GOVINTHAN KAMARAJ,NAGERCOIL V. THE INCOME TAX OFFICER, WARD - 1, NAGERCOIL, NAGERCOIL

ITA 2730/CHNY/2025

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The case involves Govinthan Kamaraj, a wholesale trader of onions, who did not file a return of income for the Assessment Year 2018-19. The Income Tax Officer (ITO) noticed substantial cash deposits in Kamaraj's account and initiated a reassessment under section 148 of the Income Tax Act, 1961. Kamaraj contested the validity of the reassessment notice and the subsequent assessment order, arguing that they were issued without proper jurisdiction and violated principles of natural justice. The Tribunal's decision focused on the procedural validity of the notice under section 148, particularly the requirement of approval from the PCCIT for notices issued beyond three years, which was not adhered to in this case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825011 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 05-10-2025
• Other Referred Cases: Vodafone Idea Limited Vs DCIT, Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., ITO vs. Prakash Pandurang Patil, DCIT vs C.E. Info Systems Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LATCHANA
• Assessee Lawyers: R. VENKATA RAMAN; C.A
• Keywords: Set aside; Invalid notice; Principle of natural justice
• Section: 147; 148; 144

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ ा यपीठ, चे\u0012ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0015ी यस यस िव\u0018ने\u001a रिव, ा ियक सद एवं सु\u0015ी प ा वित यस, लेखा सद क े सम$ BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND MS. PADMAVATHY.S, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2730/Chny/2025 िनधा %रण वष% /Assessment Year: 2018-19 Govinthan Kamaraj, 344, Chetty Street, Kottar, Nagercoil, Kanyakumari, Nagercoil – 629 002. PAN: DPPPK 0818K Vs. The Income Tax Officer, Ward-1, Nagercoil. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थ( की ओर से/ Assessee by : Mr. R. Venkata Raman, C.A *+थ( की ओर से /Respondent by : Ms. Latchana, JCIT सुनवा ई की ता रीख/Date of Hearing : 16.12.2025 घोषणा की ता रीख /Date of Pronouncement : 31.12.2025 आदेश / O R D E R PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short \"CIT(A)\") passed u/s. 250 of the Income Tax Act, 1961 (in short \"the Act\") dated 06.06.2025 for Assessment Year (AY) 2018-19. The assessee has raised the following grounds of appeal: “1. That the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi ['Ld.CIT(A)'] erred in not appreciating that the assessment order dated 02.11.2023 passed by the National Faceless Assessment Centre [\"Assessing Officer u/s.147 r.w.s 144 of the Income-tax Act, 1961 [\"Act\"], for the Assessment Year 2018- Printed from counselvise.com ITA No.2730/Chny/2025 Govinthan Kamaraj :- 2 -: 19 is invalid, void ab initio, and liable to be quashed as being bad in law. 2. That the Ld.CIT(A) is not justified in passing the appellate order ex parte without affording sufficient and proper opportunity to the appellant to present his case, thereby violating the principles of natural justice. 3. That the Ld.CIT(A) ought to have appreciated the fact that the notice u/s. 148 of the Act, dated 07.04.2022 issued by the Jurisdictional Assessing Officer is in violation of the provisions of Section 151A of the Act and the faceless assessment scheme notified by the Central Government, hence the same is bad in law and consequently the impugned assessment order dated 02.11.2023 framed u/s.147 of the Act is invalid and void ab initio. 4. That the Ld CIT(A) is not justified in upholding the assessment order passed by the Assessing Officer. Without prejudice to the above, on merits the following grounds of appeal are raised 5. That the Ld CIT(A) is not justified in confirming the addition of Rs.7,56,28,190/-made by the Assessing Officer treating the cash deposits in the bank account of the appellant as unexplained money u/s 69A r.w.s 115BBE of the Act. 6. That the Ld. CIT(A) ought to have appreciated that the provisions of section 69A rwis 115BBE of the Act are not applicable to facts and circumstances of the case of the appellant. 7. That the Ld CIT(A) errec in not appreciating that the appellant is a vendor Involved in buying and selling of vegetables under the name and style of Mayandi & Co and the cash deposits in the bank account were made out of the sale proceeds of the said business. Without prejudice to the above, the following grounds of appeal are raised: 8. That the Ld.CIT(A) ought to have set aside the assessment back to the file of the Assessing Officer for fresh assessment or ought to have called for remand the Assessing Officer.” Printed from counselvise.com ITA No.2730/Chny/2025 Govinthan Kamaraj :- 3 -: 2. The assessee is an individual and engaged in the wholesale trading of onion under the proprietorship name Shri Mayandi and Co. on commission basis. The assessee did not file the return of income for A.Y 2018-19. The A.O based on the information received noticed that the assessee has deposited cash amounting to Rs.7,56,28,190/- during the Financial Year relevant to A.Y 2019-20. The ITO, Ward-1, Nagercoil (JAO) issued a notice u/s. 148A(b) of the Act dated 22.03.2022. The JAO passed an order u/s. 148A(d) of the Act dated 07.04.2022 holding that the assessee's case is fit for reopening. The JAO also issued a notice u/s. 148 of the Act on the same date. The assessment unit (FAO) completed the assessment u/s. 147 r.w.s 144 of the Act treating the entire amount deposited by the assessee as unexplained u/s. 69A of the Act since, the assessee did not respond to any of the notice issued by the A.O. Aggrieved, the assessee filed further appeal before the CIT(A), who dismissed the appeal ex-parte for the same reason that the assessee did not respond to the notices issued by the CIT(A). 3. During the course of hearing, the Ld. AR submitted that the assessee has raised the legal contention that the notice u/s. 148 of the Act dated 07.04.2022 issued by JAO is without jurisdiction and also the contention that the notice which is issued beyond three years period should have been approved by the Principal Chief Commissioner of Income Tax (PCCIT) as per provisions of Section 151(iii) of the Act, whereas the notice is issued in assessee's case with the approval of PCIT. The ld. AR further submitted that if the legal contentions are considered when the grounds on merits would become academic. 4. We heard the parties and perused the material on record. The ld. AR submitted that the notice under section 148 which is dated 07.04.2022 is Printed from counselvise.com ITA No.2730/Chny/2025 Govinthan Kamaraj :- 4 -: beyond the period of 3 years and therefore, as per the provisions of Section 151 of the Act the AO should have obtained the approval from Principle Chief Commissioner of Income Tax (PCCIT). The Ld. AR further submitted that in the present case the AO has obtained approval from Principle Commissioner of Income Tax (PCIT) while issuing notice under section 148 and therefore the notice is invalid. The ld. DR rebutted the said argument stating that the AO initiated the proceedings by issue of notice u/s. 148A(b) on 22.03.2022 which is within 3 years and therefore the AO has rightly obtained the approval from PCIT. In this regard, we notice that the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited Vs DCIT (WP No. 2768 of 2022 dated 06.02.2024) has considered and identical issue and held that- 1. Petitioner is impugning a notice dated 19th March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 (\"the Act\"), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (\"PCIT\") and not by the Principal Chief Commissioner of Income Tax (PCCIT\"). 2. Petitioner's request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re- assessment proceeding. 3. The impugned order and the impugned notice both dated 7 April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year (\"AY) 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The provisio to Printed from counselvise.com ITA No.2730/Chny/2025 Govinthan Kamaraj :- 5 -: Section 151 has been inserted only with effect from 1\" April 2023 and, therefore, shall not be applicable to the matter at hand. 4. In this circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside. 5. The ratio laid down by the Hon'ble High Court in the above case is that even in cases where the notice u/s. 148A(b) was issued before completion of 3 years, if the notice u/s. 148 is issued beyond 3 years the approval needs to be obtained from PCCIT as per Section 151(ii) of the Act. 6. In assessee's case though the notice under section 148A(b) was issued on 22.03.2022, and the notice u/s. 148 has been issued on 07.04.2022. On perusal of the notice u/s. 148 we notice that the approval has been obtained from PCIT, Madurai-1. The relevant extract of the notice u/s. 148 is as under: Printed from counselvise.com ITA No.2730/Chny/2025 Govinthan Kamaraj :- 6 -: 7. The above view is confirmed by the Hon'ble Supreme Court in the case of ITO vs. Prakash Pandurang Patil [2025] 178 taxmann.com 8 (SC) and in the case of DCIT vs C.E. Info Systems Ltd [2025] 180 taxmann.com 703 (SC). From the perusal of these facts, we are of the considered view that the ratio laid down by the judicial precedence is applicable to the present case. Accordingly respectfully following the above judicial precedence we hold that the notice issued by the AO u/s.148 beyond 3 years on 07.04.2022 with the approval of PCIT instead of PCCIT as per the provisions of section 151(ii) is not valid. Consequently the assessment completed based on the invalid notice is liable to be quashed. 8. Since we have allowed the appeal considering the legal contention regarding notice u/s.148 being issued without obtaining the approval of the appropriate authority, the other legal grounds and grounds on merits have become academic and left open accordingly. 9. In the result, the appeal of the assessee is allowed Order pronounced on 31st day of December, 2025 at Chennai. Sd/- Sd/- (यस यस िव\u0018ने\u001a रिव) (SS Viswanethra Ravi) \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / Judicial Member (प ा वित यस) (Padmavathy.S) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 31st December, 2025. EDN, Sr. P.S आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF Printed from counselvise.com ITA No.2730/Chny/2025 Govinthan Kamaraj :- 7 -: Printed from counselvise.com "