CHANGAPPA PEMMAIAH BIDDAMADA,BILUR, PONNAPPASANTHE, VIRAJPET TALUK, KODAGU V. INCOME TAX OFFICER, WARD, MADIKERI

ITA 600/BANG/2025

AI Insights

The case revolves around an appeal by the assessee, Changappa Pemmaiah Biddamada, against the order of the CIT(A) which upheld the AO's fresh assessment order confirming the addition of \\u20b920,78,000 on account of cash deposits in the bank for the assessment year 2017-18. The original assessment was completed under section 144 of the Act, and the addition was made. The assessee's revision application under section 264 led to the PCIT setting aside the assessment order but without directions for a fresh assessment. Despite this, the AO initiated fresh proceedings and confirmed the addition, which was challenged by the assessee in the CIT(A) and subsequently in the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717662 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 21-03-2025
• Other Referred Cases: DCIT Vs. Jaya Publication, Fu Sheen Tannery
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GHALE; STANDING
• Assessee Lawyers: SRIRAM; V RAO
• Keywords: Set aside; Revision of order
• Section: 144

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI NARENDER KUMAR CHODHRY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 600/Bang/2025 Assessment Year: 2017-18 Changappa Pemmaiah Biddamada, Bilur, Ponnappasanthe, Virajpet Taluk, Kodagu District. PAN – AIZPB 7501 Q Vs. The Income Tax Officer, Ward -1, Madikeri. APPELLANT RESPONDENT Assessee by : Shri Sriram, V Rao, CA Revenue by : Shri Ganesh R Ghale, Advocate – Standing Counsel for the Revenue Date of hearing : 05.08.2025 Date of Pronouncement : 13.08.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 22/01/2025 in DIN No. ITBA/NFAC/ S/250/2024-25/1072435112(1) for the assessment year 2017-18. 2. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO, even though the same was set aside by the learned PCIT under section 264 of the Act by an order dated 28th March 2021. Printed from counselvise.com ITA No.600/Bang/2025 Page 2 of 6 . 3. Before dealing with the specific issue arising from the orders of the authorities below, it is necessary to briefly refer to the history of the case. In this case, the original assessment was completed under section 144 of the Act vide order dated 27th December 2019. An addition of ₹20,78,000 was made on account of cash deposits in the bank. The assessee filed a revision application under section 264 of the Act. The learned PCIT, vide order dated 28th March 2021, set aside the assessment order. The learned PCIT in his order also observed that the assessee should periodically check the e-filing portal of the Income Tax Department to ensure timely response to any communication from the Department. 4. Following the directions of the learned PCIT under section 264, the AO again initiated proceedings and confirmed the same cash deposit addition made in the earlier assessment order. The fresh assessment order was passed on 30th March 2022. 5. The assessee filed an appeal before the learned CIT(A) against the order dated 30th March 2022. The learned CIT(A) upheld the assessment order vide his order dated 22-01-2025. 6. Being aggrieved by the order of the learned CIT(A), the assessee has filed the present appeal before us. 7. The learned AR submitted that once the assessment order dated 27-12-2029 was set aside by the learned PCIT under section 264 of the Act, there was no occasion for the AO to initiate fresh assessment proceedings. According to the learned AR, the authorities have exceeded Printed from counselvise.com ITA No.600/Bang/2025 Page 3 of 6 . their jurisdiction, which goes against the direction of the learned PCIT under section 264 of the Act. The learned AR argued that the term \"set aside\" means the earlier order no longer exists, and since there was no direction for fresh assessment, the AO could not proceed further. 8. On the other hand, the learned DR argued that the learned PCIT under section 264 of the Act had clearly stated that the assessee must regularly check the portal for any communication. This implies that the learned PCIT had, in fact, remanded the matter to the AO for fresh adjudication. 9. We have heard both parties and considered the materials on record. The controversy here is whether the assessment made under section 144 of the Act dated 27th December 2019 was quashed by the learned PCIT under section 264 vide order dated 28the March 2021. In this regard, we refer to the observations made by the learned PCIT under section 264 of the Act, which are reproduced below: “7. Therefore, under the powers u/s 264 of the IT Act-the assessment order for the A.Y. 2017-18 dated 27.12.2019 is set aside. The petitioner shall periodically cheek the efiling portal to ensure that h communications of the department is responded to, on time, during the assessment proceedings.” 9.1 On reading the above directions, it is clear that the assessment order dated 27th December 2019 was set aside without giving any instruction to initiate fresh assessment proceedings. 10. The next issue is whether the term \"set aside\" means quashing the earlier assessment. In this regard, it is relevant to refer to the ITAT Printed from counselvise.com ITA No.600/Bang/2025 Page 4 of 6 . order in MP. No. 91/Bangalore/2021 dated 11.01.2021, which observed the following: “10. The word ‘set aside’ means that the earlier asst. order has been quashed and there was no direction by the Tribunal to do any fresh assessment on the same issue. When there is no direction to do the fresh asst. and order for earlier asst. year has been set aside, the AO cannot take advantage of passing remark/observation on the Tribunal order so as to frame fresh asst. on the same issue. Our view has been fortified by the order of the Chennai Bench of the Tribunal in the case of DCIT Vs. Jaya Publication 123 ITD 53, wherein it is held that when the CIT(A) set aside asst. which means he actually quashed the asst. since he has not given any direction to redo asst. As such, the AO has no jurisdiction to pass any further order order and he has to be duty bound to follow the direction of the CIT(A) and therefore cannot sit over the order of CIT(A), which is the statutory authority. The remedy lies with the department elsewhere and he has to file appeal against the order of the CIT(A) if he has any grievances. This view is also been supported by Hon’ble Supreme Court in the case of Seghu Buchhaiah Shetty 52 ITR 532. The same view has been taken in this case also. Accordingly in our opinion, on earlier occasion, the Tribunal had quashed the asst. order passed by the AO which is on the basis of 26AS and there is no direction to do any fresh assessment.” 10.1 We also note that the Hon’ble Calcutta High Court in the case of Fu Sheen Tannery reported in 134 Taxman 25 held as follows: 6. It is needless to mention here that no direction for reassessment has been given in the order impugned. It is, therefore, clear that the appellate authority was quite conscious of the admission of the assessing authority that if the matter is remanded for fresh assessment it would require considerable time to explore, investigate, enquire to ascertain actual position and thus decided to set aside the order of assessment without giving any direction for assessment. I, thus, find substance in the contention of Mr. Bhattacharjee that the order amounted to annulment of the assessment in toto. 7. The assessing, authority, therefore, acted without jurisdiction in reopening the assessment notwithstanding the fact that such right was not conferred upon him by the appellate authority. There is no dispute that the order of the appellate authority has not been impugned by the Department and as such the same has attained finality. I, thus, set aside the order impugned on the ground that the Assistant Commissioner acted without jurisdiction in reassessing the matter in the absence of any direction, from the appellate authority. Printed from counselvise.com ITA No.600/Bang/2025 Page 5 of 6 . 10.2 Coming to the facts of the present case, it is clear that the assessment was set aside by the learned PCIT under section 264 without giving any direction to the revenue authorities. Hence, it can be inferred that the assessment proceedings under section 144 dated 27th December 2019 stood quashed. Therefore, we hold that no fresh assessment proceedings were legally permitted in these circumstances. The revenue authorities exceeded their jurisdiction by initiating proceedings based on the directions of the learned PCIT under section 264 of the Act despite the fact that the order under section 144 dated 27th December 2019 stood quashed. 10.3 It is also important to note that the learned DR has not shown any record to suggest that the direction under section 264 was either modified or withdrawn by the learned PCIT. Thus, we hold that the assessment order under section 144 dated 27th December 2019 was quashed by the learned PCIT under section 264 of the Act. Therefore, the proceedings initiated by the AO after this direction are not sustainable in law. Accordingly, the ground raised by the assessee is allowed. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in court on 13th day of August, 2025 Sd/- Sd/- (NARENDER KUMAR CHODHRY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 13th August, 2025 / vms / Printed from counselvise.com ITA No.600/Bang/2025 Page 6 of 6 . Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore Printed from counselvise.com "