Scrutiny notice u/s 143(2) issued by ITO lacking pecuniary jurisdiction per CBDT instruction renders assessment invalid; defect incurable under s.292BB, quashing proceedings ab initio.

ORDER

PER MANISH AGARWAL, AM :

The present appeal is filed by the assessee against the order dated 23.02.2024 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“ld. CIT(A)”] in Appeal No. CIT (A), Gurgaon- 1/11612/2019-20 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 23.12.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18.

2. Brief facts of the case are that the assessee is an individual and filed his return of income on 05.11.2017 declaring total income at INR 39,58,400/-. The case was selected for scrutiny under CASS and the notice was issued by ITO, Ward-1(3), Gurgaon. Thereafter, various notices were issued and replies were filed by the assessee. After considering the submissions, total income was assessed at INR 3,40,09,154/- by making addition of INR 1,40,51,028 u/s 68 r.w.s.115BBE of the Act and further disallowance of INR 1,59,99,726/- was made being 5% of the expenses claimed.

3. Against the said order, the assessee preferred an appeal before ld. CIT(A) who vide impugned order dated 23.02.2024, dismissed the appeal of the assessee and confirmed the additions / disallowance made.

4. Aggrieved by the order of the ld. CIT(A), the assessee has raised following grounds of appeal:-

1. On the facts and circumstances of the case, the learned CIT (A) has erred in law and in facts in dismissing the appeal and confirming the additions without providing proper opportunity of being heard, especially when additional evidences were admitted but did not wait for receiving of remand report ITNS-51 from the Ld. AO, which is in violation of the principal of natural justice.

2. On the facts and circumstances of the case, The Ld. CIT(A) erred in not properly adjudicating the additional evidences submitted under Rule 46A of the Income Tax Rules, 1962 despite admitting the same, and failed to appreciate that the Ld. AO did not furnish any remand report despite repeated opportunities.

3. On the facts and circumstances of the case, The Ld. CIT(A) erred in confirming the addition of Rs.65,74,394/- relating to opening balances of unsecured loans u/s 68 in a mechanical manner without applying judicial mind and without dealing with the assessee's detailed submissions, contrary to the principles laid down in various judicial precedents.

4. On the facts and circumstances of the case, the learned CIT (A) has erred in law and in facts in confirming the addition of Rs. 1,40,51,028/ as unexplained cash credit u/s 68 without considering the additional evidence i.e. documents relating to identity and credit worthiness of the lenders as well as genuineness of the transactions provided during appellate proceedings.

5. On the facts and circumstances of the case, the learned CIT (A) has erred in law and in facts that being the appellant is the proprietor of two firms namely M/s. Paramhans Enterprises and Sheetal catering Services. The amount payable by one firm Rs. 6,54,545/- is Corresponding receivable by another firm of the same proprietor and not in the nature of unsecured loan but a capital addition in the firm.

6. On the facts and circumstances of the case, the learned CIT (A) has erred in law and in facts in confirming the additions made by the Ld. AO without being considering the fact that the amounts payable to sister concerns those are not third parties and the amount properly received through banking channels and duly reflected in th