RANJITSINH KANUBHAI RATHOD,KALOL V. ASSESSMENT UNIT, NFAC PRESENT JURIDICTION THE ITO, WARD-1, MEHSANA

ITA 1804/AHD/2024

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The case involves Ranjitsinh Kanubhai Rathod, who appealed against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment years 2017-18 to 2019-20. The primary contention was the dismissal of his appeals for non-prosecution and the validity of notices issued under Sections 148 and 153C, which were challenged based on procedural grounds and the claim that they were issued without proper jurisdiction. The Tribunal found that the reopening of the assessment was justified based on the information received about bogus long-term capital gains, independent of any search and seizure actions under Sections 132/132A. However, the Tribunal noted that the CIT(A) had not addressed the merits of the case and remanded these issues back for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790916 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Appeal Filed On: 17-10-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMESHWAR P MEENA
• Assessee Lawyers: JIMI PATEL
• Keywords: Invalid notice; Principle of natural justice; Search and seizure; Bogus
• Section: 147; 148; 144; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. Nos.1802 to 1804/Ahd/2024 (Assessment Years: 2017-18 to 2019-20) Ranjitsinh Kanubhai Rathod, 13-B, Mill Kamdar Society, Nr. Shrinagar, Kalol, Gandhinagar, Gujarat-382721 Vs. Assessment Unit, National Faceless Assessment Centre- Income Tax Department Through Jurisdictional Assessing Officer-Income Tax Officer, Ward-1, Mehsana [PAN No.AFHPR1121D] (Appellant) .. (Respondent) Appellant by : Shri Jimi Patel, AR Respondent by : Shri Rameshwar P Meena, Sr. D.R. Date of Hearing 27.11.2025 Date of Pronouncement 03.12.2025 O R D E R PER: SUCHITRA KAMBLE, JM: These three appeals are filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on separate orders dated 06.09.2024 and 15.04.2024 for A.Ys. 2017-18 to 2019-20. First we are taking ITA No. 1802/Ahd/2024 (A.Y. 2017-18) 2. The grounds of appeal raised by the assessee are as under: ITA No. 1802/Ahd/2024 (A.Y. 2017-18) “1. Ld. CIT(A) erred in law and on facts in dismissing the appeal of the appellant for non- prosecution and thereby erred in confirming additions of Rs.2,32,60,127/- without appreciating fact and law of the case properly. 2. Notice issued u/s 148 dated 31.03.2021 is bad in law as the no proceedings u/s 147 r.w.s. 148 can be validly initiated on the basis of information and document received from the Printed from counselvise.com ITA Nos. 1802 to 1804/Ahd/2024 Ranjitsinh Kanubhai Rathod vs. ITO Asst.Years–2017-18 to 2019-20 - 2 - search carried out at premise of another person u/s 132/132A due to mandatory provision of section 153C of the Income Tax Act, 1961 and accordingly, order passed u/s 144 r.w.s. 147 dated 22.03.2022 and notice of demand issued u/s 156 dated 22.03.2022 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 3. Notice issued u/s 148 dated 31.03.2021 is bad in law for want of acquiring valid jurisdiction accordingly, order passed u/s 144B r.w.s. 147 dated 22.03.2022 and notice of demand issued u/s 156 dated 22.03.2022 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 4. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.” 3. The assessee filed return of income declaring total income at Rs. 83,760/- on 04.08.2017. On the basis of information, the assessee received accommodation entry as bogus Long Term Capital Gain to the tune of Rs. 2,12,29,643/-. After recording the reasons and taking necessary approval from competent authorities notice under Section 148 was issued on 31.03.2021 to the assessee and served upon the assessee. The assessee filed reply on 31.01.2022 in the response to statutory notices but the details were not filed before the Assessing Officer and therefore, the Assessing Officer held that the assessee sold shares of M/s. Kushal Ltd. through his broker for total consideration of Rs. 2,28,04,047/- which resulted in Long Term Capital Gain. Thus, the Assessing Officer made addition of Rs. 2,28,04,047/- under Section 69A of the Act and also Rs. 4,56,080/- being 2% of total receipt of the said amount under Section 69C of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal on the ground on non- prosecution. 5. The Ld. AR submitted that the assessee has not at all received notices at the email address mentioned in Form 35. The assessee has also challenged that notice issued under Section 148 dated 31.03.2021 as bad in law as there was no Printed from counselvise.com ITA Nos. 1802 to 1804/Ahd/2024 Ranjitsinh Kanubhai Rathod vs. ITO Asst.Years–2017-18 to 2019-20 - 3 - proceedings under Section 147 r.w.s. 148 can be validly initiated on the basis of information and document received from the search carried out at premises of another person under Section 132/132A due to mandatory provision of Section 153C of the Income Tax Act, 1961. The Ld. AR further submitted that notice issued under Section 148 also lacks as no valid jurisdiction was exercised by the Assessing Officer. The Ld. AR submitted that since all these issues were not dealt by the CIT(A) the appeal may be remanded back to the file of the CIT(A). 6. The Ld. DR submitted that the proceedings of reopening was rightly conducted as the Assessing Officer has received information. After receiving the information invoked Section 147 validly and issued notice under Section 148 after recording reasons and taking necessary approval from the competent authorities. The proceedings under Section 153C as contemplated by the assessee will not suffice as there is escapement of income and the Assessing Officer was satisfied thereby recording reason that the assessee’s case should be reopened. Therefore, Ground Nos. 2 and 3 should be dismissed. 7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the order passed under Section 147 by the Assessing Officer was in respect of the information that the assessee received accommodation entry as bogus Long Term Capital Gain. Though a search and seizure action was carried out in Kushal Group there was an independent inquiry and independent reasons given by the Assessing Officer for reopening assessee’s case. Therefore, the plea of the assessee that Section 153C should have been invoked does not come in picture. Therefore, Ground No. 2 and 3 of assessee’s appeal does not survive. Ground Nos. 2 and 3 of assessee’s appeal are dismissed. Printed from counselvise.com ITA Nos. 1802 to 1804/Ahd/2024 Ranjitsinh Kanubhai Rathod vs. ITO Asst.Years–2017-18 to 2019-20 - 4 - 8. As regards the merit of the case, the CIT(A) has not commented anything on the merits of the case and has not taken cognizance of the documentary evidences filed by the assessee before the Assessing Officer. Therefore, it will be appropriate to remand back this issue on merit to the file of the CIT(A) for proper verification of the evidences and adjudicate the issues as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, ITA No. 1802/Ahd/2024 for A.Y. 2017-18 is partly allowed for statistical purposes. Now we come to ITA No. 1803/Ahd/2024 (A.Y. 2018-19) 9. The assessee raised the following grounds of appeal: ITA No. 1803/Ahd/2024 (A.Y. 2018-19) “1. Ld. CIT(A) erred in law and on facts in dismissing the appeal of the appellant for non- prosecution by recording the facts of any other appellant and thereby erred in confirming additions of Rs.2,13,77,491/-, without appreciating fact and law of the case properly. 2. Notice issued u/s 148 dated 31.03.2022 by physical charge i.e. Jurisdictional Assessing Officer (JAO) is bad in law and nullity in eyes of law as the same is issued in direct contravention of Notification No. 18 of 2022 dated 29.03.2022 which mandate the issuance of Notice u/s 148 through automated allocation and in faceless manner and accordingly, order passed u/s 144B r.w.s 147 dated.27.03.2023 and notice of demand issued u/s 156 dated.27.03.2023 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 3. Notice issued u/s 148 and order passed u/s 148A(d) dated.31.03.2022 are bad in law as the no proceedings u/s 147 r.w.s 148 can be validly initiated on the basis of information and document received from the search carried out at premise of another person u/s 132/132A due to mandatory provision of section 153C of the Income Tax Act,1961 and accordingly, order passed u/s 144B r.w.s 147 dated.27.03.2023 and notice of demand issued u/s 156 dated.27.03.2023 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 4. Notice issued u/s 148A(b) dated 12.03.2022 notice issued u/s 148 dated 31.03.2022 along with the order passed u/s 148A(d) dated 31.03.2022 are bad in law for want of acquiring valid jurisdiction accordingly, order passed u/s 144B r.w.s 147 dated 27.03.2023 and notice of demand issued u/s 156 dated 27.03.223 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 5. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.” Printed from counselvise.com ITA Nos. 1802 to 1804/Ahd/2024 Ranjitsinh Kanubhai Rathod vs. ITO Asst.Years–2017-18 to 2019-20 - 5 - 10. As regards ITA No. 1803/Ahd/2024 the appeal before is belatedly but the assessee has given the substantial details related to his cancer treatment and therefore, the delay is condoned. As regards Ground Nos. 2, 3 & 4 the same does not survive as the Assessing Officer has rightly invoked Section 147 by following due procedure as the Income Tax Law. Thus, Ground Nos. 2, 3 and 4 are dismissed. 11. As regards Ground No. 1 related to the merits of the case the same direction that was given hereinabove for A.Y. 2017-18 in Para 8 are followed. Thus, ITA No. 1803/Ahd/2024 is partly allowed for statistical purposes. Now we come to ITA No. 1804/Ahd/2024 (A.Y. 2019-20) 12. The assessee has raised the following grounds of appeal: ITA No. 1804/Ahd/2024 (A.Y. 2019-20) “1. Ld. CIT(A) erred in law and on facts in dismissing the appeal of the appellant for non- prosecution and thereby erred in confirming additions of Rs.56,65,104/- without appreciating fact and law of the case properly. 2. Notice issued u/s 148 dated 23.03.2023 by physical charge i.e Jurisdictional Assessing Officer (JAO) is bad in law and nullity in eyes of law as the same is issued in direct contravention of Notification No.18 of 2022 dated 29.03.2022 which mandate the issuance of Notice u/s 148 through automated allocation and in faceless manner and accordingly, order passed u/s 144B r.w.s 147 dated.05.03.2024 and notice of demand issued u/s 156 dated.05.03.2024 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 3. Notice issued u/s 148 and order passed u/s 148A(d) dated.23.03.2023 are bad in law as the no proceedings u/s 147 r.w.s 148 can be validly initiated on the basis of information and document received from the search carried out at premise of another person u/s 132/132A due to mandatory provision of section 153C of the Income Tax Act, 1961 and accordingly, order passed u/s 144B r.w.s 147 dated.05.03.2024 and notice of demand issued u/s 156 dated.05.03.2024 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. 4. Notice issued u/s 148 dated.23.03.2023 r.w.s 147 along with the order passed u/s 148A(d) dated.23.03.2023 are bad in law for want of acquiring valid jurisdiction accordingly, order passed u/s 144B r.w.s 147 dated.05.03.2024 and notice of demand issued u/s 156 dated.05.03.2024 in pursuance of said invalid notice issued u/s 148 are equally bad in law and nullity. Printed from counselvise.com ITA Nos. 1802 to 1804/Ahd/2024 Ranjitsinh Kanubhai Rathod vs. ITO Asst.Years–2017-18 to 2019-20 - 6 - 5. Ld. Commissioner of Income Tax Appeals (NFAC) erred in law and on facts in confirming addition of Rs.55,00,101/-u/s 69A by treating alleged long term capital gain as unexplained money without appreciating fact and law of the case properly. 6. Ld. Commissioner of Income Tax Appeals (NFAC) erred in law and on facts in confirming addition of Rs.1,65,003/- u/s 69C of the Act, which is made on assumption and presumption without appreciating facts and law of the case properly. 7. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.” 13. As regards Ground Nos. 2, 3 and 4 are identical to that of Ground Nos. 2, 3 and 4 for A.Y. 2018-19 and Ground Nos. 2 and 3 of A.Y. 2017-18, hence dismissed. 14. As regards Ground Nos. 1, 5 and 6 are on merits and the CIT(A) has passed ex-parte. Therefore, identical directions to that of earlier assessment year are followed herein. Thus, ITA No. 1804/Ahd/2024 for A.Y. 2019-20 is partly allowed for statistical purposes. 15. In the combined result, all three appeals filed by the assessee are partly allowed for statistical purposes. This Order pronounced in Open Court on 03/12/2025 Sd/- Sd/- (NARENDRA P. SINHA) (ACCOUNTANT MEMBER) (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 03/12/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "