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Judgment
Per Renu Jauhri, Accountant Member:
The above captioned appeal is preferred by the assessee against the Assessment Order passed u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) dated 23.01.2025 for A.Y. 2018-19.
The assessee has raised the following grounds of appeal:
“1.The initiatio n o f reassessment proceeding u/s. 147 of the Income Tax Act, by issuance, of the notice u/s. 1 48 of the Income Tax Act are invali d & bad in law. T he same may be quas hed/cancelled. Assessee has spe cifically reque sted the L d. Assessing Office r, vide le tte r dated 24-12-2024 subm itted in his office 26-12-20.24 to pr ovide the copy of sancti on obtaine d from- specified author ity u/s. 151 of the Act to issue notice u/s. 148 of the Act. The assessing o ffice has howeve r not provided the same to assessee so far. As such the assesse e is no t in a posi tio n to e xamine the lega lity o f the sanction granted in this c ase u/s. 151 of the Ac t. The asses see reser ves all the r ights to raise any addit ional gro und that may be require d o n rece ipt, o f the co py of t he s aid sanct ion o r ot herwise.
1.1The reope ning of t he assessme nt by issuing notice u/s 148 in t his case is invalid and had in law. The same may be quas hed/c ancelled.
(i)The Asse ssing Office r had no cogent material/ information be fore him to co me to the conclusion that any income char geable to tax has escaped assessment.
(ii)There is no live link between the material/ information re lied upon by t he Assessing Office r and t he conclusion drawn by the Asses sing officer that the income charge able to tax has esc aped assessment.
(iii)The Assessing Officer has fai led to e ven specify the amo unt charge able to tax that has e scaped as sessment.
(iv)As pa r para 5 of the or de r u/s 148A (d) of the Income Tax Act the assessme nt has been reopened for furthe r verific ation, whic h es tablishes that the Assessing officer was as yet, not a satisfi ed that the inco me chargeable to tax has escaped asse ssment.
(v)In the order u/s 1 48A (d) the Assessing Office r has wrongly mentioned that no submissions have been made by the assesse e in re sponse to Show C ause No tice issue d u/s 148A (b) of the I.T . Act. In f act the assessee has file d its submissions o n 08-04-2022 tho ugh the same were due o n 06-04-2022. The order u/s 148A (d) howeve r is passe d on 13-04-2022 i.e. after the assessee has filed its subm issions. As suc h t he Assessing Officer has passed the o rder u/s 148A (d) of the Act wit ho ut considering the submiss ions/objec tions filed by the assessee.
(vi)In para 5 of the Show Cause no tic e date d 27-03-2022 issued u//s 148A (b) o f the Act, it is mentioned tha t t he said Sho w cause no tice is issue d after taking the prio r appro val u/s 151 of the Ac t. However in para 3 of the notice dated 13-04-2022 issued u/s 148 of the IT Act, it is mentio ne d that the notice is being i ssue d after obtaining the prior approval o f the CIT (IT), Delhi-1 accorde d on 08-04-2022 vide refe rence No. F. No. CIT (Intl. Tax)-1/148/2022-23/44 dated 08-04-2022. There is a huge dif ference in both the date s. 1.2 Consequently, the impugned assessment order passed on the basis of an invalid notice u/s. 148 of the Act is also invalid & bad in law. The sam e may be quashed/cancelled.
2.The Ld. Assessing O fficer has err ed in di sallowing the capital loss of Rs. 12,26,184/- claimed by the assessee and has fur the r erred in adding Rs. 12,26,184/- to the income of the asse ssee as sho rt term capital gains.
3.The Ld. Assessing Officer has erred i n dis allowing the short term capital gains o f Rs. 26,67,939/- and in adding of Rs. 26,67,939/- as unexplaine d money u/s 69A r.w.s. 115BBE of the I.T. Act. T he Assessing Officer has misdirected himself in holding that the unaccounted money gener ated by the assesse e has been ro uted back in the fo rm of Lo ng Term Capital Gains. The Assessing Office r has not bro ught any evidence on reco rd in support of this alle gation/o bservation. T he Assessing Office r has furthe r m isdire cted /-himse lf in holding t hat the assessee has earned S hort Term Capita l Gains o f Rs. 26,67,939 which have not been declare d in the: return of income.
4.The appe llant craves leave to add to or amend/modify or de lete any or all of the abo ve gro unds of a ppe al. ”
The assessee has also raised the follow ing additional grounds of appeal:
“(i)The init iatio n r e-asse ssment pr oceedings are invalid and bad-in-law because the notice u/s 148 in t his case has bee n issued after the lapse o f the pe riod of 3 ye ars from the assessment o rder, even tho ugh the income escaping assessment do es no t e xceed Rs.50 lacs. Thus the co nditio n for re-opening of the assessment as prescribed in claus e (b) o f sectio n 149 (1) of the I.T . Act is no t satisfied.
(ii)The initiat ion of re assessment procee dings is invalid and bad- in-law, as the prio r sanctio n u/s 151(ii) of the I.T. Act be fore issuing the notice u/ s 148 of the I.T. Act in this case is tak en fro m the Commissione r of Income Tax (Inte r national Taxation)- Delhi, who w as not the specifie d authority prescribed in this reg ard.”
Brief facts of the case are that the assessee had filed return for A.Y. 2018-19 on 24.08.2018 declaring total income of Rs. 8,77,403/- which was duly processed u/s 143(1) of the Act. Subsequently, a search action was taken u/s 132 of the Act in the case of Kushal Group of Ahmedabad on 05.02.2019. It was found during the course of search that the Kushal Group was engaged in providing accommodation entries in the form of bogus long term capital gain /loss. Further, it was found that during the financial year (F.Y.) 2017-18, the assessee had traded in penny scrip, M/s Kushal ltd. and acquired profits of Rs. 26,67,96,639/- which was not shown in the return. Accordingly, notice u/s 148 was issued on 31.03.2022 as per prescribed procedure. Subsequently, assessment was computed u/s 147 r.w.s. 144 vide dated 23.01.2025 at an income of Rs. 47,61,523/- in pursuance of directions of DRP.
Aggrieved, the assessee has filed an appeal before the Tribunal, raising multiple grounds of appeal.
Before us, at the outset, the Ld. AR has raised the issue of validity of the reassessment proceedings on following counts:
Requisite approval of the specified authority u/s 149 was not taken as more than 3 years had elapsed after the end of the assessment year and therefore approval of PCCIT was required to be taken instead of PCIT.
Income escaping assessment in this case being less than Rs. 50 lakhs, notice u/s 148 of the Act could not have been issued after lapse of 3 years from the end of the assessment year.
The Ld. AR has submitted that the notice u/s 148 of the Act has been issued to the assessee on 13.04.2022, i.e. after the expiry of 3 years from the end of the A.Y. 2018-19. Therefore, the approval had to be taken from PCCIT /CCIT and also the income escaping assessment has to be Rs. 50 lakhs or more which is not the case here.
5 On the other hand, the Ld. DR relied upon the decision of the Co-ordinate Bench of the Tribunal in the case of Albert Joseph Rozin .vs. ITO (I.T.) [2025] 176 taxmann.com 995(Mumbai-Trib.) wherein it has been held that for the purpose of computing period of limitation u/s 149, period allowed to the assessee to respond to show cause notice issued u/s 148A(b) has to be necessarily excluded. Accordingly, he has argued that since notice u/s 148A(b) was issued on 27.03.2022 and assessee filed reply on 08.04.2022 and thereafter order u/s 148A(d) and notice u/s 148 of the Act were issued on 13.04.2022. The same was within the prescribed time limit.
We have heard the rival submissions and perused the material available on record along with the judicial citations relied upon by both the parties. We note that the income amounting to Rs. 26,67,939/- was stated by the AO to have escaped assessment as is seen from the notice u/s 148A(b) as well as order u/s 148A(d) of the Act. Since notice u/s 148 has been issued on 13.04.2022, i.e. after a lapse of more than 3 years, the condition laid down u/s 149(1)(b) regarding escapement of income of Rs. 50 lakhs or more is not satisfied. Accordingly, we hold that the notice u/s 148 of the Act issued on 13.04.2022 was invalid as a result of which the order u/s 147 r.w.s 144 of the Act, dated 23.1.2025 is liable to be quashed.
Since the assessment itself has been quashed, remaining grounds are rendered academic and hence are not being adjudicated upon.
In the result, appeal of the assessee is allowed.