.2020 at the appellant's business premises. During the course of survey, the survey team was able to ascertain from one of the customer that the appellant is supressing sales. Further the survey team recorded a statement from the appellant u/s 131 of the Act wherein, the appellant Printed from counselvise.com :-8-: ITA. No: 1632/Chny/2025 has accepted to admit 8% of the turnover in the return of income for the AY 2020-21. 6.2.7 As evident in the assessment order, the AO while contemplating the addition has relied upon the statement recorded from the appellant and the total turnover estimated during the course of survey. It is appropriate to bring on record that the AO while completing the assessment has not relied upon any evidence that was impounded during the course of survey. In the absence of any such incriminating evidence to arrive at any conclusion that the appellant has suppressed sales is not appropriate. Further, the presumption laid down u/s 132(4A) and 292C of the Act will not apply to the fact and circumstances of the case of the appellant. 6.2.8 A submission by one of the customer of the appellant alleging sale suppression cannot be taken as a sacrosanct without conducting any further enquiries. This isolated incident cannot be extrapolated to all the transaction of the appellant carried out throughout the year without there being any proven facts. Further, the appellant’s books of accounts were subjected to audit as per the provisions of section 44AB of the Act. When the AO has accepted the books of accounts in total, there can be no case to make an estimation of the turnover. The turnover determined by the AO is an estimation. 6.2.9 The action of the AO in adding the discrepancy between the reported turnover and the estimated turnover as additional business income was not based on any concrete evidence or material that indicated suppressed sales or income. The appellant’s reported turnover, supported by GST filings and audited financials, merits consideration unless there exist any adverse findings upon with supporting evidences. 6.2.10 The undersigned is of the considered view that the reported turnover declared by the appellant in the return of income amounting Rs. 6,04,44,763/- is legitimate, as it was consistent with the appellant’s GST filings and financial statements. More significantly, the AO failed to bring on record any substantial evidence to suggest that the turnover was understated or that the appellant was involved undisclosed sales. Therefore, any estimation of total income based on an estimated turnover, which is not supported by cogent and corroborative evidence, is merely speculative and lacks substantiation. Therefore, all the grounds raised by the appellant upon this issue are hereby treated as allowed and the AO is directed to delete the addition of Rs.32,53,990/- made for the AY 2020-21.” 20. Further, the relevant observations of the ld.CIT(A) in deleting the addition towards unsecured loans are as under: - Printed from counselvise.com :-9-: ITA. No: 1632/Chny/2025 “6.2.13 The undersigned has carefully examined the issue under consideration. As evident from the details furnished by the appellant during the course of appellate proceedings which were also made available before the AO during the course of assessment proceedings, it can be seen that the amount of Rs.72,20,000/- constitutes two components viz.. 1. Receipt of Rs. 22,50,000/- from Son-in-law. 2. Receipt of Rs. 49,70,000/- from the appellant’s spouse They are dealt as under Receipt of Rs. 22,50,000/- from of Son-in-law. 6.2.14 As evident from the bank statements, this amount was transferred from the current account of M/s. A.V.Tiles, a partnership firm in which the appellant’s son-in law, Shri. L.D. Thilak, is a partner. The amount of Rs. 9,00,000/- was transferred on 19.01.2013 and Rs. 13,50,000/- was transferred on 21.01.2013, from the partnership firm's bank account to the appellant’s bank account. The relevant bank statements evidencing the same is appended here as under. 6.2.15 The appellant contends that the transaction represents an advance to the appellant in her personal capacity from her son-in-law, who acted through the partnership firm, which was recorded as drawings in the partner’s capital account. The funds were transferred Printed from counselvise.com :-10-: ITA. No: 1632/Chny/2025 through a prescribed digital mode and have been routed through banking channels from a disclosed source. The appellant submits that since the amount pertains to the financial year 2012-2013, it should not be considered in the current assessment year, as the credit is not related to the year in which it was first recorded. 6.2.16 The undersigned has carefully examined the issue under consideration. As evident in the bank statement, the aforesaid transactions under consideration was effected during the FY 2012-13. The appellant had no occasion to disclose these transactions in the return of income filed for the earlier years as the appellant regularly admits income on presumptive basis. Therefore, the findings of the AO that the appellant has claimed these transactions as unsecured loan during the FY 2019 20 relevant to AY 2020-21 is devoid of merits. The appellant has substantiated this claim and proved that the appellant has received during the FY 2012-13. Further, in the case of M/s. AV Tiles, who has advanced these amounts, the transaction was accepted in total in the absence of any adverse findings. In this background the under signed is of the view that the action of the AO to treat the amounts of Rs. 9,00,000/- and Rs13,50,000/- amounting to Rs. 22,50,000/- as bogus unsecured loan u/s 68 of the Act lacks merits. Receipt of Rs. 49,70,000/- from the appellant’s spouse 6.2.17 As evident from the bank statements furnished by the appellant, that was made available before the course of assessment proceedings, that the appellant’s spouse, Shri. Ramasubbu, has made remittances to the appellant’s proprietary concern, M/s. Maries Blue Metals, amounting to Rs. 40,27,000/- during the FY 2017 18 and Rs. 29,43,000/- during the FY 2018-19. The appellant has substantiated the above receipts from the bank statements of Shri. Ramasubbu. The AO during the course of assessment proceedings has examined the bank statements and has arrived at a conclusion that a sum of Rs. 20,00,000/- was alone transferred to the appellant’s proprietary concern on 07.03.2018 and treated the balance amount as bogus. 6.2.18 On examination of the bank statement, it can be seen that the AO has disallowed a sum of Rs. 14,00,000/- transferred on 11.02.2019 which pertains to EB deposit. On examination of the other transactions it can be seen that these transactions were made with Deepa Machinery and other payments relating to the appellant’s proprietary concern. These remittances were made through a re- finance availed from Sri Ram Transport Finance, a finance company where the appellant’s spouse Shri. Ramasubbu had financial dealings. The remittances were directly used for capital goods and utilities in connection with the business and were made through banking channels. Printed from counselvise.com :-11-: ITA. No: 1632/Chny/2025 6.2.19 It is the case of the appellant, the remittances were accounted for in the books of Shri. Ramasubbu, and the details of the debit balances are reflected in the books of Shri. Ramasubbu. The extract of ledger account which was made available by the appellant’s spouse before the AO in response to the summons issued u/s 131 of the Act is appended here as under. 6.2.20 Further Shri. Ramasubbu is assessed to tax separately under the PAN- ACQPR3070B. The AO in the case of Shri. Ramasubbu has not made any adverse findings upon the above transactions. The appellant had no occasion to disclose these transactions in the return of income filed for the earlier years as the appellant regularly admits income on presumptive basis. Therefore, the findings of the AO that the appellant has claimed these transactions as unsecured loan during the FY 2019 20 relevant to AY 2020-21 is devoid of merits. The appellant has substantiated this claim and proved that the appellant has received during the FY 2017-18 & 2018-19. Further, in the case of Shri. Ramasubbu, who has advanced these amounts, the transaction was accepted in total in the absence of any adverse findings these amounts should be treated as a loan from him to the business, rather than as an unexplained credit. These remittances were debited in the financials of Mr. Ramasubbu with no irregularities in their treatment. In this background the undersigned is of the view that the action of the AO to treat the amounts of Rs. 49,70,000/- as bogus unsecured loan u/s 68 of the Act lacks merits. Printed from counselvise.com :-12-: ITA. No: 1632/Chny/2025 6.2.21 In view of the detailed analysis and the evidence(s) provided by the appellant, it is clear that the amounts received from the appellant's son-in-law and husband have been routed through proper banking channels are backed by verifiable sources, and were correctly recorded in the respective financial years. Therefore, the addition of Rs. 72,20,000/- as bogus unsecured loans u/s 68 r.w.s. 115BBE of the Act is unwarranted. Accordingly, all the grounds raised by the appellant upon this issue are hereby treated as allowed and the AO is directed to delete the addition of Rs. 72,20,000/- as bogus unsecured loans u/s 68 r.w.s.115BBE for the AY 2020-21.” 21. Aggrieved of the above order passed by the ld.CIT(A), the Revenue is in appeal before us challenging the relief given by the ld.CIT(A). 22. The ld.DR, appearing on behalf of the Revenue, submitted that the turnover of Rs.6,64,76,379/-, as determined on the date of survey, was based on documents duly impounded during the course of survey proceedings in the presence of the assessee. Accordingly, such turnover cannot be disregarded. It was further contended that the assessee, in her statement recorded at the time of survey, had voluntarily agreed to offer 8% of the said turnover as income. However, in contravention thereof, the assessee subsequently filed her return of income declaring a lower figure of business income, which is not valid in law. Thus, the ld.DR argued that the addition of Rs.32,53,990/- made by the AO on account of undisclosed business income is justified and sustainable in law. The ld.DR therefore, prayed that the impugned order of the ld.CIT(A), deleting the said addition, be set aside and the order of the AO be restored. 23. With respect to the issue concerning the addition on account of unsecured loans, the ld.DR contended that the provisions of Section 68 of the Act are attracted even in relation to the opening balances, where the assessee Printed from counselvise.com :-13-: ITA. No: 1632/Chny/2025 has failed to establish the creditworthiness of the creditors in the assessment year in which such balances are first reflected or claimed. The ld.DR further submitted that the reasoning adopted by the ld.CIT(A) that opening balances cannot be subjected to addition in the year under consideration is legally untenable. It was therefore prayed that the order of the ld.CIT(A) deleting the addition be set aside, and the order passed by the AO be restored. 24. Per contra, the ld.AR, appearing for the assessee, by invoking the provisions of Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, raised a legal ground assailing the validity of the assessment order dated 29.09.2022 passed by the AO u/s.143(3) of the Act. The ld.AR submitted that the notice issued u/s.143(2) of the Act on 29.06.2021 by the Income Tax Officer, Ward–4, Tirunelveli, was without jurisdiction. 25. It was further contended that, pursuant to the order passed u/s.127 of the Act by the Principal Commissioner of Income Tax–1, Madurai, dated 09.12.2020, the jurisdiction over the assessee stood transferred with immediate effect from the Income Tax Officer, Ward–4, Tirunelveli, to the Central Circle–2, Madurai. Accordingly, the ld.AR argued that with effect from 09.12.2020, the jurisdiction vested exclusively with Central Circle–2, Madurai, and not with the Income Tax Officer, Ward–4, Tirunelveli. 26. Therefore, the ld.AR submitted that the notice u/s.143(2) dated 29.06.2021 issued by the ITO, Ward–4, Tirunelveli, was without authority of law and invalid, rendering the consequential assessment order dated 29.09.2022 Printed from counselvise.com :-14-: ITA. No: 1632/Chny/2025 passed by the AO on the basis of notice u/s.143(2) issued by the non jurisdictional Assessing Officer is void ab initio. 27. On merits, the ld.AR placed reliance upon the order of the ld.CIT(A) and submitted that there is no perversity in the findings recorded therein warranting any interference. It was thus prayed that the order of the ld. CIT(A) be upheld and the appeal of the Revenue be dismissed. 28. We have heard the rival submissions advanced by both sides, examined the material available on record, and duly perused the paper book filed by the assessee. At the very outset, we observe that the ld.AR has raised a legal ground challenging the very validity of the assessment order. In view of the settled principles of law, a jurisdictional ground strikes at the very root of the assessment proceedings. Therefore, in the interest of justice, it becomes imperative to adjudicate upon such a legal issue as a preliminary matter before proceeding further into the merits of the case. 29. The ld.DR, however, has strongly opposed the admission of the said legal ground by invoking the provisions of Rule 27 of the ITAT Rules. It has been contended by the ld.DR that since the assessee did not raise the issue of jurisdiction before the lower authorities, the same cannot now be permitted to be agitated for the first time before this Tribunal. The preliminary question, therefore, that arises for consideration is whether an assessee, by resorting to Rule 27 of the ITAT Rules, is entitled to raise a pure question of jurisdiction for Printed from counselvise.com :-15-: ITA. No: 1632/Chny/2025 the first time before the Tribunal, notwithstanding the fact that such issue was not urged before the authorities below. 30. On this aspect, useful reference may be made to the judgment of the Hon’ble Bombay High Court in Peter Vaz v. CIT [2021] 436 ITR 616 (Bom.), wherein the Hon’ble Court, after an elaborate analysis of the scope and ambit of Rule 27 of the ITAT Rules, as also section 260A(7) of the Income-tax Act, 1961 read with Order XLI Rule 22 of the Code of Civil Procedure, 1908, and the interpretation accorded thereto by the Hon’ble Supreme Court in S. Nazeer Ahmed v. State of Karnataka, categorically held as under: “38. In the present case, it is not as if the issue of non-fulfillment of jurisdictional parameters of Section 153C was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT (Appeals). Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963 as also the provisions of section 260A(7) read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed (supra) we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any cross-objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue.” 31. Respectfully following the aforesaid precedent, we hold that the assessee, even without having filed either an appeal or cross-objections, is fully entitled to raise a jurisdictional ground before this Tribunal by invoking Rule 27 of the ITAT Rules. Such a ground, being purely legal in nature and going to the root of the matter, can indeed be admitted for adjudication at this stage. Consequently, the objection raised by the ld.DR opposing its admission is rejected. The legal ground raised by the assessee is, therefore, admitted for adjudication on merits. Printed from counselvise.com :-16-: ITA. No: 1632/Chny/2025 32. We note that a survey u/s.133A of the Act was conducted in the case of the assessee on 26.02.2020. As on the said date, the territorial jurisdiction over the assessee vested with the Income Tax Officer, Ward-4, Tirunelveli. 33. We are aware that it is a matter of established administrative procedure that, in the ordinary course, upon completion of a survey action, the jurisdiction of the assessee is generally centralized and transferred from the regular jurisdictional Assessing Officer to the Central Charge. From the date on which such centralization is effectuated, the erstwhile Assessing Officer of the regular charge ceases to exercise jurisdiction, which thereafter vests exclusively with the Assessing Officer of the Central Charge. 34. However, such centralization of jurisdiction can only be validly effected through an order of transfer issued by the jurisdictional Principal Commissioner of Income Tax, in exercise of the powers conferred u/s.127 of the Act. 35. In the present case, we observe that the Principal Commissioner of Income Tax-1, Madurai, vide Notification No.11/2020-21 (C.No.440/PCIT/MDU- 1/2020-21 dated 03.12.2020), passed an order u/s.127 of the Act dated 09.12.2020, whereby the jurisdiction over the assessee was transferred from the Income Tax Officer, Ward-4, Tirunelveli, to the Assessing Officer, Central Circle-2, Madurai, with immediate effect from 09.12.2020. The said order, inter alia, directed the concerned Assessing Officer of the regular charge to transfer Printed from counselvise.com :-17-: ITA. No: 1632/Chny/2025 all assessment records along with connected files and documents to the Assessing Officer of the Central Circle-2, Madurai. 36. For ease of reference, the relevant extract of the aforesaid order is reproduced herein below: Printed from counselvise.com :-18-: ITA. No: 1632/Chny/2025 37. In view of the foregoing order, it stands conclusively established that the Income Tax Officer, Ward-4, Tirunelveli, ceased to exercise jurisdiction over the assessee with effect from 09.12.2020. Consequent thereto, the exclusive and absolute jurisdiction in respect of all matters pertaining to the assessment, reassessment, collection, recovery, enforcement, and all other proceedings under the provisions of the Act in the case of the assessee, vests with and shall be exercised by the office of the Deputy/Assistant Commissioner of Income Tax, Central Circle–2, Madurai, from the aforesaid date. 38. The ld.DR contended that although the impugned order was passed on 09.12.2020, due to a delay in the migration of the PAN in the Income Tax Department's ITBA system, there would inevitably be a corresponding delay in the actual transfer of jurisdiction. Accordingly, it was argued that for all practical purposes, the relevant date for invoking jurisdiction should be reckoned from the date of actual migration of the PAN in the ITBA portal. Printed from counselvise.com :-19-: ITA. No: 1632/Chny/2025 39. We are unable to concur with the submission of the ld.DR, it is well settled that once an order is passed u/s.127 of the Act, the same operates as binding on all subordinate authorities, and the transfer of jurisdiction takes effect immediately upon the issuance of such order. The mere administrative delay in system migration cannot and does not operate to defer or dilute the legal effect of a duly passed statutory order. In other words, administrative inconvenience cannot override or nullify the operative effect of an order passed by the PCIT u/s.127 of the Act. 40. We further observe that the order dated 09.12.2020, passed by the PCIT u/s.127 of the Act, has not been withdrawn, modified, or stayed at any point in time. In light of the foregoing, it is evident that as of the date of issuance of the notice u/s.143(2) of the Act, namely, 29.06.2021, the jurisdiction in respect of the assessee’s case vested unequivocally with Central Circle-2, Madurai, and not with the Income Tax Officer, Ward-4, Tirunelveli. Consequently, the notice u/s.143(2) of the Act, issued by the ITO, Ward-4, Tirunelveli, is without jurisdiction and, therefore, invalid and liable to be quashed. 41. It is a well-settled legal proposition that an assessment order passed by an Assessing Officer pursuant to a notice u/s.143(2) of the Act issued by an officer lacking jurisdiction is null and void ab initio. In support of this principle, reliance is placed on the following judicial precedents: 42. The Hon’ble Calcutta High Court in PCIT v. Nopany & Sons [2022] 286 Taxman 388 (Cal) has held as under:- Printed from counselvise.com :-20-: ITA. No: 1632/Chny/2025 “6. The short issue which falls for consideration is whether the assessing officer, who had jurisdiction over the assessee at the relevant time had issued notice under section 143(2) of the Act before taking up the scrutiny assessment under section 143(3). Before we go into the facts, we take note of the legal position as laid down by the Hon'ble Supreme Court in Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362, wherein the Hon'ble Supreme Court held that omission on the part of the assessing officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with. Further, we also take note of the decision in the case of CIT v. Gitsons Engineering Co. [2015] 53 taxmann.com 108/231 Taxman 506/370 ITR 87 (Mad.), wherein it was held that the word 'shall' employed in section 143(2) of the Act, contemplates that the assessing officer should issue notice to the assessee so as to ensure that the assessee has not understated income or has not computed excessive loss or has not under paid the tax in any manner. It was further held that when the assessing officer considers it necessary and expedient to ensure that tax is paid in accordance with law, he should call upon the assessee to produce evidence before him to ensure that the tax is paid in accordance with law. The section makes it clear that service of notice under section 143(2) of the Act within the time limit prescribed is mandatory and it is not a mere procedural requirement. At this juncture, it would be relevant to take note of the definition of assessing officer as defined in section 2(7A) of the Act. The said provision defines 'assessing officer' to mean the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer, who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of the Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, who is directed under clause (b) of sub-section (4) of section 120 to exercise or perform all or any of the powers and functions conferred on, or assigned to, an assessing officer under this Act. In the instant case, the order of assessment was challenged on several grounds and, particularly, on the ground that no notice under section 143(2) of the Act was issued within the time prescribed by the assessing officer, who had jurisdiction over the assessment file of the assessee at the relevant time. The Commissioner of Income-tax (Appeals)-XXXVII, Kolkata, (CIT(A)) did not agree with the contentions raised by the assessee that there is failure to comply with the mandatory statutory requirement. The CIT(A) opined that the assessing officer, who originally dealt with the e-return filed by the assessee had issued notice under section 143(2) of the Act. With regard to the merits of the matter, the CIT(A) held it in favour of the assessee. Therefore, the revenue was on appeal before the Tribunal and cross-objection was filed by the assessee questioning that portion of the order of the CIT(A) which held that there is no procedural irregularity committed Printed from counselvise.com :-21-: ITA. No: 1632/Chny/2025 by the assessing officer. The Tribunal considered the correctness of the finding of the CIT(A) and, on facts, found that both the assessing officers, namely, the assessing officer, who had jurisdiction over the assessee till 6-4-2009 and the assessing officer, who had jurisdiction post the said date had not issued notice under section 143(2) of the Act within the prescribed period of six months from the end of the financial year in which the return was filed. This factual position could not be controverted by the revenue before us. As pointed out by the Hon'ble Supreme Court in the case of Hotel Blue Moon (supra), non- issuance of notice under section 143(2) is not a procedural irregularity and, therefore, it is not curable. Thus, on facts, it having been established that no notice was issued under section 143(2) of the Act, the order passed by the Tribunal was perfectly legal and valid. The revenue also sought to rely upon section 292BB of the Act to justify their stand that notice is deemed to be valid and sought to bring the assessee's case under the circumstances mentioned in section 292BB. This question was considered by the Tribunal and it was pointed out that section 292BB provides that where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any of the provision of the Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner. This amendment to the Act was introduced with effect from 1-4-2008 and the assessment year under consideration is AY 2007-08. In any event, the Tribunal examined as to whether at all the revenue can rely upon section 292BB of the Act and noted that the assessee has filed an objection vide letter dated 16-11-2009 objecting to the issuance of notice under section 142(1) of the Act without valid service of notice under section 143(2) of the Act. Taking note of the said letter the Tribunal, in our view, rightly held that the proviso to section 292BB would not stand attracted and the said section cannot be made applicable to the assessee's case. The Tribunal, thereafter, analysed as to the correctness of the submission of the revenue seeking to sustain their stand by referring to a notice issued by the assessing officer, who at the relevant point had no jurisdiction over the assessee and, on facts, found that there is no valid compliance of section 143(2) of the Act as the notice issued under section 143(2) of the Act by the assessing officer/Income Tax Officer, Ward-3(1) had no jurisdiction over the assessee at the relevant time. The Tribunal to support its conclusion placed reliance in the case of CIT v. Mukesh Kumar Agrawal [2012] 25 taxmann.com 112/345 ITR 29 (Allahabad), wherein it was held that the assessing officer did not have jurisdiction to proceed further and make assessment since notice under section 143(2) of the Act was admittedly not issued. As in the case on hand, the revenue sought to take coverage under section 292BB of the Act which was rejected on the ground that the very foundation of the jurisdiction of the assessing Printed from counselvise.com :-22-: ITA. No: 1632/Chny/2025 officer was on the issuance of notice under section 143(2) of the Act and the same having been complied with, the revenue cannot take shelter under the provisions of section 292BB of the Act.” 43. Respectfully following the foregoing judgment of the Hon’ble Calcutta High Court, it is held that the assessment order dated 29.09.2022 passed by the AO u/s.143(3) of the Act, pursuant to a notice u/s.143(2) of the Act issued by a non-jurisdictional officer, namely ITO, Ward-4, Tirunelveli, is without jurisdiction and, accordingly, stands quashed. Thus, the legal ground raised by the assessee invoking Rule 27 of the ITAT Rules is allowed in favour of the assessee. 44. On merits of the case, with regard to the issue concerning the addition of Rs.32,53,990/- towards undisclosed business income of the assessee, we observe that the said addition was made solely on the basis of statements recorded during the course of the survey, without any corroborative evidence to substantiate that the noting in the impounded material genuinely represented the actual sales of the assessee. It is a settled position in law that where the Assessing Officer has already accepted the books of account, he cannot arbitrarily estimate income solely on the basis of noting found during a survey. The AO ought to have relied on cogent and verifiable material demonstrating that the noting indeed represented the actual turnover of the assessee on the date of the survey. In the absence of such material, we are of the considered view that there is no infirmity in the findings of the ld.CIT(A) in deleting the addition made by the AO. Printed from counselvise.com :-23-: ITA. No: 1632/Chny/2025 45. Further, regarding the addition of Rs.72,20,000/- made u/s.68 r.w.s 115BBE of the Act, it is undisputed that the said amount represented opening balances of unsecured loans and did not arise from fresh credits during the relevant assessment year. It is a well-established principle that the provisions of Section 68 of the Act are triggered only with respect to credits received during the year and do not apply to opening balances. In the facts and circumstances of the present case, we find that no addition u/s.68 of the Act is warranted, and the ld.CIT(A) has rightly deleted the addition, which requires no interference. 46. In view of the foregoing discussion, even on merits, we find no justification to interfere with the order of the ld.CIT(A) deleting the additions made by the AO towards undisclosed business income and unsecured loans. Accordingly, we are inclined to uphold the order of the ld.CIT(A), and the grounds of appeal raised by the Revenue are dismissed. 47. In the result, the appeal of the Revenue is dismissed. Order pronounced in the court on 07th October, 2025 at Chennai. Sd/- Sd/- (एस.एस.िव\u0007ने रिव) (S.S.VISWANETHRA RAVI) ाियकसद\u0011/Judicial Member (एस. आर.रघुनाथा) (S. R. RAGHUNATHA) लेखासद\u0011/Accountant Member चे\u0003नई/Chennai, \u0006दनांक/Dated, the 07th October, 2025 sp Printed from counselvise.com :-24-: ITA. No: 1632/Chny/2025 आदेशक \u000e\u000fत\u0011ल\u0013पअ\u0016े\u0013षत/Copy to: 1. अपीलाथ\u001a/Appellant 2. \u000e\u001bयथ\u001a/Respondent 3.आयकर आयु त/CIT– Chennai/Coimbatore/Madurai/Salem 4. \u0013वभागीय \u000e\u000fत\u000fन#ध/DR 5. गाड& फाईल/GF Printed from counselvise.com "