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Judgment
The appeals filed by the assessee are against orders dated 13.05.2026 of ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [hereinafter referred to as “the CIT(A)”] under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) arising out against assessment orders dated 24.05.2023 and 29.05.2023 of the ld. Assessing Officer/ assessment unit (hereinafter referred to as ‘the AO’) u/s 147 of the Act for A.Y. 2015-16 and 2016-17 respectfully.
Brief facts of the case are that the through ITA No. 7471/Del/2026 are that the assessee filed ITR declaring income of Rs. 5,63,890/-, the information was flagged that the assessee had made sales of Rs. 3,42,45,867/- to PAN Group without actual movement of goods/services. The reasons for reopening were recorded and after obtaining approval from competent authority, notice u/s 148 of the Act dated 23.06.2021 was issued. Keeping in view, directions of Hon’ble Supreme Court of India in the case of Union of India vs. Ashish Agarwal Civil Appeal No. 3005/2022 dated 04.05.2021 and subsequent directions issued by CBDT Instructions No. 1 of 2022 dated 11.05.2022 and further proceedings u/s 148A of the Act were initiated treating earlier notice u/s 148 of the Act as show cause notice u/s 148A(B) was issued. Considering non-satisfactory reply to show cause notice, fresh notice u/s 148 of the Act dated 30.06.2022 was issued after passing order u/s 148A(d) of the Act on 30.06.2022. Intimation letter dated 02.11.2022, notice u/s 142(1) of the Act dated 09.01.2023, notice u/s 143(2) of the Act dated 13.04.2023, notice u/s 142(1) of the Act dated 24.04.2023 and show cause notice dated 03.05.0223 were issued. On completion of proceedings, Ld. AO vide order dated 24.05.2023, assessed total income/ loss determined as Rs. 83,48,189/-.
Against order dated 24.05.2023 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 13.05.2023.
Being aggrieved, the appellant/assessee preferred present appeal on following grounds:
“1.On the facts and circumstances of the case, the order passed by the National Faceless Appeal Centre (NFAC) is bad, both in the eye of law and on the facts.
2.On the facts and circumstances of the case the re-assessment proceeding initiated by issue of notice u/s 148 is barred by limitation as per the provisions of section 149 of the Act.
3.On the facts and circumstances of the case the re-assessment proceeding initiated by issue of notice u/s 148 is bad in law in the absence of sanction of the proper authority as prescribed under section 151 of the Act.
4.On the facts and circumstances of the case the re-assessment proceeding initiated by issue of notice u/s 148 is barred by limitation as per the surviving period defined by hon'ble Supreme Court in the case of Union of India vs. Rajiv Bansal reported in (2024) 469 ITR 46 (SC).
5.(i) On the facts and circumstances of the case, the Id.NFAC. has erred both onfacts and in law in confirming the action of A.O. in computing the business income of the assessee at Rs. 83,06,563 as against Rs. 5,22,268/- declared by the assessee.
(ii)That the above said addition was made arbitrarily at the rate of 0.5% as against the commission income actually earned by the assessee.
(iii)On the facts and circumstances of the case, the NFAC. has erred in not providing the benefits of expenses claimed for earning the commission Income.
6.On the facts and circumstances of the case, the Id. NFAC has erred both on facts and in law in confirming the action of A.O. in drawing adverse inference against the assessee making the bank account of the assessee as basis, despite the fact that allegation made in order u/s 148A(d) have been proved to be wrong during the assessment proceedings itself.
7.Without prejudice to the above and in the alternative, On the facts and circumstances of the case, the IdNFAC. has erred both on facts and in law in rejecting the contention of the assesseethat the assessment was made in total disregard to the basic principle that the Income Tax has to be paid only on 'income' and not on receipts.
8.The appellant craves leave to add, amend or alter any of the grounds of appeal.”
Ld. Authorized Representative for appellant/assessee submitted that notice u/s 148 of the act dated 30.06.2022 is barred by limitation. Synopsis mentioned as under:
“The notice issued u/s 148 of the Act dated 30.06.2022 is barred by limitation
| Particulars | |
| Assessment Year | 2015-16 |
| Notice issued under the erstwhile provision | 23.06.2021 |
| Hon'ble SC order dt. 04.05.2022 in Ashish Agarwal's case deeming notice under section 148 issued under erstwhile law as Notice under section 148A(b) of New Law as amended by Finance Act, 2021 and directing that material/information be given in 30 days from date of the said order and assessee shall reply within two weeks thereafter. | 04.05.2022 |
| Notice u/s 148A(b) was issued in consequence of Hon'ble SC order | 18.05.2022 |
| Time limit to issue notice u/s 148 for the A.Y. 2015-16 in consequence of judgment of Rajiv Bansal, wherein the department conceded in respect of A.Y. 2015-16 as the said A.Y. is not covered by TOLA. | 31.03.2022 |
| Date of notice issued u/s 148 | 30.06.2022 |
| If barred by limitation | YES |
Ld. Departmental Representative relied on impugned order.
From examination of record in light of aforesaid rival contention, it is crystal clear that for the assessment year 2015-16, notice u/s 148 of the Act dated 30.06.2022 has been issued. Hon’ble Supreme Court of India in case of Union of India vs. Rajeev Bansal in Civil Appeal No. 8629 of 2024 reported as 469 ITR 46 of 2024 (10) TMI 264 in para No. 19 reads as under:
“19.Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:
a. xxxx
b. xxxx
c. xxxx
d. xxxx
e. xxxx
f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1st April, 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA.”
In view of above well settled legal position, notice u/s 148 of the act dated 30.06.2022 being barred by limitation is set aside. Ground of Appeal No. 1 to 4 are accepted. Ground of Appeal No. 5 to 8 are left open.
In the result, the appeals filed by the assessee ITA No. 7471/Del/2026 is allowed.
ITA No. 7472/Del/2026, A.Y. 2016-17
Brief facts of the case are that the assessee filed return of income of Rs. 5,55,890/- on 31.03.2018. The reassessment proceedings u/s 147 of the Act were initiated as per procedural mentioned u/s 148A of the Act. Notice u/s 148 of the Act was served on assessee on 30.06.2022, notice u/s 148 of the Act dated 30.06.2022, notice u/s 142(1) of the Act dated 19.01.2023 were issued. The assessee filed ITR on 03.02.2023 u/s 148 of the Act. A notice u/s 143(2) of the Act dated 10.03.2023, notices u/s 142(1) of the Act dated 18.03.2023, 10.04.2023, show cause notice dated 17.05.2023 were issued. The assessee submitted replies. On completion of proceedings, Ld. AO vide order dated 29.05.2023 made addition of Rs. 52,46,161/-.
Against order dated 29.05.2023 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 13.05.2026.
Being aggrieved, the appellant/assessee preferred present on following grounds:
“1.On the facts and circumstances of the case, the order passed by the National Faceless Appeal Centre (NFAC) is bad, both in the eye of law and on the facts.
2.On the facts and circumstances of the case the re-assessment proceeding initiated by issue of notice u/s 148 is bad in law in the absence of sanction of the proper authority as prescribed under section 151 of the Act.
3.(i) On the facts and circumstances of the case, the NFAC has erred both on facts and in law in confirming the addition of Rs. 52,46,161/- made by the A.O. under section 28 of the Act, invoking the provisions of section 44AD of the Act.
(ii)That the addition was made being 8% of the sales made to PAN group, ignoring the fact that these sales have already been taken into account by the assessee.
(iii)That the abovesaid addition has been confirmed arbitrarily rejecting the explanation and documents provided by the assessee.
4.On the facts and circumstances of the case, the Id. NFAC has erred both on facts and in law in rejecting the contention of the assessee that the abovesaid addition on account of income from business was made without rejecting the books of accounts of the assessee.
5.The appellant craves leave to add, amend or alter any of the grounds of appeal.”
Ld. Authorized Representative for appellant/assessee submitted that approval u/s 151 of the Act is accorded by inappropriate Authority. In synopsis, it was submitted as under:
“The Assessment Year under consideration is AY 2016-17 Order u/s 148A(d) and notice u/s 148 was issued on 30.6.2022. The notice being issued beyond a period of 3 years, the approval should have been taken from PCCIT or CCIT, however, the approval has been taken from PCIT-15. Since the approval is accorded by an inappropriate authority, the notice u/s 148 becomes invalid and the consequent reassessment proceedings shall be quashed.
Case Laws relied upon:
-Union of India & Ors Vs. Rajeev Bansal, 2024 (10) TMI 264, SC
-Communist Party of India (Marxist) vs. CIT(Exmp), (2025) 174 Taxmann.com 925 (Delhi), Delhi HC
-Assotech moonshine Urban Developers Pvt. Ltd. Vs. Dy. CIT, ITA No. 3866/Del/2026, ITAT Delhi
-Jus Infratech Private Limited Vs. ACIT, ITA No. 8803/Del/2025, ITAT Delhi”
Ld. Departmental Representative relied on impugned order.
From examination of record in light of aforesaid rival contention, it is crystal clear that notice u/s 148 of the Act dated 30.06.2022 reads as under:
“This notice is being issued after obtaining the prior approval of the PCIT accorded on date 28.06.2022.”
Hon’ble Supreme Court of India in Rajeev Bansal in para 73 observed as under:
“Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under Section 148 The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments. A table representing the prescription under the old and new regime is set out below:
Therefore, the notice u/s 148 of the Act dated 30.06.2022 for A.Y. 2016-17 issued beyond a period of three years should have issued by with approval from Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General but was issued by the Principal Commissioner of Income Tax, which being invalid is set aside. Ground of Appeal No. 1 and 2 are accepted. Ground of Appeal No. 3 to 5 are left open.
In the result, the appeal filed by the assessee ITA No. 7472/Del/2026 is allowed.
In the result, both the appeals filed by the assessee are allowed.