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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal o f the Revenue and cross ob jection by the assessee is dire cted against the order 22.09.20 25, passed by CIT(A)/NFAC u/s 250 of the Income Tax Act, 196 1 (hereinafter referred to as “the Act”) wherein, the additio n of Rs. 54,60 ,000/- u/s 68 of the Act made by the AO vide assessment order dated 22.05.2023 was deleted.
The facts in brief as culled out fro m para 2 of the impugned order are as under:
“2 . The brief facts of the case ar e tha t the appella nt filed its return o f inco me for the year und er consideration on 16.08.2016 declaring to tal incom e of N IL. Subsequently , as per the i nfor matio n avai lable with t he department, searc h and surv ey action unde r s ecti ons 1 32 and 133A of the Incom e Tax Act, 1961 was carri ed out on 08.03.2017 at the residential and office premises of S hri Puneet Kult hia, C.A., l ocated at 54, Model Town, North-Ex., Del hi -110009 a nd at No. 7, Model Town, Nort h-Ex., Bas ement Fl oor , N ew Del hi-110009 respec tively. During the c ours e of t he search and t he post-s ear ch proc eedi ngs in the case of the Punee t K ulthia group, it was revealed tha t Shri Puneet Kul thia was engaged i n providi ng accommodation e ntri es to various persons for channelizi ng t heir unaccounte d i ncome bac k i nt o t heir busi ness, in the guise of raising capital t hrough bogus sales , uns ecured loans and other such mea ns. On t he basis of t hes e fi ndings, it cam e t o light that the appell ant had ta ken accommodati on entries amounti ng to Rs.54,60,000/- fro m a paper/shell company, namely M/s Gold en Vyapaar (P) Ltd., whi ch was co ntroll ed direc tly or indir ectly by Shri Puneet K ul thia, hi s wif e S mt . Shweta Kul thia, or his acc ountant Shri Yoge ndra Si ngh.
Ther efore, pr oceedings i n t his case wer e i niti ated u/s 147 of the Act and notice u/s 148 of the Act was issued t o t he appellant on 13.07.2022. In response the appel lant fi led its ITR on 10.08.2022 declari ng t otal inc ome of NIL.
Assessment in this case was completed u/s 147 r.w.s. 144B of the Act at an assess ed income o f Rs. 54,60,000/-against the returned inco me of NIL by ma ki ng a n addition of Rs. 54,60,000/- by i nvoki ng the pr ovisions of S ect ion 68 of the Act.”
Aggrieved by the impugned order of the ld. CIT(A), the Revenue is in appeal before the Tribunal and raising follo wing grounds:
“1 . Whether o n the facts and circ umstanc es of t he case, ld. CIT(A) erred i n deleti ng the addition of Rs.54,60,000/- m ade by t he Assessing O fficer wit hout appr eciati ng the fact that Mr. PuneetK ul thia, CA i n his stat ement rec orded on oath u/s 131(1A) of the Inco me Tax Ac t, 1961 clearly admitt ed that the alle ged accommodation entri es wer e provi ded by hi m and his associates t o t he several entiti es i ncl udi ng t he ass es see.”
The assessee has raised follo wing grounds of cro ss objectio n in CO No.116/Del/2026:
“1 That the lea rned Commissioner of Income Tax (Appeals ) has erred both i n law and on facts in upholdi ng the i niti ation of proceedi ngs under section 147 of the Act and, c ompletion of ass essme nt under secti on 147/144B of the A ct without appreciating that the same were without j uri sdictio n and hence deserved to be quashed as s uc h.
1.1That the lea rned Commissioner of Income Tax (Appeals ) has failed t o appreciate that t her e was no ta ngibl e mat erial on record i n the form of specified informati on to s ugges t t hat i nc ome of the appella nt had escaped a ssessm ent a nd in vi ew t hereof the proceedi ngs initiated were i llegal, untenable and t herefor e unsustai nable.
1.2That the lea rned Commissioner of Income Tax (Appeals ) has failed to appreciate t hat i nitiation of proc eedi ngs was mechanical and wi thout any applicati on of mi nd muc h less indepe ndent application of mi nd, theref ore t he noti ces iss ued u/s 148A(b) of the Act ; and u/s 148 of the Ac t were i nvalid notice; and also order u/s 148A(d) of the Act was an i nvalid orde r and t hus assumpti on u/s 147 of the Act was without j urisdicti on.
1.3That the lea rned Commissioner of Income Tax (Appeals ) has failed t o appr eciate t hat no tice issued u/s 148 of t he Act after t hree years have elaps ed fr om the end of the relevant ass ess ment year i n absence of possession o f books of account or other docum ents or evidence whic h reveal t hat t he i ncome chargeabl e to tax repres ent i n t he form of ‘asset’, which has escaped assessment amounti ng t o o r is l ikely to amount t o fi fty lakh rupe es or m ore for that year i n view of pro visio ns of s ec tion 149(1)(b) of the Act .
1.4That notic e u/s 148A(b) of the Act was iss ued bas ed on factually incor rect assumptions and presumptions and therefore suc h a notice bei ng hi ghly cryptic vague c oul d not l egally and logical ly be made a basis fo r ass umption of jurisdiction and t herefore deserves to be quas hed as such.
1.5That the lea rned Commissioner of Income Tax (Appeals ) has fai led to appreciat e t hat orde r dated 13.7.2022 u/s 148A(d) of the Act and, notic e dated 13.7.2022 u/s 148 of the Act iss ued wi thout validl y complyi ng s ecti on 151 of the Act wer e also wit hout jurisdictio n.
2 That the lea rned Commissioner of Income Tax (Appeals ) has failed t o a ppreciate that si nc e D ocument Identi fication Number (“D IN”) is ab sence in notic e dated 13.7.2022 u/s 1 48 of t he Act a nd therefore the proc eedi ngs initiated u/s 147 of the Act was i nvalid and assumpti on of juri sdiction u/s 147/143(3) of t he Ac t was without j urisdict ion and consequently order of assessment date d 22.5.2023 u/s 1 47/144B of t he A ct, the same was invalid and des erves to be quashe d as such.
3 That notice dat ed 7.12.2022 u/s 143(2) of the Act issued by the l ear ned Assessment Unit, Incom e Tax Departme nt is illegal, invalid and wit hout j urisdic tion and the ref ore deserves to be quashed as s uch and consequently impugned order of assessm ent dated 22.5.2023 u/s 147/144B of the Act is wit hout jurisdictio n and deserv es to be quashed as s uch.
4 That the lea rned Commissioner of Income Tax (Appeals ) has fai led t o appreciate that vari ous adverse findi ngs and conclusions rec orded in the orde r o f assessment dated 22.5.2023 u/s 147/144B of t he Act without confronti ng t he material a nd, without p roviding cr oss exami nation wer e vitiated in law and, hence illegal , i nvalid and untenable .
It is theref ore, prayed t hat ac ti on u/s 147 s ustai ned by Commissi o ner of Income Tax (Appeals) may ki ndly be held to be without jurisdicti on and cro ss-obj ecti on of the assessee be allowed .”
We first deal with the cross obje ction of the assessee. At the o utset, ld. AR has submitted that the notice dated 13.7.2022 u/ s 148 of the Act was issued w itho ut valid ly complying with sectio n 151 of the Act is not in accordance with law. In this regard, following chart of relevant dates has been filed by the ld. ARwhich is placed at page 4 of the written submission are as under:
| Sr . N o . | P a r t i c u l a r s | A ss e s s e e ’ s c a s e ( p a g e s o f P a p e r B o o k ) | A p p r o v a l b y |
|---|---|---|---|
| i) | A ss e ss m e n t Y e a r | 2 0 1 6 - 1 7 | |
| i i) | N o t i c e is s u e d u / s 1 4 8 o f t h e A c t | 1 9 . 4. 2 0 2 1 | R a n g e - 2 5 , D e lh i |
| i i i ) | N o t i ce i ss u e d u / s 1 4 8 A (b ) o f t h e A c t in t e r m s o f d ir e ct io n b y H o n ’ b l e S u p r e m e C o u rt in c a s e o f U O I v . A s h i s h A ga r wa l | 2 5 . 5. 2 0 2 2 | |
| iv ) | N o t i ce u /s 1 4 8 A (d ) o f t h e A c t | 1 3 . 7. 2 0 2 2 | P r i n c ip a l C o m m i s s io n e r o f I n c o m e Ta x - 7 , N e w D e lh i |
| v ) | N o t i ce u /s 1 4 8 o f t h e A c t | 1 3 . 7 . 2 0 2 2 |
It is submitted that in view of the provisions of section 151 of the Act, the approval was required to be granted from the Ld. Principal Chief Commissioner or Ld. Principal Director General or Chief Commissioner or Dire ctor Gener al, where there is no Ld. Principal Chief Commissioner or Ld. Principal Director General. However, in the instant case , approval was obtained u/s 151 of the Act from the Ld. PCIT-7, New Delhi which is thus invalid approval. To support his aforesaid contentions, Ld . AR has re lied on the fo llow ing decisio ns wherein the issue has been decided in favour o f the asse ssee follow ing the decisio n of the Hon’ble Apex Court in the case of UO I & Others Vs. Rajeev Bansal (2024) SCC Online (SC) 2693:
Kusum Healthcare (P ) Ltd. Vs. DCIT 304 taxmann.com 471 (Del .)
Abhi nav Ji ndal HUF Vs. ITO 468 ITR 787 (Del.)
Kids Dr eam Inte rnatio nal (P) Ltd. Vs. AC IT W.P.(C ) 2814/2023 (Del. )
Galax Mi nerals Pv t. L td. Vs. ITO ITA N o. 994/Del/2026 dat ed 29.04.2026 - Del hi ITAT
Saif Ali Mans oor Ali Khan Pataudi v. ACIT, Circle -16 (1), Mumbai ITA No. 2131/MUM/2025 - Mum bai ITAT
M/s RS Constructi on v. ITO War d 41(3)(3), Mumbai ITA No . 4918/Mum/2025 - Mumbai ITA T
On the other hand, ld. DR has strongly relied on the orders of the lower authorities.
We have heard the r ival submissio ns and perused the material placed on record. It is an admitted fact that in the instant case the approval was obtained u/s 151 of the Act from the PCIT-7, New Delhi and notice u/s 148 of the Act was issued on 13.07.2022 , which demo nstrates that notice dated 13.7.2022 u/s. 148 of the Act was issued w ithout validly complying with sectio n 151 of the Act is not in accordance with law and thus invalid, in view of the Hon’ble Apex Court decision in the case o f Rajeev Bansal (supra) wherein it has been laid down as under:
“73.Section 151 impos es a c heck upon t he power of the Revenue to reope n assessment s. The provision impos es a res ponsibility on the R evenue to e nsur e that it obtains the sanction of the s pecified authority before issui ng a notice unde r section 148. The p urpose behi nd this proc edur al check is to save the assesses from harassment resul ting from t he mec hanical reopeni ng of assessments S ri kr ishna (P.) Ltd. v. ITO [1996] 87Tax man 315/221 ITR 538 (SC) /[1996] 9 SCC 534. A table repres enti ng the prescription under the old and new regim e is set out bel ow:
Regime Time li mits Speci fied author ity Secti on 151(2)of the old regime Before expiry of four years f rom the end of the rel evant assessment year Joi nt Commissioner Secti on 151(1)of the old regime Aft er expir y of four years f rom the end of the rel evant assessment year Pri ncipal Chi ef Commissi oner or Chi ef C ommissio ner or Pri ncipal Commissi oner or Commissi oner Secti on 151(i)of the new regime Thr ee years or less tha n three years from the end of the relevant assessment year Pri ncipal Commissi oner or Pri ncipal Direct or or Co mmissioner or Director Secti on 151(ii)of the new regime More than t hree ye ars have elaps ed from the end of the relevant assessment year Pri ncipal Chi ef Commissi oner or Pri ncipal Direct or General or Chi ef Commissi oner or Director Ge neral 74.The above tab le indicates that the specified authori ty is direc tly co-related to the ti me when the notice is issued. This pl ays out as follows under t he old regi me: (i) If i nc ome escaping assessment was less t han Rupees one lakh: (a) a reassessment notic e could be issued under section 148 wi thin four ye ars a ft er obtai ning the ap proval of the Joi nt Commissi o ner; and (b) no notice co uld be i ssued after the expiry of four years; and (ii) If i nco me escapi ng was more t han Rupees one lakh: (a) a reass essment notice co uld be i ssued withi n four years aft er obtai ni ng the approval of the Joi nt Commissioner ; a nd (b) after four years but wit hi n six years after obtai ni ng the approval of t he Pri ncipal Chief Commissioner or Chi ef Commissi o ner or Pri ncipal C ommissioner or Commissi o ner. 75. After 1 April 2021, the new regi me has specified different aut hori ties for granti ng sanc tions under section151. The new regi me is be neficial to the ass essee because it specifies a hi gher level of authority for t he grant of sancti ons in comparis on to t he ol d regime. Ther efore, i n t erms of As hi sh Agarwal (supra), aft er 1 April2021, the prior a pproval must be obtai ned from t he appr opriate aut horities specified under section 151 of the new regi me. The effec t of S ec tio n 151 of the new re gi me is t hus: (i) If i ncome escaping assessment i s less t han Rupees fift y lakhs: (a) a reasses sment notic e could be issued wit hi n thr ee years aft er obtai ni ng the prior approval of the Pri ncipal Commissi o ner, or Principal Di rector or Commissi o ner or Director; and (b) no notice could be issued aft er the expiry of thre e years; and (ii) If i nc ome escaping assessment is mor e t han Rupees fift y lakhs: (a) a reasses sment notic e could be, issued withi n thr ee years aft er obtai ni ng the prior approval of the Pri ncipal Commissi o ner, or Principal Di rector or Commissi o ner o r Director ; and (b) after thr ee ye ars a ft er obtai ning the prior approval of t he Pri ncipal Chi e f Commissi oner or Principal Direct or General or Chi ef Commissio ner or Direct or General .”
In view of above factual matrix and respectfully following the aforesaid decisio ns, we hold that the notice issued u/ s 148 of the Act is bad in law and thus invalid, hence, the same is quashed and accordingly, the conseque nt assessment order is also quashed. Resultantly, the cross objectio n filed by the assessee is allowed in the aforesaid manner.
Since, the cross objectio n of the assessee has been allowed on legal ground wherein the notice u/s 148 of the Act as well as assessment order have been quashed, the issues on merit in Revenue ’s appeal are no t adjudicated being acade mic.
In the result, the appeal of the Revenue is dismissed and the CO of the assessee is allowed.