M/s Ripples Engineering Pvt Ltd vs PCIT-7

PER SUDHIR PAREEK, JM

The aforetitled appeal arising out of the order dated 25.03.2026 passed by the Principal Commissioner of Income Tax, Delhi-7 (for the sake of convenience, hereinafter referred in short as Learned PCIT] passed against the order dated 11.05.2023 passed by the Assessing Officer [(for the sake of convenience, here in after referred in short as Learned AO)] for A.Y. 2015-16.

Facts of the case may be concisely narrated as that the appellant filed his return of income for the Assessment Year 2015-16 declaring income of Rs.42,09,537/-. Subsequently, information was received from investigation wing, New Delhi based on search and post search enquiries conducted in the case of certain entry operators indicating that the appellant was a beneficiary of accommodation entries in the nature of bogus purchase and on the basis of the said information proceedings u/s 147 of the Act were initiated and accordingly notice u/s 148 of the Act was issued and reassessment completed u/s 147 read with section 144B of the Act determining total income at Rs 57,37,146/-. In the course of reassessment proceedings, the Learned AO held purchase of Rs 1,22,88,695/- from entities identified as accommodation entry providers, to be non genuine but the addition was restricted to 12.5% of such purchases amounting Rs 15,36,086/-.

Heard rival submissions and carefully perused the material available on record.

Reiterating the grounds of appeal, the Learned AR submitted that invoking section 263 is unwarranted as the assessment order u/s 147/144B of the Act neither erroneous nor prejudicial to the interest of revenue and submitted that the assessment order is barred by limitation and so, no valid jurisdiction can be assumed for invoking section 263 of the Act and assessment could have been initiated only u/s 153C of the Act and not in section 147/148 of the Act.

Per Contra, the Learned DR relied upon the orders passed by both lower authorities.

The Learned AR further submitted that it is established legal position that since original reassessment order itself was not validly passed, then subsequent revisional order was required to be held invalid as well. Further submitted that as per law the assessee can challenge validity of order passed u/s 263 of the Act on ground that Impugned assessment order was non est. it is submitted that in present case which is related with AY 2015-16 and assessment order has been framed on the basis of notice u/s 148 of the Act dated 27-07-2022 and said notice is barred by limitation in view of UOI versus Rajeev Bansal (2024) 167 taxmann.com 70 SCC. The Learned AR shown chronology of relevant events as follows :

The Learned AR vehemently argued that in AY 2015-16 TOLA was not applicable and in present case notice for AY 2015-16 could had been issued up to 31-03-2022 and since notice u/s 148 of the Act was issued on 27-07-2022 was barred by limitation and in the case of Rajeev Bansal (supra) the revenue conceded that for the AY 2015-16, all notices issued on or after 01-04-2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA and likewise in the case of Makemytrip India Pvt Ltd versus DCIT (2025) 173 taxmann.com 497 (Delhi), held that as TOLA was not applicable in respect of said notice u/s 148 of the Act for AY 2015-16, then notice was liable to be set aside. Further submitted that in this case reassessment proceeding u/s 147 of the Act were initiated on account of information received on searchu/s 132 of the Act on Mohit Garg and others on 26-11-2016 and since the date of search is prior to 01-04-2021 then the impugned proceedings should have been only u/s 153C of the Act and not u/s 148 of the Act. Section 148 is applicable only where the relevant search has taken place on or after 01-04-2021.

In this matter, it is admitted position that notice u/s 148 of the Act was given on 27-07-2022, which is clearly time barred and so assessment dated 11/05/2023 in pursuance of time barred notice may treated as non est and non sustainable in the eye of law and accordingly there was no valid jurisdiction of the Learned PCIT for invoking section 263 of the Act in respect of above assessement order. There is also material substance in submission that in the established legal position, relevant assessment proceedings could been initiated only u/s 153C of the Act. On considering above, we find material substance in the submissions advanced on behalf of the appellant as above and of firm opinion that the appeal of the assessee deserves to be allowed on legal grounds i.e. ground 1 to 4 and addition in question deserves to be deleted. Rest of the grounds need not be adjudicated as appeal is disposed of on legal grounds.

Consequently, this appeal is hereby allowed as indicated above.