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Judgment
PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC”] vide order dated 12.12.2025 pertaining to A.Y. 2017-18 arising out the assessment order dated 28.05.2023 u/s.147 read with section 144B of the Income-tax Act, 1961, (in short ‘the Act’).
The assessee has raised the following grounds in appeal:
1.On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the initiation of reassessment proceedings by wrongly relying upon the decision of the Hon’ble Apex court in the case of Rajeev Bansal v. UOI whereas per this decision of apex court itself and reassessment proceedings initiated was liable to be quashed.
2.On the facts and circumstances of the case and law, the notice u/s 148isued in this case is bad-in-law, without jurisdiction and barred by limitation and, therefore the said notice u/s 148 along with assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in holding so
3.On the facts and circumstances of the case and law the reassessment proceedings initiated is bad-in-law without jurisdiction and contrary to the provisions of law including the specific provisions of section 147 to section 151A of income Tax Act, 1961 and therefore, the reassessment proceedings initiated along with assessment order passed ae liable to be quashed and CIT(A) erred in not holding so.
4.On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in-law, without jurisdiction and barred by limitation and CIT(A) erred in not holding so.
5.On the facts and circumstances of the case and in law, the Ld. CIT(A) erred not deleting the addition made by the assessing officer of Rs.80,76,000/- on the account of unexplained cash credit u/s 68of the Act
The brief facts of the case are that the assessee is a HUF and had filed return of income on 30-07-2017 declaring total income of Rs.21,64,850/- for the A.Y.2017-18. As per the information available with the department the assessee had traded in the Scrip of M/s Yamini Investment Company Limited during the year under consideration and is a beneficiary from non-genuine trading in this Scrip. The assessee has sold of 2,40,000 shares of Yamini Investment Company Ltd. for Rs.80,76,000/-. The assessee has claimed exempt income from LTCG as Rs.77,76,000/-. Therefore, the bogus LTGC received by the assessee is to be disallowed and should be brought to tax. A notice u/s 148A(b) of the Act dated 20-05-2022 was issued to the assessee. Order dated 14-07-2022 u/s 148A(d) of the Act was passed and the notice u/s 148 of the Act dated 15-07-2022 was issued. In the compliance of the notice the assessee filed the return of income on 03-08-2022. The Assessing Officer completed the assessment after making the additions of Rs.80,76.000/- under section 68 of the Act and assessed the total income at Rs.1,02,40,850/-.
Aggrieved by the order of the AO the assessee filed the appeal before the Ld. NFAC, who vide his order dated 12-12-2025 dismissed the appeal. Being aggrieved by the order of the Ld. NFAC, the assessee is in appeal before the Tribunal.
Ld. Counsel for the assessee has raised the legal ground no. 1&2 and stated that first notice u/s 148 was issued on 23-04-2021(PB page no-14) for the A.Y. 2017-18 under the old reassessment tax regime, however due to the introduction of new reassessment tax regime from 01-04-2021 and in the compliance of the Hon’ble Supreme Court Order in the case of Ashish Agarwal notice u/s 148A(b) of the Act was issued on 15-07-2022(PB page1-2) after obtaining the prior approval of the Pr. CIT-12 Delhi and consequent order under section 148A(d) of the Act on 14-07-2022 (PB page3-10) was issued. The case of the assessee relates to the A.Y. 2017-18 and the notice /order was issued on 15-07-2022 after a period of three years from the end of the relevant assessment Year, the sanctioning authority should have been Principal Chief Commissioner or Principal Director General or Chief commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. This issue is squarely covered by the Judgement of Hon’ble Jurisdictional Delhi High Court in the case of Communist Party of India (Maxist) V. CIT(Ex) WP 9031/2023 dated 28-04-2025 and the case of Sampark Management Consultancy LLP v. DCIT, Circle -5(2) (1) Noida ITA NO. 6025 & 6026 /Del/2024 dated June 25, 2025. In the case of Sampark Management Consultancy LLP v. DCIT, Circle -5(2) (1) Noida the Co-ordinate bench held as under:
“3.We find that section 148 of the Act was substituted by the Finance Act, 2021 wet. 01.04.2021. Notice 14 of the Act as per the old provisions of section 148 of the Act applicable till 31.03.2021 should have been issued only upto 31.03.2021. The issue stands settled by the Hon'ble Supreme Court in Union of India vs Ashish Agarwal, 444 ITR 1 (SC) The assessee company was part of the litigations. The AO has issued notice u/s 148A(b) on 27.05.2022 and on 28.07.2021 order was passed u/s 148A(d) and issued notice is 148 of the Act on the same date, i.e, on 28.07.2022 in AY 2016-17 and while in AY 2017-18 on 27.07.2022 order was passed u/s 148A(d) and issued notice w/s 148 of the Act on 28.07.2022. This notice dated 28.07.2022 u/s 148 of the Act, available at page 14-15 of the paper book for AY 2016-17 and on pages 16-17 for PB for AY 2017-18, and same are shown to be issued after obtaining approval of Principal Commissioner of Income-tax, Noida. This approval is contrary to the provisions of section 151 of the Act as amended/substituted by the Finance Act, 2021 because, as per section 151 of the Act, if more than three years have lapsed from the end of the relevant assessment year, approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. In the present assessment years, notices u/s 148 have been issued on 28.07.2022 after expiry of three years from the end of relevant assessment years. Accordingly, sanction/ approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in Union of India vs. Rajeev Bansal, 2024 (10) TMI 264 SUPREME COURT) and various decisions. Thus, the approval is not sustainable under law. The grounds as raised deserves to be sustained. Consequently, the appeals of the assessee are allowed.”
The Ld. Sr. DR has relied the order of the lower authorities and submitted that the notice/ order was issued after taking the prior approval from the authority as per the directions of the Hon’ble Supreme Court in the case of Ashish Agarwal [2022] 444 ITR 1 SC. In the present case the notice was issued on 15-07-2022 for the A.Y. 2016-18 from the prior approval of the Pr. Commissioner, without, the approval of the authority specified u/s 151 of the Act. The notice was issued beyond the period of three years from the end of the relevant assessment year, thus in term of section 151(ii) of the Act the sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. Respectfully following the decision of the Hon’ble High Cort and the Co-ordinate Bench we allowed the appeal of the assessee and quashed the assessment order dated 28-05-2023.
We allowed the appeal of the assessee on legal ground the other grounds have become academic and keep them open for adjudication.
In the result the appeal of the assessee is allowed.