SEEMA DEVI AGRAWAL,RAIGARH, CHHATTISGARH V. INCOME TAX OFFICER, BILASPUR

ITA 250/RPR/2025

AI Insights

The case involves Smt. Seema Devi Agrawal, who appealed against the reassessment order issued by the Deputy Commissioner of Income Tax, Circle-1(1), Bilaspur, for the assessment year 2015-16. The primary contention was the validity of the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961. The Tribunal examined whether the A.O had valid reasons to believe that income had escaped assessment, focusing on the application of mind and the correctness of the reasons recorded. The Tribunal found that the A.O's reasons were based on a misunderstanding of the facts, particularly regarding the sale and purchase of immovable property, leading to a conclusion that the reassessment was not justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714164 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2015-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: YOGESH SETHIA; WAY OF SELF SPEAKING DOCUMENTARY; WAY OF SELF SPEAKING DOCUMENTARY EVIDENCE; EXPLANATION
• Keywords: Reassessment proceedings; Question of law; Unexplained investment; Gift; Principle of natural justice; Reason to believe
• Section: 147; 68; 69

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं./ITA No.250/RPR/2025 Ǔनधा[रण वष[ /Assessment Year : 2015-16 Smt. Seema Devi Agrawal C/o. Sunil Kumar Agrawal Sewa Kund Road, Raigarh-496 001 (C.G.) PAN: AFFPA4990K .......अपीलाथȸ / Appellant बनाम / V/s. The Deputy Commissioner of Income Tax Circle-1(1), Bilaspur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Yogesh Sethia, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 04.08.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 04.08.2025 Printed from counselvise.com 2 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 18.12.2024 for the assessment year 2015-16 as per the grounds of appeal on record. 2. At the very outset, it is noted that the appeal is time barred by 67 days. In this regard, the Ld. Counsel for the assessee submitted that the impugned delay of 67 days had been condoned by the Tribunal vide order sheet entry dated 19.06.2025 observing as follows: “The Ld. Counsel had submitted that as per the calculation of the registry, there is a delay of 67 days. In this regard, the Ld. Counsel had filed a condonation petition and affidavit on record. It is a matter of common knowledge that after faceless regime happened, the orders/communications are served on the assessee only by way of sending it digitally on the email id of the assessee. There is no physical service of the orders/notices by the department. In this context, many assessees are not aware with the intricacies and digital format in the taxation framework. In fact the bonafide assessees are sometimes unable to fulfill the requirements of law of limitation on the ground of delay because of the fact that they are ignorant about dealing with the income tax proceedings. Also, the Ld. Counsel submits that the assessee is not well conversant with the income tax law and solely depends on his counsel. In this background, I have examined the contents of the condonation application and find that the reasons for delay cannot be attributed to any malafide or deliberate conduct of the assessee, if any. That as per the direction of the Hon’ble Supreme Court the delay which is beyond 365 days will be termed as inordinate delay and anything below that is ordinate delay. However, the law of limitation is to be construed strictly and whether it is ordinate or inordinate, delay has to be well explained. At the same time in these issues a liberal and judicious approach Printed from counselvise.com 3 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 must be adopted also. Considering the aforesaid facts, I condone the same relying on the judgments of the Hon’ble Supreme Court in the cases of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos……………../2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025 and Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No…………/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025…………….” 3. In this case, the assessee has filed both legal grounds as well as grounds on merits. The Ld. Counsel for the assessee submitted that he would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits shall become academic only. 4. In so far as the first legal ground is concerned, the Ld. Counsel for the assessee submitted that though the assessee had filed return of income, however, the CPC/A.O, Bengaluru had wrongly mentioned that no return was filed by the assessee. As per the records, the facts of the matter is that the return of income filed by the assessee was treated as invalid for the reason that there was no compliance in so far physical issuance of the acknowledgement is concerned back to the CPC/A.O, Bengaluru within 30 days by the assessee. Since this was not complied, therefore, the return of income was treated as invalid by the CPC/A.O, Bengaluru. The aforesaid legal ground raised by the Ld. Counsel is rejected for the fact that invalid return of income tantamount to non-filing of return of income. Printed from counselvise.com 4 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 5. In so far the second legal ground is concerned, the Ld. Counsel for the assessee submitted that there was non-application of mind by the A.O while recording reasons to believe for reassessment proceedings. The Ld. Counsel in support of his aforesaid contention refers to the copy of the “reasons to believe”. For the sake of completeness, the same is culled out as follows: “As per information available with this office (Cycle 5 P-1), the assessee had done following transactions during the F.Y 2014-15 relevant to the AY 2015-16: a) Purchase of immovable property exceeding Rs.30,00,000/- (AIR 006 001) A letter was issued to the assessee on 1.2.2017 seeking clarifications on certain points, but no reply was filed. On checking from the system it was noticed that the assessee had not filed Return of Income for the year under consideration. As per information available with the office, the assessee had made investment in purchase of immovable property at Rs.1,22,80,100/- during the F.Y 2014-15, Therefore, the capital gain arising out of the sale from the properties has not been disclosed, thus confirming that the income chargeable to tax has escaped assessment for the AY 2015-16. Thus, I have reason to believe that the income of the assessee to the tune of Rs.1,22,80,100/- for the A.Y.2015-16 has escaped assessment within the meaning of explanation 2(a) of sec.147 of the Act. I am therefore of the considered opinion that it is a fit case for reopening u/s.147 of the IT Act, 1961. Hence, it is proposed to assess the escaped income and any such other income which comes to the notice subsequently during the course of assessment proceedings u/s 147 of the IT Act, 1961. For these reasons, a proposal u/s.147 of the Act is submitted to Hon'ble CIT, Range-1, Bilaspur for according approval to issue notice u/s.148 of the Act. Printed from counselvise.com 5 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 Sd/- (Sujit Biswas) Income tax Officer-3 Raigarh.” 6. It is discernible from the aforesaid “reasons to believe” that the A.O writes that the assessee had made investment in purchase of immovable property at Rs.1,22,80,100/- during the F.Y.2014-15 relevant to A.Y.2015-16. Thereafter, the A.O writes that “the capital gain arising out of sale from the properties has not been disclosed………”. Therefore, on one hand, the A.O initiated reassessment proceedings on the basis of the fact that the assessee had made investment in purchase of immovable property, whereas, in concluding the “reasons to believe” for income escaping assessment, he writes that the capital gain arising out of sale of the property was not disclosed by the assessee. Though correctness of the investment so far as purchase is concerned is there as per record, however, there has been no sale transactions entered by the assessee at all during F.Y.2014-15 relevant to A.Y.2015-16, therefore, the entire “reasons to believe” by the A.O is vitiated as it is perverse, incorrect devoid of independent application of mind by the A.O. 7. In this regard, the Ld. Sr. DR has relied on the judgment of the Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs. Income-Tax Officer and Ors. (1999) 236 ITR 34 (SC). The facts and circumstances of the said referred judgment are substantially different Printed from counselvise.com 6 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 from facts in assessee’s case hence is misplaced by the revenue and further, it is observed that the Quasi-Judicial authority is duty bound to apply provisions of the Act in its strictest sense and in the present case as observed hereinabove while reopening u/s.147/148 of the Income Tax Act, 1961 (for short ‘the Act’), “reasons to believe” has been recorded by the A.O without application of mind and is perverse, therefore, such proceedings cannot be held to be valid since such reasons recorded are not in accordance with the dictate of the Act. 8. The Ld. Sr. DR had submitted that in the entire judgment referred to by her, there is no mention that irrespective of non-application of mind by the Quasi-Judicial Authority in the Income Tax proceedings, the said proceedings shall have to be deemed to be valid putting the assessee on prejudice. The fact of the matter is that the Income Tax Act is welfare legislation and the assessee should be provided ample opportunity of hearing by the department to prepare for his defense. This is one of the basic principles of natural justice that the person against whom the department with its entire machinery intends to proceed, shall have to be accorded with reasonable opportunity to prepare his defense. In such scenario, where initiation of reassessment and reasons recorded itself is without independent application of mind, perverse, arbitrary and bad in law, the act of the A.O cannot be held to be justified within the provisions Printed from counselvise.com 7 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 of the Act. The Co-ordinate Bench of Delhi in the case of Sanjeev Kumar, C/o M/s. Raj Kumar & Associates vs. ITO Ward 2(3)(2), Bulandshahr, reported in 2023(10) TMI 1027-ITAT Delhi on the same issue of “non- application of mind” had observed and held as follows: “14. In view of foregoing discussion, I reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and a cash salary from Bihar Milk Foods Pvt. Ltd. and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee Smt. Shalini and father of assessee Shri Kalu Mal co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Therefore, in my humble understanding the source of cash deposit during demonetization to the bank account of assesses is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. The Ld.CIT(A) though has given credit of 25% of Impugned cash deposit confirming the remaining part of addition but there is no logic of this segregation. From the relevant operative part of first appellate order, I also note that the Ld.CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Therefore, respectfully following the proposition rendered by the Hon'ble Jurisdictional High Court of Allahabad in the case of Sarika Jain (supra). I have no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. Printed from counselvise.com 8 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 15. In the result, appeal of the assessee is allowed.” 9. Similarly, in the decision of Hon’ble High Court of Allahabad in the case of Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, reported in (2018) 407 ITR 254 (All) which decision was referred to and applied in the earlier decision of the Co- ordinate Bench of Delhi (supra), the Hon’ble High Court of Allahabad held as follows: “In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that \"it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law Accordingly, we answer the question of law, as framed above, in favour of the appellant-assessee and against the Revenue and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.” Printed from counselvise.com 9 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 10. Further, ITAT, “SMC” Raipur Bench in the case of Raghvendra Singh Thakur Vs. The Income Tax Officer, Ward-4(1), Raipur ITA No.242/RPR/2025, dated 14.07.2025 on the similar facts and circumstances has held and observed as follows: “5. At the outset, on this issue, it is noted that the AO had made addition u/s.69 of the Act which refers to unexplained investment. However, in this case, the assessee had neither purchased nor sold any moveable or immoveable property, nor had invested in any such property. In fact, the verification of facts as emanating from the assessment order as well as the findings of the Ld. CIT(A)/NFAC all pertains to and revolves on un-explained cash deposits by the assessee which resulted in addition of 1/3 of the total deposit since the account was in the name of three persons, including the assessee, so as per his share 1/3 of the said deposit was added as the assesse was unable to prove the nature and source of such cash deposit. In this periphery of investigation and addition made by the department, the correct provision of law to have been applied is Section 69A of the Act, which deals with unexplained money, bullion, jewelry or other valuable article for which the assessee offers no explanation about the nature and source of acquisition of such money, bullion, jewelry or other valuable article etc. The wrong application of provision of law to the facts and circumstances of the case regarding a particular assessee tantamount to non-application of mind by the assessing officer. This itself vitiates and makes the addition void ab initio, since there is no application of mind, much less than any satisfaction arrived at by the AO. In a recent decision of the Co-ordinate Bench of Delhi in the case of Sanjeev Kumar c/o M/s Raj Kumar & Associates vs. ITO Ward 2(3)(2), Bulandshahr, reported in 2023(10) TMI 1027-ITAT Delhi on the same issue of applying wrong provision of the Act, it was observed and held as follows: “14. In view of foregoing discussion, I reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and a cash salary from Bihar Milk Foods Pvt. Ltd. and has also reduced the amount of drawings for Printed from counselvise.com 10 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 household expenses. The copy of return of income of wife of assessee Smt. Shalini and father of assessee Shri Kalu Mal co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Therefore, in my humble understanding the source of cash deposit during demonetization to the bank account of assesses is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. The Ld.CIT(A) though has given credit of 25% of Impugned cash deposit confirming the remaining part of addition but there is no logic of this segregation. From the relevant operative part of first appellate order, I also note that the Ld.CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Therefore, respectfully following the proposition rendered by the Hon'ble Jurisdictional High Court of Allahabad in the case of Sarika Jain (supra). I have no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. 15. In the result, appeal of the assessee is allowed.” 6. Similarly, in the decision of Hon’ble High Court of Allahabad in the case of Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, reported in (2018) 407 ITR 254 (All) which decision was referred to and applied in the earlier decision of the Co- ordinate Bench of Delhi (supra), the Hon’ble High Court of Allahabad held as follows: “In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It Printed from counselvise.com 11 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 may be worth noting that the Tribunal has recorded a categorical finding that \"it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law Accordingly, we answer the question of law, as framed above, in favour of the appellant-assessee and against the Revenue and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.” 7. Considering the aforestated legal principles and on examination of the facts and circumstances, the addition made u/s 69 of the Act is uncalled for and void ab initio. The AO is directed to delete the said addition from the hands of the assessee……” 11. In view of the aforesaid observation and examination of facts and circumstances and judicial pronouncements, I hold that since the reasons recorded for reopening is itself invalid therefore the same cannot provide valid jurisdiction to the A.O to pass the reassessment order and accordingly, the reassessment order is quashed. 12. Since the reassessment is quashed thereafter all other proceedings becomes non-est as per law. Since the legal issue has been answered in favour of the assessee therefore the grounds on merits becomes academic only. Printed from counselvise.com 12 Seema Devi Agrawal Vs. DCIT, Circle-1(1), Bilaspur ITA No.250/RPR/2025 13. As per the aforesaid terms the grounds of appeal raised by the assessee stands allowed. 14. In the result, appeal of the assessee is allowed. Order pronounced in open court on 04th day of August, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 04th August, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur Printed from counselvise.com "