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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals) – 30, New Delhi [‘CIT(A)’ in short] dated 26.09.2025 arising from the assessment order dated 31.03.2025, passed by the Assistant Commissioner of Income Tax, Central Circle – 32, Delhi under Section 147 of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2018-19.
The grounds raised by the assessee are as under :
1.“That Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the reopening of assessment which was also reopened earlier on the similar information without bringing on record any further material and evidence on record against the information, material and evidences on the basis of which case was reopened and assessment was completed without any adverse inference and thus reopening of assessment for change of opinion under the new regime is also bad in law and liable to be quashed.
2.That Id CIT(A) without appreciating the correct facts of the case and by ignoring the binding decision of Jurisdictional Delhi High Court in case of Rasalika Trading & Investment Co. (P.) Ltd v. Deputy Commissioner of Income Tax [2014] 43 taxmann.com 371 (Delhi) is not justified in law and facts and circumstances of the case in confirming the reopening of assessment on the basis of information which was very well available with the Assessing Officer before passing the original assessment order.
3.That Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the notice issued u/s 148 in view of explanation 2(1) and (iv) without bringing on record copy of panchnama and its annexure wherein alleged documents relating to assessee was found and seized and or any evidence of requisition made, and thus depriving the assessee form it's legal right to object the proceedings in view of provision of section 148A(b) r.w.s 148A(c) of the Income Tax Act, thus notice so issued u/s 148 in view of explanation 2 or section 148 is bad in law and liable to be quashed.
4.Without prejudice to ground of appeal no. 1 to 3That Id CIT (A) without appreciating the correct facts of the case and without giving proper opportunity of being heard is not justified in law and facts and circumstances of the case in confirming the proceedings initiated u/s 148 which suffers from other various legal infirmities Accordingly order so passed is bad in law and should be quashed.
5.That without prejudice to ground of appeal no. 1 to 4, Id CIT(A) without appreciating the correct facts of the case and without giving proper opportunity of being heard and ignoring the submissions and evidences filed during the course of hearing is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 9500000/- under section 68 of the Income Tax Act only on suspicious ground and without bringing and adverse material and evidence on record against the appellant assessee company only on the basis of irrelevant information received from Investigation Unit
6.That, without prejudice to ground of appeal no. 1 to 4, Id CIT(A) is not justified in law and facts and circumstances of the case in confirming the addition of Rs, 285000/- u/s 69C of the Income Tax Act.
7.That, without prejudice to ground of appeal no. 1 to 4, Id CIT(A) without appreciating the correct facts of the case and without giving proper opportunity of being heard is not justified in law and facts circumstances of the case in confirming the disallowance of interest of Rs. 323186/- u/s 36(1) (iii) of the Incom4 Tax Act which was paid by appellant assessee company on borrowed fund.
8.Appellant has every right to make, add, delete, modify or alter any grounds of appeal at the time of hearing.”
Brief facts of the case are that the assessee-company electronically filed its return of income of Rs.1,70,37,730/- on 17.06.2022 under section 139(1) of the Act. On the basis of search under section 132 of the Act conducted on 17.11.2021 on Galaxy Group, wherein seized documents showed that the assessee is the beneficiary of accommodation entry to the tune of Rs.95,00,000/-from entities controlled by entry operator Deepak Agarwal and Himanshu Verma. A notice under section 148 of the Act was issued to the assessee to file its return of income under section 148 of the Act. In compliance with, the assessee filed its return of income declaring an income of Rs.1,70,37,730/-.
The AO found that the assessee had received loan of Rs 95,00,000/- from M/s Sirsa Deposits and Advances Ltd, an entity controlled by Deepak Agarwal/Himanshu Verma in FY 2017-18. As the identity, genuineness and creditworthiness was not proved, the AO made an addition of Rs 95,00,000/- u/s 68 of the Act as also the interest paid on such loan of Rs 3,23,186/- as well as 3% commission on such loan amounting to Rs 2,85,000/-. On appeal, the CIT(A) confirmed the addition. Aggrieved the assessee is before us.
The ld counsel of the assessee vehemently argued that the reopening is not valid as the reopening of assessment is on account of change of opinion under the new regime. The ld AR relied on the decision of Jurisdictional Delhi High Court in case of Rasalika Trading & Investment Co. (P.) Ltd v. Deputy Commissioner of Income Tax [2014] 43 taxmann.com 371 (Delhi). The ld AR submitted that the Id CIT(A) confirmed the notice issued u/s 148 in view of explanation 2(1) and (iv) without bringing on record copy of panchnama and its annexure wherein alleged documents relating to assessee was found and seized and or any evidence of requisition made, and thus depriving the assessee form it's legal right to object the proceedings in view of provision of section 148A(b) r.w.s 148A(c) of the Income Tax Act.
On merits, the ld AR submitted that the Id CIT(A) confirmed the addition of Rs. 9500000/- under section 68 of the Income Tax Act only on suspicious ground and without bringing and adverse material and evidence on record against the appellant assessee company only on the basis of irrelevant information received from Investigation Unit. Similarly, with the addition of Rs, 285000/- u/s 69C of the Income Tax Act and the disallowance of interest of Rs. 323186/- u/s 36(1) (iii) of the Income Tax Act which was paid by assessee company on borrowed fund.
Per contra the ld DR strongly relied on the orders of the AO and the CIT(A).
We have heard the rival submissions and have perused the materials on record. In order to adjudicate the issues, it is prudent to discuss the history of the case. We find that the assessee, Ravi Kishore Enterprises Private Limited, filed the regular return of income for A.Y, 2018-19 u/s 139(1) of the I.T. Act declaring total income of Rs. 1,70,37,730/- which was scrutinised u/s 143(3) of the Income Tax Act, by NeFAC vide order dated 19/01/2021, accepting the returned income of the assessee.
Thereafter, the assessee was subjected to reassessment proceedings vide notice u/s 148 dated 29.03.2022, on the basis of information from DDIT/ADIT (Inv) 5(1), Delhi that the assessee was a beneficiary of accommodation entry amounting to Rs. 39,89,956/-from M/s Sirsa Deposit and Advance Private Ltd., a bogus NBFC company managed by Himanshu Verma. In the reassessment proceedings, after examination of the information from the Investigation Wing, the various documents/evidence submitted by the assessee, the Assessment Unit, Income Tax Department (NeFAC) accepted that the loan received of Rs 95,00,000/- received from M/s Sirsa Deposit and Advance Private Ltd, is genuine and duly explained vide order u/s 147/144B dated 23.03.2023.
Thereafter, the assessee was again subjected to another reassessment proceedings on the basis of search dated 17.11.2021 under section 132 of the Act conducted on Galaxy Group, wherein seized documents showed that the assessee is the beneficiary of accommodation entry to the tune of Rs.95,00,000/- from entities controlled by entry operator Deepak Agarwal and Himanshu Verma. We find that the AO considered this information as sacrosanct and without making any of his own enquiry/investigation and collecting corroborative evidences, added the same u/s 68 of the Act as unexplained cash credit.
We find that the CIT(A) upheld the reopening proceedings holding that the AO, in the second reassessment proceedings had “fresh tangible information emanating from search proceedings of Galaxy Group”. The CIT(A) held that the second reassessment proceedings were valid as it commenced after obtaining specific and complete details of the modus operandi of the accommodation entry operation run by Sh. Himanshu Verma and Sh. Deepak Agarwal. Their statements, recorded under oath, are on record wherein they have admitted to providing accommodation entries through conduit paper companies, supported by comprehensive Tally data and other evidence from searches conducted on the Galaxy Group on 17.11.2021.
On carefully perusing the materials and history of the instant case, we find that there is no new or fresh materials available with the AO. The Investigation Wing, in the search dated 17.11.2021 on Galaxy Group and Himanshu Verma and Deepak Agarwal, had forwarded the same information to the AO which was available to the AO in the first reassessment proceedings. The AO had in his possession the modus operandi, statement on oath of the entry operator Himanshu Verma and the transaction details of M/s Sirsa Deposit and Advance Private Ltd with the assessee. We are therefore of the considered view that there is no fresh tangible material available with the AO nor the AO has made any effort to apply his own mind or gather any corroborative evidence to substantiate the information. In such factual matrix, the decision of Jurisdictional Delhi High Court in case of Rasalika Trading & Investment Co. (P.) Ltd v. DCIT (supra) is squarely applicable which held that the reopening of assessment on the basis of information which was very well available with the Assessing Officer before passing the original assessment order, is not valid.
At this juncture, we may also point out that the first reassessment proceedings u/s 147 were completed on 23.03.2023, much after the search on Galaxy group took place on 17.11.2021. It is also interesting to note that during the pendency of the first reassessment proceedings, the Revenue had initiated the second reassessment proceedings by issuing order u/s 148A(d) and notice u/s 148 dated 29.03.2022. This fact in itself would render the second reassessment proceedings unsustainable in the eyes of law. Be that as it may, we are of the considered view that in the instant case, on the basis of reasoning recorded herein above, the impugned reopening u/s 148 is not valid and sustainable in the eyes of law. We accordingly quash the notice u/s 148 as void ab initio and the consequent reassessment order dated 31.03.2025 is also quashed. The ground 1 is allowed.
As the appeal is allowed on legal ground, no adjudication is made on merits.
In the result, appeal of the assessee in ITA 7145/Del/2025 is allowed.