ITAT Pune: CIT(A) Must Decide Legal Grounds Before Remand; Reassessment Dispute Sent Back for Fresh Hearing
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT), Pune Bench “B,” has set aside an order passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (CIT(A)/NFAC) for failing to adjudicate legal grounds raised by the assessee in a reassessment case involving cash transactions exceeding ₹1.58 crore. The bench comprising R.K. Panda (Vice President) and Vinay Bhamore (Judicial Member) held that under Section 250(6) of the Income Tax Act, 1961, it is mandatory for CIT(A)/NFAC to pass a reasoned, speaking order addressing each ground of appeal separately, especially when legal objections challenge the validity of notice and reassessment proceedings.
Background
The case concerned Shamrao Gopal Benake, a Kolhapur-based trader in cashews. The Income Tax Department, acting on information of substantial cash deposits and withdrawals in his accounts with Canara Bank and Ajara Urban Co-operative Bank during FY 2017–18, issued a notice under Section 148A(b). Since the assessee did not respond, an order under Section 148A(d) was passed and reassessment proceedings under Section 147 were initiated.
Subsequently, notices under Sections 142(1) and 144 were issued. The assessee filed a return of income declaring ₹7,44,520, but it was treated as invalid for want of verification. On March 1, 2023, the Assessing Officer completed the assessment under Sections 147 read with 144/144B, determining total income of ₹2,09,06,834. This included ₹1,58,85,877 as unexplained money under Section 69A (₹29,89,877 in cash deposits and ₹1,28,96,000 in cash withdrawals) and ₹50,20,957 as estimated business income on 10% of other bank credits of ₹5,02,09,578.
Proceedings Before CIT(A)/NFAC
The assessee appealed, raising eight grounds, including four legal grounds challenging the validity of the reassessment notices and proceedings. Written submissions were filed in April and May 2024. However, nearly eight months later, on February 21, 2025, CIT(A)/NFAC set aside the assessment under powers granted by the proviso to Section 251(1)(a) (effective October 1, 2024) that allows remand in cases assessed under Section 144.
While doing so, the CIT(A) did not adjudicate any of the grounds raised, including the legal objections, and remitted the matter to the Assessing Officer for fresh assessment.
Assessee’s Contentions
Counsel Deepak Chintaman Gadgil argued that the inordinate delay of eight months between the last submission and the order violated binding CBDT Instructions No. 20/2003 and F.No.279/MISC/53/2003-ITJ, which require orders to be passed within 15 days of the last hearing. He further contended that the CIT(A) was statutorily bound to decide all grounds, especially legal ones, before remanding.
Tribunal’s Findings
The ITAT noted that Section 250(6) mandates that appellate orders must state the points for determination, the decision thereon, and reasons for the decision. It found merit in the assessee’s grievance that the CIT(A)/NFAC failed to adjudicate any ground and simply remanded the case, thereby violating statutory requirements and principles of natural justice.
The bench emphasised that where legal grounds challenge the very validity of reassessment proceedings, the CIT(A) must render findings on such issues before taking any other action. The Tribunal also recorded that even the Revenue’s representative did not strongly oppose the remand back to CIT(A) for proper adjudication.
The ITAT set aside the CIT(A)/NFAC’s order and remanded the matter back to the appellate authority with directions to decide all grounds, including the legal ones, afresh after giving the assessee a reasonable opportunity of hearing. The appeal was allowed for statistical purposes.
Appearance
Counsel For Appellant: Deepak Chintaman Gadgil
Counsel For Respondent: Akhilesh Srivastva
Cause Title: Shamrao Gopal Benake V. ITO
Case No: ITA No.1036/PUN/2025
Coram: R.K. Panda [Vice President], Vinay Bhamore [Judicial Member]
