NATURAL POWER ASIA PRIVATE LIMITED,HYDERABAD V. ITO., WARD-16(1), HYDERABAD

ITA 581/HYD/2025

AI Insights

The case involves Natural Power Asia Private Limited, which appealed against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, Delhi. The appeal was directed against the reassessment order passed by the Assessing Officer under Sections 147 and 144 of the Income Tax Act, 1961, for the assessment year 2018-19. The primary contention was the validity of the jurisdiction under which the reassessment was initiated. The CIT(A) had set aside the ex parte assessment order and referred the case back to the Assessing Officer for a fresh assessment without addressing the jurisdictional validity, which was contested by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712443 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Reassessment proceedings
• Section: 147; 148

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री मंजूनाथ जी, माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.581/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2018-19) Natural Power Asia Private Limited, Hyderabad. PAN : AAECN5023D Vs. Income Tax Officer, Ward – 16(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Ms. S. Sandhya, Advocate. राजस्व का प्रतततितित्व/ Department Represented by : Shri Gurpreet Singh, Sr.DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 22.07.2025 घोर्णध की तधरीख/ Date of Pronouncement : 30.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated Printed from counselvise.com 2 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. 30.01.2025, which in turn arises from the order passed by the Assessing Officer under Section 147 r.w.s. 144 of the Income Tax Act, 1961 for short “the Act”), dated 27.03.2024 for A.Y. 2018-19. The assessee company has assailed the impugned order on the following grounds of appeal before us: “1. The order of the learned CIT (A), NFAC, Delhi is erroneous to the extent it is prejudicial to the appellant herein. 2. The learned CIT (A) erred in not deciding the ground No.2 i.e., the jurisdiction for issue of notice u/s 148A(b), passing order u/s 148A(d) and issuing notice u/s 148 of the I.T.Act. 3. The learned CIT(A) ought to have quashed the assessment without remitting the same to the Assessing Officer. 4. Any other ground/grounds that may be urged at the time of hearing.” 2. Succulently stated, the A.O. based on information that the assessee company which is engaged in the business of establishing solar power plants was during the subject year in receipt of income of Rs.67,17,010/- viz. (i). rental income from M/s. Somasila Solar Power Limited – Rs.17,23,080/-; (ii). interest received from SBI – Rs.26,64,260/-; (iii). Interest receuved from HDFC Bank Ltd – Rs.14,700/-; and (iv) contract receipts from M/s. Waaree Energies Limited – Rs.23,14,970/-, had not filed its return of income, initiated proceedings u/s 147 of the Act. Order u/s 148A(d) of the Printed from counselvise.com 3 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. Act was passed by the A.O. Thereafter, the A.O. issued notice u/s 148 of the Act, dated 05.04.2022. 3. As the assessee company despite sufficient opportunities, neither participated in the assessment proceedings nor filed the requisite details as were called for by the A.O., therefore, the letter was constrained to proceed with and frame the assessment to the best of his judgment u/s 144 of the Act. Accordingly, the A.O. vide his order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 27.03.2024, determined the income of the assessee company at Rs.67,17,010/-. 4. Aggrieved the assessee company carried the matter in appeal before the CIT(A). 5. Ostensibly, the assessee company despite having been afforded sufficient opportunity failed to participate in the proceedings before the CIT(A). The CIT(A) considering the fact that the A.O. had framed the assessment vide an ex parte order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 27.03.2024, therefore, pressed into service the powers vested with him u/s 251(1)(a) of the Act, and restored the matter to the file of the A.O. with a direction to frame Printed from counselvise.com 4 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. a fresh assessment in light of the documentary evidence as may be placed before him after carrying out such enquiries as may be necessary. Accordingly, the CIT(A) allowed the appeal filed by the assessee company for statistical purposes. 6. The assessee company being aggrieved with the order of CIT(A), has carried the matter in appeal before us. 7. We have heard the learned Authorized Representatives of both parties, perused the orders of lower authorities and the material available on record. 8. Smt. S. Sandhya, Advocate, the learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and on facts of the case by summarily setting aside the matter to the file of A.O. for framing of a de novo assessment. Elaborating on the contention, the Ld. AR submitted that thought the CIT(A) w.e.f. 01.10.2024 as per the “Proviso” to Section 251(1)(a) of the Act, is vested with jurisdiction to set aside an assessment in a case when the order of the assessment made u/s 144 of the Act and direct the A.O. for making fresh assessment, but Printed from counselvise.com 5 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. he remains under a statutory obligation to deal with the specific legal issue based on which the validity of jurisdiction assumed by the A.O. for initiating proceedings/framing the assessment has been assailed before him. The Ld. AR has submitted that as in the case of the present assessee company the validity of the jurisdiction that was assumed by the A.O. for issuing notice u/s 148 of the Act was specifically assailed by raising “Ground of appeal No.2” before the first appellate authority, therefore, the latter was statutorily obligated to have taken a call on the same and instead of summarily set aside the matter to the file of the A.O. making a fresh assessment. 9. Per contra, Shri Gurupreet Singh, the learned Senior Departmental Representative (for short “Ld. DR”) submitted that as the CIT(A) had validly exercised his powers vested with him under the “Proviso”, Section 251(1)(a) of the Act, set aside the ex parte order passed by the A.O. u/s 144 of the Act to his file for making a fresh assessment, therefore, there was no substance in the Ld. AR's claim wherein he has assailed the validity of the said course of action adopted by the first appellate authority. The Ld. DR submitted that the assessee company remains well within his right Printed from counselvise.com 6 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. to respond all the issues in the course of the assessment proceedings before the first appellate authority. 10. We have thoughtfully considered the contentions advanced by the learned Authorized Representatives of both parties in the backdrop of the orders of authorities below. 11. Admittedly, it is a matter of fact discernable from the record that the assessee company by the Ground of Appeal no.2 had inter alia assailed the validity of jurisdiction that was assumed by the A.O. for issuing notice u/s 148 of the Act. 12. Ostensibly, it is a matter of fact apparent from the record that the assessee company in the course of assessment proceedings had adopted an evasive approach, wherein, it had neither complied with the notice issued u/s 148 of the Act; nor replied/furnished the details as were called for by the AO in the course of the assessment proceedings. Also, the conduct of the assessee company was no better before the Ld.CIT(A), wherein, it had once again adopted an evasive approach and not participated/filed the requisite details before him. Printed from counselvise.com 7 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. 13. Be that as it may, it is however a matter of fact borne from record that the assessee company in its “Ground of appeal No.2” before the Ld.CIT(A), had specifically assailed the validity of jurisdiction that was assumed by the AO for issuing notice u/s 148 of the Act, dated 05.04.2022. For the sake of clarity, the “Ground of appeal No.2” raised by the assessee company before the CIT(A) is being culled out as under: “2. The learned CIT (A) erred in not deciding the ground No.2 i.e., the jurisdiction for issue of notice u/s 148A(b), passing order u/s 148A(d) and issuing notice u/s 148 of the I.T.Act.” 14. Admittedly, the legislature in all its wisdom had vide the Finance (No.2) Act 2024 w.e.f. 01.10.2024 inserted the “Proviso” to section 251(1)(a) of the Act, as per which the CIT(A) has been vested with the power to set-aside the assessment and refer the case back to the AO for making afresh the assessment, in a case, where the appeal filed before him is against the order of assessment made u/s 144 of the Act. For the sake of clarity, section 251(1) is culled out as under: “251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers – Printed from counselvise.com 8 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. (a) In an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment.” (emphasis supplied by us) 15. We are of the firm conviction that though the CIT(A) pursuant to the aforesaid amendment in Section 251 of the Act, now stands vested with the jurisdiction to set-aside and refer back a best judgment assessment order passed u/s 144 of the Act to the file of the AO for framing a fresh assessment, but the same cannot justify the refraining on his part from adjudicating the legal issues based on which the validity of the jurisdiction assumed by the A.O for framing the assessment or reassessment has been assailed before him. Rather, we find that as per Section 251(1) of the Act, the CIT(A) in disposing of an appeal is vested with the power to confirm, reduce, enhance or annul the assessment. We, thus, are of the firm conviction that in case an assessee appellant, based on the facts available on record, has assailed before the CIT(A) the validity of the jurisdiction that was assumed by the A.O for framing the impugned assessment or reassessment, then, if the said claim is found to be Printed from counselvise.com 9 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. in order, the CIT(A) in the exercise of the powers vested with him under sub-section (1) of Section 251 of the Act is obligated to annul the assessment or reassessment rather than adopting an evasive approach, and in the garb of the powers vested with him as per the “Proviso” to Section 251(1) of the Act set aside and refer back the impugned best judgment assessment order passed u/s 144 of the Act for framing of fresh assessment by the AO. To sum up, the CIT(A) is obligated to address and adjudicate the grievance of the assessee appellant, as regards the validity of the jurisdiction assumed by the A.O for initiating the assessment or reassessment proceedings to the extent the same can safely be done based on the facts discernible from the record before him. Our aforesaid conviction can safely be gathered from the “Memorandum Explaining the Provisions in the Finance Bill, 2024”, which to the extent relevant to the “Proviso” to Section 251(1) of the Act, reads as under: “4. Considering the huge pendency of appeals and disputed tax demands at the Commissioner (Appeals) stage, it is proposed that the cases where assessment order was passed as best judgement case under section 144 of the Act, Commissioner (Appeals) shall be empowered to set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment…….”. Printed from counselvise.com 10 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. Although the “Proviso” to Section 251(1) is an enabling proviso that further vests jurisdiction with the CIT(A) to set-aside a best judgment assessment order, but, the same cannot be construed in a manner that the same, inter alia, takes away his power to annul an assessment or reassessment which is framed de hors valid assumption of jurisdiction by the A.O. As a word of caution, if a best judgment assessment or reassessment framed u/s 144 of the Act, despite an invalid assumption of jurisdiction by the A.O is set aside and referred back to his file by the CIT(A) for framing of a fresh assessment, then, impliedly the lack of jurisdiction by the A.O will be given a go by and the challenge of the assessee-appellant to the validity of the assumption of jurisdiction would stand frustrated. We are of the firm conviction that the purpose of insertion of the “Proviso” to Section 251(1) by the legislature vide the Finance (No.2) Act, 2024 w.e.f 01.10.2024 can by no means be stretched to the extent of using it for validating an assessment or reassessment framed de hors valid assumption of jurisdiction by the A.O. 16. Adverting to the facts pertaining to the challenge thrown by the assessee company, qua the validity of the jurisdiction assumed by the AO for initiation of the reassessment proceedings, on the Printed from counselvise.com 11 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. ground that the same was beyond the prescribed time limit as contemplated under the “1st Proviso” to section 147 of the Act, we are of the view that the Ld.CIT(A) ought to have adjudicated the same instead of adopting an evasive approach in the guise of exercise of the extended jurisdiction vested with him vide the “Proviso” to section 251(1)(a) of the Act as made available on the statute by the Finance (No.2) Act 2024 w.e.f. 01.10.2024. We find substance in the Ld. AR’s contention that in case the lack of jurisdiction on the part of the A.O for framing the assessment is not addressed by the CIT(A), but, in the garb of the powers vested with him as per the “Proviso” to Section 251(1) of the Act the matter is referred back to the file of the AO for fresh adjudication, then, it would afford a second inning to the A.O who would simply give effect to the directions of the CIT(A) and reframe the re-assessment order despite lack of valid assumption of jurisdiction which was the very foundation for initiating the impugned proceedings. 17. Be that as it may, we are of the firm conviction that in the totality of the facts involved in the present appeal before us, the CIT(A) instead of summarily setting aside the matter to the file of the AO for making a fresh assessment, ought to have taken a call Printed from counselvise.com 12 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. as regards the specific ground based on which the validity of the jurisdiction that was assumed by the AO for framing the reassessment was assailed by the assessee-appellant before him. Our aforesaid conviction that it is not obligatory on the part of the CIT(A) to set aside all best judgment assessment orders passed u/s 144 of the Act to the file of the AO is further fortified on looking at the language used by the legislature in the “Proviso” to Section 251(1) of the Act, i.e, “…..may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment ….” which, thus, does not compulsorily require the CIT(A) to set aside and refer the assessment in every case where it is made u/s 144 of the Act. 18. We thus, in terms of our aforesaid deliberations set aside the order of the CIT(A), and restore the matter to his file with a direction to adjudicate the specific “Ground of appeal No.2” based on which the jurisdiction assumed by the A.O for framing the impugned assessment order u/s 147 r.w.s 144 r.w.s. 144B of the Act, dated 27.03.2024 was assailed by the assessee appellant before him. 19. Before parting, we may herein clarify, that as we have in terms of our aforesaid observations set aside the matter to the file of the Printed from counselvise.com 13 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. CIT(A), therefore, we have refrained from expressing any view, regarding the issues based on which validity of jurisdiction assumed by the AO for initiating the reassessment proceedings, and also the merits of the addition have been assailed by the assessee appellant before us. The Ground of appeal Nos.2 and 3 are allowed for statistical purposes in terms of our aforesaid observations. 20. The Grounds of appeal Nos.1 and 4 being general in nature are dismissed as not pressed. 21. Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 30th July, 2025. Sd/- Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 30.07.2025. TYNM/sps Printed from counselvise.com 14 ITA No.581/Hyd/2025 Natural Power Asia Pvt. Ltd. आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Natural Power Asia Private Limited, Flat No.201, 2nd Floor, Srinagar Colony – 500073, Hyderabad. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward – 16(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "