TOURS5 COM,HYDERABAD V. ITO., WARD-9(1), HYDERABAD

ITA 630/HYD/2025

AI Insights

The case involves multiple appeals by the assessee firm, TOURS5 COM, against orders passed by the Assessing Officer and the CIT(A) concerning reassessment and penalties under various sections of the Income Tax Act, 1961. The primary contention revolves around the validity of the notices and the jurisdiction under which the A.O. initiated reassessment proceedings and imposed penalties. The Tribunal found that the CIT(A) did not adequately address the specific legal issues regarding the A.O.'s jurisdiction in his orders, leading to the decision to set aside the CIT(A)'s orders and remand the matters for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706917 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Appeal Filed On: 09-04-2025
• Other Referred Cases: Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Business income; Reassessment proceedings; Unexplained investment
• Section: 147; 148; 142(1); 271(1)(c); 69

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री रवीश सूद, माननीय न्याययक सदस्य एवं श्री मिुसूदन सावडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.Nos.630 to 632/Hyd/2025 (निर्धारण वर्ा/ Assessment Years : 2016-17) TOURS5 COM, Hyderabad. PAN : AAIFT7735R. Vs. The Income Tax Officer, Ward –9(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.AR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 01.07.2025 घोर्णध की तधरीख/ Date of Pronouncement : 07.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The captioned appeals filed by the assessee firm are directed against the respective orders passed by the Assessing Officer (for short “A.O.”) i.e (i) under Section 147 r.w.s. 144 r.w.s. 2 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 144B of the Income Tax Act, 1961 (for short “the Act”) dated 04.03.2024; (ii) under Section 271(1)(b) of the Act, dated 24.08.2024; and (iii) under Section 271(1)(c) of the Act, dated 20.09.2024. As common issues are involved in the captioned appeals, therefore, the same are taken up and disposed of by this consolidated order. 2. We shall first take up the appeal filed by the assessee in ITA No.630/Hyd/2025, wherein the impugned order has been assailed on the following grounds of appeal before us: “1. The order of the learned CIT (A) is erroneous both on facts and in law; 2) The learned CIT (A) erred in not deciding the Ground No.2 i.e. validity of the notice u/s 148 of the I.T.Act when the notice u/s 148A(b) and order u/s 148A(d) were not issued by the appropriate authority; 3) The learned CIT (A) erred in confirming the action of the Assessing Officer in treating the aggregate of the deposits of Rs.2,37,38,900/- as the income of the appellant without considering the fact that they relate to the business receipts which were all accounted for in the books of account; 4) The learned CIT (A) erred in setting aside the appeal without considering the ground that the provisions of Sec. 148 are not validly initiated; 5) Any other ground/grounds that may be urged at the time of hearing; 3. Succinctly stated, the A.O., based on information that the assessee firm during the subject year had though made cash 3 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. deposits of Rs. 2,37,38,900/- in its bank account with ICICI Bank, Branch: Madhapur, but had not filed its return of income, initiated proceedings u/s 147 of the Act. 4. On a perusal of the record, the A.O. further observed that the assessee firm during the subject year had earned commission income of Rs.90,088/-. Considering that the assessee firm has failed to come forth with any explanation regarding the source of cash deposits of Rs.2,33,88,635/-, the A.O. held the same as its unexplained investment u/s 69 of the Act. 5. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A), who, taking cognizance of the fact that the assessee firm, due to non-compliance with the notices, had been visited with a best judgment assessment u/s 144 of the Act, therefore, set aside the matter to the file of the A.O. for fresh adjudication. For the sake of clarity, the observations of the CIT(A) are culled out as under: 4 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 5 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 6. The assessee firm, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 7. Smt. S. Sandhya, Advocate, the Learned Authorized Representative (in short “Ld.AR”) for the assessee firm, at the threshold of the hearing of the appeal, submitted that the CIT(A) had grossly erred in law and on facts of the case in disposing of the appeal without addressing the specific issues based on which the impugned order was assailed before him. Elaborating on her contention, the Ld. AR submitted that the assessee firm had specifically assailed the validity of the impugned assessment framed by the A.O. u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 04-03-2024, but the same had remained unaddressed by the CIT(A) while disposing of the appeal. The Ld. AR submitted that though the CIT(A) has set aside the matter to the file of the A.O. for fresh adjudication, but by so doing, its specific contention regarding the validity of the assumption of jurisdiction by the A.O. for framing the assessment under Section 147 of the Act had not only remained unaddressed, but also, on the matter having been set aside to the file of the A.O. for fresh adjudication had impliedly 6 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. validated the same. The Ld. AR submitted that the piecemeal disposal of the appeal by the CIT(A) based on a half-hearted approach, not being as per the mandate of law, was liable to be set aside. 8. Per contra, Sri Gurpreet Singh, the learned Senior Departmental Representative (for short, “Ld. DR”) relied upon the orders of the lower authorities. 9. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record. 10. Ostensibly, it is a matter of fact apparent from the record that the assessee firm 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. 11. Be that as it may, it is a matter of fact borne from record that the assessee company in its \"Ground of appeal No. 2\" that 7 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. was raised before the CIT(A), had specifically assailed the validity of jurisdiction that was assumed by the AO for initiating the reassessment proceedings. 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: “1. The Assessing Officer who issued notice u/s 148A(b), order u/s 148(d) and notice u/s 148 has no jurisdiction and, therefore, the order passed u/s 144 is not valid.” 12. 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 - (a) In an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. 8 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 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) 13. 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 him from refraining to adjudicate 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 in order, the CIT(A) in the exercise of the 9 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 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 power 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.......\". 10 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 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 in absence of 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. 11 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 14. 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 regarding 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. 15. 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 12 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. on which the jurisdiction assumed by the A.O for framing the impugned reassessment order u/s 147 r.w.s 144 r.w.s 144B of the Act dated 04.03.2024 was assailed by the assessee firm before him. 16. As we have set aside the matter to the file of the CIT(A) for fresh adjudication, we refrain from adverting to the specific issues based on which the impugned addition has been assailed before us, which, thus are left open. 17. Resultantly, the appeal filed by the assessee firm is allowed for statistical purposes in terms of our aforesaid observations. ITA NO.632/HYD/2025 18. We shall now deal with the appeal filed by the assessee firm in ITA No. 632/Hyd/2025. As we have, while disposing of the appeal filed by the assessee firm directed against the order passed by the CIT(A), which in turn arises from the quantum assessment framed by the A.O. u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 04-03-2024, set aside the matter to the file of the CIT(A) for fresh adjudication, therefore, we herein set aside the captioned 13 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. appeal arising from the order passed by the A.O. u/s 271(1)(c) of the Act, dated 20.09.2024 to his file with a direction to decide the same after disposing of the quantum appeal of the assessee firm. 19. Resultantly, the appeal filed by the assessee firm is allowed on the same terms for statistical purposes. ITA NO.631/HYD/2025 20. We shall now deal with the appeal filed by the assessee firm in ITA No. 631/Hyd/2025, which in turn arises from the order passed by the A.O. under Section 271(1)(b) of the Act. The assessee firm has assailed the impugned order on the following grounds of appeal before us: “1) The order of the learned CIT (A) is erroneous both on facts and in law; 2) The learned CIT (A) erred in holding that the notice u/s 148A(b) is validly issued when the Hon'ble Telangana High Court held that the jurisdictional Assessing Officer has no jurisdiction to issue such notice; 3) The learned CIT (A) erred in confirming the penalty of Rs.20,000/- levied u/s 271(1)(b) of the I.T.Act. 4) Any other ground/grounds that may be urged at the time of hearing.” 14 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 21. Succinctly stated, the A.O., based on the fact that the assessee firm had failed to respond to the notice(s) u/s 142(1) of the Act, dated 23.08.2023 and 15-09-2023, initiated penalty proceedings u/s 271(1)(b) of the Act. 22. Thereafter, the A.O., vide his order passed u/s 271(1)(b) of the Act dated 24-08-2024, imposed a penalty of Rs. 20,000/- on the assessee firm. 23. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A). As the assessee firm had delayed the filing of the appeal before the CIT(A) by 26 days, therefore, it had sought for time to file an application seeking condonation of the delay, along with a supporting affidavit. However, the CIT(A), holding a conviction that the assessee firm had not come forth with any specific reason for the delay in filing of the appeal, declined to condone the same and dismissed the appeal on the said count itself. For the sake of clarity, the observations of the CIT(A) are culled out as under: 15 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 16 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 24. Aggrieved, the assessee firm has assailed the order of the CIT(A) before us. 25. We have heard the learned Authorized Representatives of both parties and perused the orders of the lower authorities as well as the material available on record. 26. As is discernible from the record, the CIT(A) had declined to condone the delay of 26 days involved in the appeal filed by the assessee firm and thus, approved the view taken by the A.O. 17 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. 27. We have given our thoughtful consideration to the issue in hand. In our view, there was no justification for the CIT(A) to have declined the request of the assessee firm for allowing time to file an application seeking condonation of the delay of 26 days involved in the appeal filed before him along with a supporting “affidavit”, for which a specific request was made before him. We say so, for the reason that in our view a justice oriented and liberal approach should be adopted on the issue of condonation of the delay filed by an appellant. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310- 26311/2024, dated 31st January, 2025, wherein the Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed that a justice oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay in filing the appeal. As the assessee appellant in the present case 18 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. before us had sought for some time to file an application for condonation of the delay of 26 days alongwith a supporting “affidavit”, the CIT(A), in all fairness, ought to have allowed him to do the needful instead of summarily dismissing the appeal. We thus, in terms of our aforesaid observations, set aside the matter to the file of the CIT(A), with a liberty to the assessee firm to file before him an application for condonation of the delay involved in the appeal along with a supporting “affidavit”, which the CIT(A) shall consider on merits. 28. Resultantly, the appeal of the assessee firm is allowed for statistical purposes in terms of our aforesaid observations. 29. To sum up, all the appeals of the assessee firm are allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 7th July, 2025. Sd /- (मिुसूदन सावडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 07.07.2025. TYNM/sps 19 ITA Nos.630 to 632/Hyd/2025 TOURS5 COM, HYDERABAD. आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : TOURS5 COM, H.No.21-58/A, Vivekananda Nagar, P & T Colony, Old Sai Baba Temple, Dilsukhnagar, Hyderabad – 500060. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward –9(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. "