KAILAS BANSILAL SETHI,SUREGAON , KOLPEWADI V. INCOME TAX OFFICER, WARD 2, AHMEDNAGAR, AHMEDNAGAR

CO 9/PUN/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A)/NFAC, which had allowed the appeal of the assessee, Kailas Bansilal Sethi, on merits but did not adjudicate the legal grounds concerning the validity of reassessment proceedings. The assessee had initially filed a return declaring a total income of Rs.2,36,000, which was later reassessed to Rs.2,16,31,674 due to unexplained deposits in various accounts. The CIT(A)/NFAC deleted the additions made by the Assessing Officer but did not address the legal grounds raised regarding the reassessment proceedings. Both parties presented their arguments, and the Tribunal decided to remand the matter back to the CIT(A)/NFAC for a detailed examination of the legal issues.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315416 (ITAT-PUNE)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P. MURKUNDE
• Assessee Lawyers: VINAY V. KAWDIA VIRTUAL
• Keywords: Reassessment proceedings; Reopening of assessment
• Section: 148; 144; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1011/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2015-16 ITO, Ward-2, Ahmednagar. Vs. Kailas Bansilal Sethi, Suregaon, Kolpewadi, Kopargaon- 423602. PAN : BDPPS0675A Appellant Respondent C. O. No.09/PUN/2024 (Arising out of ITA No.1011/PUN/2024) िनधाᭅरण वषᭅ / Assessment Year : 2015-16 Kailas Bansilal Sethi, Suregaon, Kolpewadi, Kopargaon- 423602. PAN : BDPPS0675A Vs. ITO, Ward-2, Ahmednagar. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the Revenue is directed against the order dated 27.03.2024 passed by Ld. CIT(A)/NFAC for the assessment Revenue by : Shri Ramnath P. Murkunde Assessee by : Shri Vinay V. Kawdia (Virtual) Date of hearing : 17.02.2025 Date of pronouncement : 16.05.2025 ITA No.1011/PUN/2024 C.O. No.09/PUN/2025 2 year 2015-16. The assessee is also in cross objection against the appeal of the Revenue. 2. First, we shall take up the cross objection filed by the assessee for adjudication. C.O. No.09/PUN/2024 : 3. The assessee has raised the following grounds in cross objection :- “1. On the facts and circumstances of the case, the learned CIT(A) has erred in not adjudicating legal ground numbers 2 and 5 pertaining to validity of reassessment proceedings raised before him. 2. On the facts and circumstances of the case, the learned CIT(A) ought to have held that reassessment proceedings and consequential assessment order dated 29.03.2022 passed by the NFAC u/s. 144 r.w.s. 147 of the Act are bad in law. 3. The assessee craves leave to add to, alter, amend, modify and/or delete all or any of the foregoing cross objections.” 4. Facts of the case, in brief, are that the assessee is an individual and filed its return of income on 31.03.2017 declaring total income of Rs.2,36,000/-. Further, on the basis of information available with the Department and after recording reasons for reopening the case of the assessee was reopened and notices u/s 148 and 142(1) of the IT Act were issued respectively. However, according to the ITA No.1011/PUN/2024 C.O. No.09/PUN/2025 3 assessee, the notice u/s 148 was manually served upon him after 31.03.2021 & reasons of reopening were also not provided to him in full. The assessee furnished return in response to notice u/s 148 however, the same was treated to be non-est by the Assessing Officer. During the course of assessment proceedings, Assessing Officer found that the assessee has deposited an amount of Rs.1,14,98,784/- in Shri Renuka Martha Multi State Co-operative Society. It was also found by the Assessing Officer that the assessee also deposited an amount of Rs.98,96,890/- in his State Bank of India, Kopergaon Branch account. After considering the reply of the assessee, the assessment was completed on total income of Rs.2,16,31,674/- as against the income returned by the assessee at Rs.2,36,000/- only. The above assessed income includes unexplained money u/s 69A of the IT Act of Rs.1,14,98,784/- deposited in Renuka Mata Multistate Urban Credit Co-operative Society account and also unexplained money u/s 69A of the IT Act of Rs.98,96,890/- deposited in State Bank of India account. 5. After considering the reply of the assessee, Ld. CIT(A)/NFAC allowed the appeal filed by the assessee and deleted the addition of ITA No.1011/PUN/2024 C.O. No.09/PUN/2025 4 Rs.2,13,95,674/- made by the Assessing Officer. However, Ld. CIT(A)/NFAC also estimated net profit at the rate of 3% of the turnover declared by the assessee, thereby determining the income at Rs.6,03,256/- only. Before Ld. CIT(A)/NFAC assessee has raised as many as 7 effective grounds of appeal and Ld. CIT(A)/NFAC has decided ground no.1, 3, 4, 6 and 7 related to the merits of the case & allowed the appeal of the assessee. However, ground no.2 and 5 mentioned in the memo of appeal which are legal in nature were not decided by Ld. CIT(A)/NFAC with regard to challenging the validity of the reopening of assessment u/s 148 of the IT Act since both these grounds were found to be academic in nature and the same were not decided since the appeal was allowed on merits of the case. It is this order wherein Ld. CIT(A)/NFAC has allowed the appeal of the assessee on merits against which the Revenue has filed appeal before this Tribunal and assessee has also filed a cross objection before this Tribunal. 6. We are now deciding the cross objection filed by the assessee first since legal ground have been raised by the assessee. ITA No.1011/PUN/2024 C.O. No.09/PUN/2025 5 7. In this regard, we find that the assessee has raised legal grounds as well as grounds on merit also before Ld. CIT(A)/NFAC and Ld. CIT(A)/NFAC was required to decide legal grounds first however we find that Ld. CIT(A)/NFAC first decided the grounds related to merit and did not decide the legal grounds raised by the assessee. In the second ground, Ld. Counsel of the assesse requested that Ld. CIT(A)/NFAC ought to have held that the order passed by Ld. CIT(A)/NFAC u/s 147 r.w.s. 144 of the IT Act as bad in law. Accordingly, it was prayed by Ld. counsel of the assessee that the order passed by the Assessing Officer may kindly be set- aside. In support of its contentions Ld. counsel of the assessee produced copy of a screen shot wherein the date of issue of notice was mentioned as 01-04-2021. It was also submitted before the bench that the full reasons for reopening were not provided to the assessee. 8. Ld. DR appearing from the side of the Revenue has objected to the cross objection filed by the assessee. 9. We have heard the Ld. Counsels from both the sides and perused the material available on record. We find force in the ITA No.1011/PUN/2024 C.O. No.09/PUN/2025 6 arguments of Ld. counsel of the assessee that Ld. CIT(A)/NFAC has not decided the legal grounds raised by the assessee. Accordingly, we remand the matter back to the file of Ld. CIT(A)/NFAC for adjudicating the legal grounds raised by the assessee after providing reasonable opportunity of hearing to the assessee. Thus, the cross objection filed by the assessee is allowed for statistical purposes. ITA No.1011/PUN/2024 : 10. So far as the Revenue’s appeal is concerned, the same has been filed raising the issue of merits of the case. However, as we have already allowed the cross objection filed by the assessee on the ground that the legal issues raised by the assessee before Ld. CIT(A)/NFAC were not adjudicated prior to adjudication of issues on merits, therefore, dealing with the ground on merits at this stage would be merely academic in nature. Thus, along with legal grounds, the grounds on merits are also restored to the file of Ld. CIT(A)/NFAC for necessary adjudication. In case Ld. CIT(A)/NFAC decides against the Revenue/Assessee, both the parties can file the appeal/cross objection as the case may be after the completion of set-aside proceedings. Accordingly, impugned ITA No.1011/PUN/2024 C.O. No.09/PUN/2025 7 order is set-aside and grounds raised by the Revenue also stand allowed for statistical purposes. 11. In the result, cross objection filed by the assessee and the appeal filed by the Revenue are allowed for statistical purposes. Order pronounced on 16th day of May, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 16th May, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "