BALAGURU RAJAMANICKAM,NAGAPATTINAM V. ITO, WARD-1, KUMBAKONAM

ITA 2827/CHNY/2025

AI Insights

The case involves two appeals by Balaguru Rajamanickam against the orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment years 2015-16 and 2016-17. The primary legal issue was the validity of the notices issued under section 148 of the Income Tax Act, which were challenged as being barred by limitation. The Tribunal examined the timelines and procedural compliance for reopening the assessments and found discrepancies that rendered the notices invalid. Consequently, the Tribunal quashed the assessments made under section 147 read with section 144B of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824515 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 14-10-2025
• Other Referred Cases: TVS Credit Services Ltd. v. DCIT, Hexaware Technologies Ltd. V. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LATCHANA
• Assessee Lawyers: S. VELPANDIAR
• Keywords: Reassessment proceedings; Unexplained investment; Period of limitation; Reopening of assessment
• Section: 147; 148; 142(1); 69

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं सुŵी एस.पȧावती,, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Ms. S. Padmavathy, Accountant Member आयकर अपील सं./I.T.A. Nos.2827 & 2828/Chny/2025 िनधाŊरण वषŊ/Assessment Years: 2015-16 & 2016-17 Balaguru Rajamanickam, No. 12, Thiruvilandur North Street, Mayiladuthurai, Nagapattinam Dt., Nagapattinam 609 001. [PAN: AEGPR5775K] Vs. The Income Tax Officer, Ward 1, Kumbakonam. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri S. Velpandiar, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. Latchana, JCIT सुनवाई की तारीख/ Date of hearing : 17.12.2025 घोषणा की तारीख /Date of Pronouncement : 31.12.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: Both the appeals filed by the assessee are directed against separate orders dated 22.09.2025 and 18.09.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment years 2015-16 and 2016-17 respectively. 2. Both the appeals filed by the same assessee, heard together and being disposed of by this common order for the sake of brevity. Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 2 3. First, we shall take up ITA No. 2827/Chny/2025 – AY 2015-16 for adjudication. 4. In ground Nos. 2 to 4, the assessee raised legal ground challenging the reopening of assessment is barred by limitation by issuing notice under section 148 of the Act dated 26.04.2024. 5. The Assessing Officer noted that in the FY 2014-15 relevant to AY 2015-16, the assessee made cash deposits in his saving account with Karur Vysya Bank Ltd. amounting to ₹.60,17,800/- and made credits (deposits other than cash) of ₹.51,02,500/-, but, however, not filed return of income for AY 2015-16. Accordingly, the Jurisdictional Assessing Officer after passing order under section 148A(d) of the Income Tax Act, 1961 [“Act” in short] on 21.04.2022, issued notice under section 148 of the Act dated 26.04.2022 requiring the assessee to file the return of income for AY 2015-16. In response, the assessee filed return of income on 16.05.2022 admitting income at ₹.3,10,500/-. In response to notice under section 142(1) of the Act, the assessee furnished part details and the same is reflected in para 3.5 of the assessment order. Since the assessee could not furnish complete details such as, modus operandi of the business, cash book/cash flow Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 3 statement, source of cash deposits and credits made in his accounts, the assessment unit of NFAC completed the assessment under section 147 r.w.s. 144B of the Act dated 15.03.2024 assessing total income of the assessee at ₹.1,14,30,800/-, inter alia, making addition towards unexplained income under section 69A of the Act at ₹.60,17,800/- and unexplained investment under section 69 of the Act at ₹.51,02,500/-. The ld. CIT(A) confirmed the additions made by the assessment unit of NFAC. 6. The ld. AR Shri S. Velpandiar, Advocate drew our attention to page 10 of the paper book and submits that the notice under section 148 of the Act was issued on 26.04.2022 is barred by limitation. He submits that the limitation to reopen the assessment expires on 31.03.2022 as per 1st proviso to section 149(1) of the Act and argued that the reassessment proceedings initiated under section 147 of the Act is bad in law as the Assessing Officer passed the order under section 148A(d) of the Act on 21.04.2022 instead on 07.04.2022 as it is the extended period of limitation as per the 4th proviso to section 149(1) of the Act. Thus, the ld. AR prayed for quashing the assessment order passed under section 147 r.w.s. 144B of the Act dated 15.03.2024. Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 4 7. The ld. DR Ms. Latchana, JCIT drew our attention to the show- cause notice issued under section 148A(b) of the Act on 26.03.2022 and submits that the Assessing Officer rightly assumed jurisdiction to reopen the assessment under section 147 of the Act and supported the order passed the Assessing Officer. 8. We have heard both the parties and perused the material available on record. In this case, as per para 1.1 of the assessment order and page 10 of the paper book filed by the assessee, we note that the Jurisdictional Assessing Officer issued notice under 148 of the Act on 26.04.2022. The contention of the ld. AR is that the notice issued under section 148 of the Act is barred by limitation as per section 149 of the Act for the reason that the limitation to reopen the assessment as per 1st proviso to section 149(1) of the Act for the AY 2015-16 expires on 31.03.2022 or by extended period of 7 days i.e. on 07.04.2022. 9. We note that the Jurisdictional Assessing Officer issued show cause notice under section 148A(b) of the Act on 26.03.2022, but, according to the limitation to reopen the assessment, as per 1st proviso to section 149(1) of the Act, which expires on 31.03.2022, thus, the Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 5 Jurisdictional Assessing Officer has no time to pass the order under section 148A(d) of the Act, the same gets extended to 7 days as per the 4th proviso of section 149(1) of the Act from 31.03.2022, whereas, the Jurisdictional Assessing Officer passed under section 148A(d) of the Act on 21.04.2022 and consequently, notice dated 26.04.2022 issued under section 148 of the Act is barred by limitation. We find force in the arguments of the ld. AR and accordingly, the assessment order passed under section 147 r.w.s. 144B of the Act dated 15.03.2024 is quashed. Thus, ground Nos. 2 to 4 raised by the assessee are allowed and remaining ground Nos.5 to 7 become infructuous. I.T.A. No. 2828/Chny/2025 – AY: 2016-17 10. In ground No. 4, the assessee has challenged that the assessment having been reopened by the Jurisdictional Assessing Officer, who lacks the jurisdiction to do the same as per section 151A of the Act, the reopening and impugned order are illegal and the ld. CIT(A) went wrong in failing to hold so. 11. The Assessing Officer noted that in the FY 2015-16 relevant to AY 2016-17, the assessee made cash deposits in his saving account Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 6 with Karur Vysya Bank Ltd. amounting to ₹.1,43,94,000/- and made credits (deposits other than cash) of ₹.1,49,72,976/-, but, however, not filed return of income for AY 2016-17. Accordingly, the Jurisdictional Assessing Officer passed order under section 148A(d) of the Act and issued notice under section 148 of the Act on 31.03.2023. In response to the said notice, the assessee filed return of income on 05.04.2023 admitting income at ₹.3,35,550/-. Thereafter, against various notices under sections 143(2)/142(1) of the Act, there was no reply from the assessee or furnished part reply. Against the show-cause notice dated 01.03.2024, the assessee furnished part reply. After considering the part reply furnished by the assessee, the assessment unit of NFAC completed the assessment under section 147 r.w.s. 144B of the Act dated 16.03.2024 assessing total income of the assessee at ₹.2,97,02,526/-, inter alia, making addition towards unexplained income under section 69A of the Act at ₹.1,43,94,000/- and unexplained investment under section 69 of the Act at ₹.1,49,72,976/-. The ld. CIT(A) confirmed the additions made by the assessment unit of NFAC. 12. The ld. AR drew our attention to pages 16, 18 & 21 of the paper book and submits that the notice under section 148A(b) of the Act Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 7 dated 08.03.2023, the order under section 148A(d) of the Act and notice under section 148 of the Act dated 31.03.2023 respectively were issued by the jurisdictional Assessing Officer. Further, he drew our attention to the assessment order dated 16.03.2024 passed under section 147 r.w.s. 144B of the Act by the Faceless Assessing Officer. The ld. AR vehemently argued that the assessment order passed by the Faceless mechanism [Assessing Officer] is bad in law in terms of the decision of the Hon’ble High Court of Madras in the case of TVS Credit Services Ltd. v. DCIT in W.P. No. 22402 of 2024 & WMP No. 13336 of 2023 dated 24.06.2025 placed on record and prayed to quash the assessment order passed by the NFAC without issuing notice under section 148A(d) of the Act. 13. The ld. DR supported the order passed the Assessing Officer. 14. We have heard both the parties and perused the material available on record. In this case, we note that the assessment order under section 147 r.w.s. 144B of the Act was passed by the assessment unit of NFAC. Further, we note that the notice under section 148 of the Act was issued by the Jurisdictional Assessing Officer and also passed order under section 148A(d) of the Act. On Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 8 perusal of the decision of the Hon’ble High Court of Madras in the case of TVS Credit Services Ltd. v. DCIT (supra), we note that the Hon’ble High Court was pleased to hold that the assessment made by the assessment unit of NFAC is not valid if the order and notice under section 148A(d)/148 of the Act issued by the Jurisdictional Assessing Officer, but, however, liberty was given to the Revenue to re-ignite the notice in case the Hon’ble Supreme Court interferes with the order of the Hon’ble High Court of Bombay in the case of Hexaware Technologies Ltd. V. ACIT 464 ITR 430 (Bombay). Accordingly, we hold that the assessment order dated 07.03.2024 passed by the assessment unit of NFAC is bad in law and it is quashed. Accordingly, the ground Nos. 2 to 4 raised by the assessee are allowed and remaining ground Nos.5 to 7 become infructuous. 15. In the result, both the appeals filed by the assessee are allowed. Order pronounced on 31st December, 2025 at Chennai. Sd/- Sd/- (S. PADMAVATHY) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 31.12.2025 Vm/- Printed from counselvise.com I.T.A. Nos.2827 & 2828/Chny/25 9 आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. Printed from counselvise.com "