INCOME TAX OFFICER, DELHI V. SHRI RAM UDYOG, DELHI

ITA 5226/DEL/2024

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the Commissioner of Income Tax (Appeals), which had quashed the assessment order passed against Shri Ram Udyog for the assessment year 2017-18. The primary issue was the validity of the return filed by the assessee, which was not within the statutory time limits nor in response to the notice under section 142(1). The Assessing Officer treated the return as invalid and made additions based on unexplained cash deposits during the demonetization period. The CIT(A) quashed the assessment for lack of notice under section 143(2), which was contested by the Revenue in the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792429 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 14-11-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SHANTANU VER MA
• Keywords: Set aside
• Section: 144; 142(1); 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.5226/Del/2024 (ASSESSMENT YEAR 2017-18) Income Tax Officer, Delhi. Vs. Shri Ram Udyog, 1707 Block, E-2, Civic Centre, Delhi-110002. PAN-ADDFS0045F (Appellant) (Respondent) Assessee by Shri Shantanu Verma, Adv. Department by Shri Manish Gupta, Sr. DR Date of Hearing 11.09.2025 Date of Pronouncement 05.12.2025 O R D E R PER MANISH AGARWAL, AM: This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (‘the CIT(A)’ in short) dated 25.09.2024 passed u/s 250 of the Income Tax Act, 1961 in Appeal No. CIT(A)-Delhi-15/11070/2019-20 against the assessment order dated 28.12.2019 passed u/s 144 of the for Assessment Year 2017-18. 2. Brief facts of the case are that the assessee is an individual and had not filed the return of income for the year under appeal. The AO had information that assessee has deposited cash of Rs.48,46,340/- during the period of demonetization, therefore, the notice u/s 142(1) was issued to the assessee on 19.06.2019 for filing the return of income. In response no return of income was filed by the assessee. The assessee finally filed the return of income on 09.06.2019. Since, the same was filed belatedly Printed from counselvise.com 2 ITA No.5226 Del/2024 ITO vs. Shri Ram Udyog and beyond the time limit prescribed u/s 139 of the Act and also beyond the time provided in the notice issued u/s 142(1) of the Act, therefore, AO treated the return filed by the assessee as invalid return and no cognizance of the same was taken. Thereafter, the AO issued various notices from time to time and asked the assessee to furnish the source of the cash deposits, however, assessee failed to file any reply therefore, the AO was left with no other alternate but to pass the assessment order exparte, wherein the AO has made addition of Rs.41,39,7055/- towards the total credits in the bank account maintained with ICICI Bank including the cash deposit during the demonetization period. 3. Against the said order, assessee preferred an appeal before the Ld. CIT(A) wherein the assessee claimed that the assessment order was passed by AO without issuing the statutory notices u/s 143(2) of the Act though the assessee had filed the return of income on 09.06.2019, therefore, the entire proceedings should be held as invalid. The Ld. CIT(A) admitted this plea and quashed the assessment order being passed without the issue of notice u/s 143(2) of the Act. 4. Aggrieved by the said order of Ld. CIT(A), the Revenue is in appeal before the Tribunal wherein the following grounds of appeal are taken by the assessee: “1. The CIT (A) has erred in low and facts by not considering the fact that the assessee has not filed ITR in accordance with section 139 of the Act or in response to notice w/s 142(1) of the Art, which is mandatory requirement for issued of notice w's 143(2) of the Act. 2. The CTT (A) has erred in law and facts by not considering the fact that the A. O has declared the ITR dated 09.06.2019 as invalid and there is no requirement of issue of notice w/s 143(2) of the Act in such case. 3.The CIT(A) bas erred in law and facts by not considering the fact that assessee has failed to fulfil its onus to substantiate the credits in its bank account. 4.The CIT(A) has erred in law and facts by not considering the fact that whether the debit entries in its bank account are related/connected to credit of funds. Printed from counselvise.com 3 ITA No.5226 Del/2024 ITO vs. Shri Ram Udyog 5. The CIT (A) has erred in low and facts by not considering the fact that the assessee has not furnished any evidence/documents in support of debit entriesin its bank account whether the same are related to expenditure assets. 6. The appellant craves the right to add, alter or amend any ground of appeal before or during the course of hearing of appeal.” 5. Heard both the parties and perused the materials available on record. From the perusal of the orders of lower authorities, we find that before the Assessing Officer though the assessee had filed the return of income on 09.06.2019 declaring total income at Rs.28,200/-, however, the said return was neither filed within the time limit prescribed u/s 139 of the Act nor within the extended time period allowed in the notice u/s 142(1) of the Act. The AO in para No.2 of the order has treated the this return of income filed by the assessee as invalid return which fact is further stated in para 3 of the order and was duly intimated to the assessee along with subsequent notice issued. Further no cognizance of the said return was taken by the AO who even had not considered the income declared in the return in the final computation of income. Therefore, it cannot be said that the return of income filed by the assessee is a valid return, and the AO should have issued the mandatory notice u/s 143(2) of the Act to assume the jurisdiction to assess the income of the assessee. 6. Once the return filed by the assess is held as nonest as the same was not filed in accordance with law, its cognizance could not be taken and the AO has ignored the said return by holding the same as invalid. AS observed above, while computing the total income of the assessee, the AO has taken income as per return of income at Nil, thereafter, made the additions. This clearly shows that the return of income filed by the assessee belatedly is not accepted by the Department and, therefore, the question of issue of notice u/s 143(2) to assume jurisdiction does not arise. In view of these facts and the circumstances of the case, we are not in agreement with the observations of the Ld. CIT(A) that in the instant case once the return of income was Printed from counselvise.com 4 ITA No.5226 Del/2024 ITO vs. Shri Ram Udyog filed by the assessee, notice u/s 143(2) being mandatory requirement of should be issued. The judgments relied upon the CIT(A) while allowing the appeal of the assessee are having different facts wherein the returns filed were held as invalid returns as has been held in the instant case. Therefore, the ratio laid down in these cases are not applicable to the facts of the instant case. 7. In view of the above discussion, we allowed the ground of appeal No.1 taken by the Revenue and held the assessment order as valid. However, it is not seen that the Ld. CIT(A) has not decided the grounds of appeal raised by the assessee on the merits of the additions and the assessment order is also exparte where the assessee has not field any details to justify the source of the deposits made and no justification was filed for all other transactions in bank account. It is further seen that the entire credit entries were taken as unexplained money by ignoring the corresponding debit entries. In view of these facts, and further looking to the fact that we have already held the assessment order as valid, therefore, we set aside the orders of the lower authorities and direct the remand AO to pass the assessment order denovo fresh after making verification of all the transactions oi the bank account. Needless to say, assessee be provided a reasonable opportunities of being heard. The assessee is also directed to file all the evidences in support of the claim. 8. In the result, the appeal of the Revenue is partly allowed. Order pronounced in the open Court on 05.12.2025. Sd/- Sd/- (YOGESH KUMAR U.S) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 05.12.2025 PK/Sr. Ps Printed from counselvise.com 5 ITA No.5226 Del/2024 ITO vs. Shri Ram Udyog Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "