AI Structured Summary
Not yet generated for this judgment
Judgment
PER AMITABH SHUKLA, AM
This appeal filed by the Revenue is directed against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, dated 15.12.2025 arising out of assessment order dated 22.05.2023 passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 for Assessment Year 2014-15. The word ‘Act’ herein this order would mean Income Tax Act, 1961. The assessee has also filed Cross Objection.
ITA No.1771/Del/2026 (Revenue’s appeal)
The Revenue is contesting the impugned order of the ld. CIT(A) by raising following grounds.
‘1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the reassessment proceedings initiated u/s 147 of the Income-tax Act, 1961 were void ab initio, despite the fact that the Assessing Officer had duly complied with the mandatory statutory requirements of sections 148A(b) and 148A(d) of the Act and had obtained prior approval of the specified authority u/s 151 of the Act before issuance of notice u/s 148, as clearly evidenced from the assessment records. The findings of the Ld. CIT(A) is erroneous, contrary to law, and unsustainable on facts.
2.The Ld.CIT(A) has erred in law and on facts in concluding that no approval of the Specified Authority u/s 151 of the Act was obtained prior to issuance of notice u/s 148, by completely ignoring the documentary evidence available on record which clearly demonstrates that the requisite statutory approval was duly accorded by the competent authority and communicated to the assessee. The finding recorded by the Ld.CIT(A) is perverse, factually incorrect, and contrary to the material on record.
3.The Ld.CIT(A) has erred in law and on facts in holding that the Assessing Officer failed to conduct independent enquiry before reopening the assessment, despite the existence of specific, credible, and tangible material received from the Investigation Wing indentifying the assessee as a beneficiary of accommodation entries. The said information constituted valid "reason to believe" that income chargeable to tax had escaped assessment.
4.The Ld.CIT(A) further erred in misinterpreting the law by applying an incorrect standard requiring conclusive proof or further verification at the stage of initiation of reassessment, contrary to the settled legal position that only a prima facie satisfaction based on tangible material is required at the stage of recording reasons for reopening.
5.The Ld.CIT(A) has erred in law in ignoring the fact that the original notice u/s 148 dated 23.04.2021 was issued within the extended limitation period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and that the subsequent proceedings were carried out strictly in compliance with the directions of the Hon'ble Supreme Court in Union of India v. Ashish Agarwal. The Ld. CIT(A) further erred in quashing the entire reassessment proceedings on alleged procedural infirmities without adjudicating the addition made on merits u/s 69A of the Act, thereby exceeding the scope of appellate jurisdiction and rendering findings that are perverse, arbitrary, and contrary to the material available on record.’
The Revenue through its grounds of appeals is contesting the decision of the ld. CIT(A) to have quashed the assessment order passed by the ld. Assessing Officer. The ld. DR took us through the brief factual matrix of the case. Revenue was in receipt of information from the Investigation Wing of Ghaziabad that the assessee has taken accommodation entry of Rs.1,54,70,174/- from one M/s Bansal Traders (PAN-ANFPB8459E). The ld. Assessing Officer issued notice u/s 148 dated 30.06.2022. Before the ld. Assessing Officer, the assessee has agitated it had not entered into any transaction of Rs.1,54,70,174/- from M/s Bansal Traders (supra). The ld. Assessing Officer however placed reliance upon the information received from the Investigation Wing and rejecting submissions of the assessee proceeded to make addition of impugned amount. In appeal, before the ld. First Appellate Authority, the assessee reiterated its arguments made before the ld. Assessing Officer and submitted that the Assessing Officer did not pass a judicious order and proceeded to quash the assessment order by holding as under:-
“Decision : I have carefully considered the submission made by the appellant in appeal, the grounds and facts of the case as well as gone through the observation and findings of the AO ‘s order dated 22-052023. I find, while framing the assessment order the AO, without making any actual verification, without conducting independent enquiry has issued notice u/s 148 of the Act vide dated 30-06-2022based on an information was received from DDIT(Inv) unit -1, Ghaziabad. It is observed that after receiving the information from departmental portal the AO has neither recorded any action for verification of credibility of the said information giving opportunity to the appellant, nor recorded of any approval being taken from Specified Authority as mandated in section 151 of the Act before issuance of the said 148 notice. In view of above I find infirmity in the issuance of notice u/s 148 by the AO in as much as the AO violates the basic legal formalities before issuance of income escaped notice. Therefore the initiation of assessment proceeding being treated as void ab-initio. The ground on the issue of initiation of proceeding u/s 147is allowed. Thus, as the initiation of assessment proceeding being treated as void ab-initio accordingly the assessment order cannot withstand and therefore the addition of Rs.1,54,70,174/- made based on such notice stand deleted. The grounds of appeal, relating to this issue are allowed. In the result, the appeal of the appellant is allowed.”
The ld. DR vehemently argued in favour of the order of the ld. Assessing Officer. He placed reliance upon order u/s 148A(d) dated 29.06.2022 to support the argument of valid reasons being recorded in the case along with approval of competent authority.
The ld. Counsel for the assessee reiterated the arguments taken before the ld. CIT(A). The ld. Counsel has placed on record a copy of its bank statement maintained with HDFC Bank bearing account no.17197630000218 for the period 25.04.2013 to 28.03.2016. It was stated that perusal thereof vividly establishes that no transactions were ever taken by the assessee with any party named M/s Bansal Traders. The ld. Counsel also drew our attention to page-2 of the order u/s 148A(d)(supra), where the arguments of the assessee with regard to M/s Bansal Traders were summarily rejected. Copy placed on records.
We have heard rival submissions in the light of material placed on records. We have noted that the bank account of the assessee with HDFC Bank (supra) do not evidences any transaction with M/s Bansal Traders. We have also noted that the assessee had clearly brought to the notice of the ld. Assessing Officer both during u/s 148A(d) proceedings as well as assessments proceeding regarding its no connection with M/s Bansal Traders. There is nothing on record to suggest that any enquiry or investigation was conducted by Revenue to rebut these arguments save by a cryptic rejection. We are therefore of the considered view that the order of the ld. CIT(A) is based upon clear understanding and interpretation of the facts of the case and does not require any interference at this stage. We therefore confirm the order of the ld. CIT(A) and dismiss the appeal of the Revenue.
Cross Objection No.344/Del/2026
As we have dismissed the appeal of the Revenue in ITA No.1771/Del/2026 and sustained the decision of quashing of the assessment order, the Cross Objections raised by the appellant have become in fructuous and hence dismissed.
In the result, the appeal of the Revenue as well as Cross Objection of the assessee are dismissed.