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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi [‘CIT(A)’ in short] in Appeal No. CIT(A), Delhi-24/10086/2012-13 dated 09.10.2025 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) arising out of the assessment order dated 10.03.2022 passed u/s 147 r.w.s143(3) of the Act for Assessment Year 2013-14.
Brief facts of the case are that the assessee is a company engaged in the business of real estate. The return of income was filed on 16.09.2013 declaring total income at Rs.70,47,970/-. Thus, the case of the assessee was selected under CASS and after considering the submissions made by the assessee, vide order dt. 04.02.2016 income declared was accepted. Thereafter, a search and seizure action was carried out u/s 1321 of the Act in the case of Sanjay Singhal Group of cases on 15.11.2017. The assessee was also searched being part of the group and jurisdiction over the assessee was transferred to Central Circle. Thereafter, notice for the year under appeal was issued u/s 153A on 04.04.2019. In response the assessee filed the return of income on 24.04.2019 declaring same income as was declared in the return filed u/s 139(1) of the Act. The Assessing Officer passed the order wherein it is alleged that the assessee has taken accommodation entry of Rs.70,00,000/- from M/s Ujjawal Merchandise Pvt. Ltd. and, accordingly total income was assessed at Rs.70,47,970/-.
Against the said order, the assessee filed the appeal before the Ld. CIT(A) who vide order dated 22.06.2020 allowed the appeal of the assessee by placing reliance on the judgments of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in (2016) 380 ITR 573 (Delhi) by holding that no incriminating material was found as a result of search and thus no addition could be made for the alleged accommodation entry in the order passed u/s 153A of the Act. Thereafter the AO initiated the proceedings u/s 147 of the Act after recording the reason and the approval was taken from the competent authority, wherein it is alleged that the loan of Rs.70,00,000/- taken from M/s Ujjawal Merchandise Pvt. Ltd. is an accommodation entry and remained unexplained as the assessee has not proved the creditworthiness. The AO further observed that case of the assessee was reopened after period of four years as the assessee has failed to disclose truly and fully all material facts necessary for the assessment and issued the notice u/s 148 of the Act on 31.03.2021. After considering the submission filed by the assessee, reassessment order was passed u/s 147 r.w.s. 143(3) by making addition of Rs.70,00,000/- u/s 68 of the Act.
Against the said order, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee.
Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking following grounds of appeal.
“1.On the facts and circumstances of the case and in law, the notice u/s 148 issued 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 not holding so.
2.On the facts and circumstances of the case and in law, the assessment proceedings initiated are contrary provisions of law including specific provisions of Section 147 to 151A of the Act and CIT(A) erred in not holding to SO.
3.On the facts and circumstances of the case and in law, the order passed by the learned assessing officer and the addition made therein is bad-in-law and CIT(A) erred in not holding so.
4.On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 70,00,000/-made by the Ld. Assessing Officer on account of alleged unexplained credit u/s 68 of the Act and CIT(A) erred in not holding so.
5.On the facts and circumstances of the case and in law, the addition of Rs. 70,00,000/- made by the Ld. Assessing Officer on account of alleged unexplained credit u/s 68 of the Act is beyond the scope of provisions of section 148/147 of the Act and CIT(A) erred in not holding so.”
Grounds of appeal No.1 to 2 are with respect to the initiation of reassessment proceedings u/s 147 of the Act.
Before us, the Ld. AR for the assessee submits that the notice u/s 148 was though issued on 31.03.2021, however, the said notice was served upon the assessee on 1st April, 2021. For this, the assessee has filed the copy of screen shot of e-filling portal of the assessee wherein it is appearing that notice u/s 148 was issued on 1st April, 2021 and the same was served upon on 31.03.2021. Ld. AR submits that it is not possible that the notice issued on 1st April, 2021 could be served on 31.03.2021. He thus submits that the notice u/s 148 of the Act was in fact issued in 31.03.2021 and served upon the assessee through e-filing portal on 01.04.2021 and was never served upon the assessee up to 31.03.2021, therefore, as per the judgment of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal reported in 445 ITR 05, The said notice should be treated as the deemed notice u/s 148A(b) of the Act and proceedings u/s 148A should have been completed before the issue of notice u/s 148 which has not been done in the instant case. Ld. AR therefore, submits that the entire reassessment proceedings concluded are invalid and the consequent reassessment order passed be quashed.
The Ld. AR further submits that in the instant case as per the reason recorded, it is clear that the proceedings were initiated by recording the satisfaction of escapement of income to the extent of Rs.70,00,000/- being loan taken from M/s Ujjawal Merchandise Pvt. Ltd., as unexplained. The Ld. AR submits that in the instant case issue, assessment has also been completed u/s 143(3) wherein assessee has filed all the details with respect to the unsecured loans taken and after considering the same, returned income was accepted. He further submits that the as a result of search assessment order u/s 153A was passed on 30.12.2019 wherein addition u/s 68 of the Act for the loan taken from M/s Ujjawal Merchandise Pvt. Ltd. was made. He submits that all the evidence and information pertaining to the loan taken such as confirmation, bank statements etc. were filed during original assessment proceedings and further in the proceedings concluded u/s 153A of the Act. The Ld. AR submits that though the addition was made in the order passed u/s 153A however, the same was deleted by placing reliance on the judgment of the Hon’ble Delhi High Court in the case of Kabul Chawala (supra) by holding that that said addition was not based on the incriminating material, however, the fact remained that the assessee has filed fully and truly all the material necessary for the assessment and, therefore, it could not be said that the assessee has failed to furnish any evidence. This fact is accepted by the AO in the reasons recorded wherein the sole basis for reopening was that the order passed u/s 153A wherein the addition was made was quashed because no incriminating material was found pertaining to eh impugned year. Ld. AR submits that once the AO has admitted that all the facts were duly disclosed and necessary material was filed during the assessment proceedings completed u/s 143(3) of the Act, proceedings initiated u/s 147 of the Act is mere change of opinion and thus deserves to be quashed. For this reliance is placed on the judgement of Hon’ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. Reported in (2010) 187 TAXMANN 312 (SC) and of the Hon’ble Delhi High Court in the case of Global Signal Cables (India) Ltd. Pvt. Ltd. Vs DCIT reported in (2014) 368 ITR 609 (Delhi).
On the other hand, the Ld. SR. DR vehemently supported the orders of lower authorities and submits that though the addition made in the order passed u/s 153A of the Act was deleted however, it was deleted for the reason that no incriminating material was found/seized as a result of search indicating the loan taken from M/s Ujjawal Merchandise Pvt. Ltd. as unexplained credit. He further submits that fact remain that the assessee has failed to prove the creditworthiness of the said loan. The Ld. Sr. DR further submits that Hon’ble Supreme Court in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxman.com 399 (SC) while confirming the order of the Hon’ble Delhi High Court in the case of Kabul Chawla (supra) has held that though no addition could be made in absence of any incriminating material, however liberty was granted to the Revenue to take necessary remedial action in the respective cases. He, therefore, submits that the AO has rightly initiated the proceedings u/s 147 of the Act and requested for the confirmation of the same.
Heard both the parties and perused the materials available on record. It is true that in the instant case the reason for which the proceedings u/s 148 were initiated is the loan taken from M/s Ujjawal Merchandise Pvt. Ltd. Rs.70,00,000/- for which the AO had concluded in the order passed u/s 153A dated 30.12.2019 that assessee has failed to establish the creditworthiness of the lander company. The said addition was deleted by the Ld. CIT(A) by placing reliance on the judgment of the Hon’ble Delhi High Court in the case of Kabul Chawla (supra), however, as relied upon by Ld. Sr. DR in the case of Abhisar Buildwell (supra), the Hon’ble Supreme Court has granted the liberty to the Revenue to take remedial action where ever possible in accordance with law for those assessment years where such additions made dehors the incriminating material should be considered in the reassessment proceedings, and thus it cannot be said that issue has already been considered in the proceedings u/s 153A, therefore, the same cannot be reconsidered at this stage now. Thus, this plea of the assessee cannot be accepted.
However, it is observed that in the instant case assessment was already completed u/s 143(3) of the Act vide order dated 04.02.2010 wherein during the course of original assessment proceedings, assessee has filed all the details with respect to the loans taken including loan taken from M/s Ujjawal Merchandise Pvt. Ltd. alleged as unexplained and has filed its, confirmation, bank statements and balance sheet. It is also a matter of fact that the AO has examined such details and, thereafter accepted the returned income declared. There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. Not only material facts were disclosed by the assessee but also they were fully scrutinized by the AO in the original assessment proceedings and figure of income was worked out by the AO. Now on the same material AO has tried to cover up the error and omission by way of reopening the assessment without any fresh material which is nothing but mere change of opinion. No new information and/ or tangible material was found and the formation of any opinion based on same facts which were then available with the AO at the time of original assessment is not permissible. The Hon’ble Apex Court in the case of CIT Vs. Kelvinator of India Ltd (supra) has laid down that “ the assessing officer has no power to review; he has the power to re-assess, but re-assessment has to be based on fulfilment of certain pre -condition and if the concept of ‘change of opinion’ is removed, then, in the garb of re-opening the assessment, the review would take place. One must treat the concept of ‘Change of opinion’ as an in-built test to check abuse of power by the assessing officer.”
Once this evidence has already been available on record and one of the plausible views was taken, therefore, revisiting the same facts is nothing but mere change of opinion. Therefore, the reassessment proceedings initiated based on same material which was available before the AO as a result of assessment proceedings conducted u/s 143(3) is mere change of opinion and an attempt to unsettle the issue which has already been settled. Under these circumstances, by respectfully following the judgement of hon’ble apex court in the case of Kelvinator of India Ltd. (supra) we are of the considered opinion that the reopening in the instant case is not based on fresh material and is mere change of opinion. Accordingly, the notice issued u/s 148 is hereby quashed.
It is further observed that the notice u/s 148 was dated 31.03.2021, but as per the copy of screen shot of e-filling portal placed before us at page 2 of the PB the same was served upon the assessee on 01.04.2021 which is reproduced below:-
It is observed as per the above, the notice u/s 148 was issued on 01.04.2021 and was served on 31.03.2021. We are unable to understand as to how notice issued on 01.04.2021 could be served on the assessee on 31.03.2021. It appears that the notice u/s 148 was served upon the assessee on 1st April, 2021. The Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), has held that the notice issued u/s 148 on or after 01.04.2021 should be treated as the deemed notice u/s 148A(b) of the Act and, thereafter, the information available with the AO should be supplied to the assessee and after receiving the reply from the assessee, the order u/s 148A(d) should be passed and notice u/s 148 could be issued to the assessee. The Hon’ble Supreme Court in the case of Rajiv Bansal vs. Union of India reported in [2024] 469 ITR 46 (SC) has held as under:
“19.Mr. N. Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:
a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act;
b. Section 149 of the new regime provides three crucial be nefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re-assessment for previous assessment years;
c. The relaxations provided under Section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act;
d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime;
e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act, Including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:
Assessment year (1) Within 3 Years (2) Expiry of Limitation read with TOLA for (2) (3) Within six Years (4) Expiry of Limitation read with TOLA for (4) (5) 2013-2014 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-2015 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-2016 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;
g. Section 2 of TOLA defines "specified Act" to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and
h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).
The Hon’ble Jurisdictional High Court in the case of Suman Jeet Agarwal and Ors. vs. ITO & Ors. reported in [2022] 449 ITR 517 (Del.) in para 31 of the order has made following observations:
“31.For the reason and principles that we have laid down, we dispose of these Writ Petitions with the following directions.
31.1Category ‘A’,: The Notices falling under category 'A', which were digitally signed on or after 14 of Apr, 2021 are held is bear the date on which Notices were digitally signed and not 31st March 2021. The said petitions are disposed of with the direction that the said Notices are to be considered as show cause-notices under Section 148A (h) of the Act as per the directions of the apes Court in the Ashish Agarwal (Supra) judgment.
31.2Category ‘B’,: The Notices falling under category ‘B' which were sent through the registered e-mal ID of the respective JAOs. Though not digitally singed are held to be valid. The said petitions are disposed of with the direction to the JAOs to verify and determine the date and time of is despatch as recorded in the ITBA portal in acceptance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after of 2021 the Notices are to be considered as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
31.3.Category ‘C’: The petitions challenging Notices falling under category. C' which were digitally signed on 31st of March 2021 to the JAOs to verify and determine the date and time of despatch as recorded in the ITIBA portal in accordance with the law laid down in the of issuance. If the date and time of despatch recorded is on or before 1st of April, 2021, the Notices are in be considered as show cause notes under Section 1464 (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
31.4.Category ‘D’: The petitions challenging Notices falling under category D' which were only uploaded in the E-filing portal of the assesses without any re alert, are disposed of with the direction to the JAOs to determine the date and time when the assessees viewed the Notices in the E-f-ling portal, as recorded in the ITBA portal and conclude such date as the date of issuance in accordance with the law laid down in this judgment. If such date of issuance is determined to be on or after 1st of April 2021, the Notices will be construed as issued under Section 1484 (b) of the Act of 1961 as per the Ashish Agarwal (Supra) judgment.
31.5Category ’E’: The petitions challenging Notices falling under category which manually despatched. disposed of with the direction to the JAD determine in accordance with the law laid down in this judgment, the date and time when the Notices were delivered to the post office for despatch and consider the date and time of despatch recorded is on or after. 1st of April, 2021, the Notices are to be construed as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
31.6.Notices sent to unrelated e-mail addresses. The petitions challenging Notices which were sent to unrelated e-mail addresses are disposed of with the direction the JAOs to venrify the date on which the Notice was first viewed by the assessee on the E-filing portal and consider the same as the date of issuance. If such date of Issuance is determined to be on or after 01st April, 2021, the Notices will be construed issued under Section 148A (b) of the Act of 1981 as per judgment in Ashish Agarwal (Supra)
31.7.We may note that in the writ petitions, the petitioners have raised additional defenses to challenge the impugned Notices. Such additional defenses have not been considered by this Court and the petitioners shall be at liberty to raise all such additional defenses as available in law
31.8.We are conscious that the time granted by the Supreme Court in Ashish Agarwal to the Department has since expired on 3rd June, 2022 however, the proceedings in the present writ petitions were stayed on 24th March, 2022 until the pronouncement of this judgment. Therefore, we grant the JACs in the instance eight (8) weeks time from today to determine the date of issuance of the Notices as per the law laid down in this judgment.
31.9.The Notices which in accordance with the law laid down in this judgment has been verified by the JAOs to have been issued on or after 01st April 2021 and until 30th June, 2021 shall be deemed to have been issued under Section 148A of the Act of 1961 as substituted by the Finance Art, 2021 and construed to be show-cause notices in terms of Section 148A(b) as per the judgment of the apex Court in Ashish Agarwal (Supra) and the JAOs shall thereafter follow the procedure set down by the Supreme Court in the said judgment which reads as follows:
“26 view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in WT. No. 624/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:-
(1)The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which the subject matter of wit petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show cause notices in terms of section 148A(b) The assessing officer that within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the show-cause notices within two weeks thereafter;
(ii)The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed wit as a one-time measure vis-à-vis those notices which have been issued under section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officer to hold any enquiry, if required.
(iii)The assessing officer shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assesseess; Thereafter, after following the procedure required under section 148A may issue notice under section 148 (as substituted);
(iv)All defences which may be available to the assesses including those available under section 149 of the IT Act and all nights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.”
Similar view is expressed by the Hon’ble jurisdictional High Court in the case of Makemytrip India Private Limited reported in [2025] 4 TMI 46 (Delhi).
In the light of above facts, in our considered opinion, in the instant case, the order passed u/s 147 of the Act based on the notice dated 31.03.2021 issued u/s 148 which was served upon the assessee on 1st April, 2021 is bad in law as the same was issued without following the due procedure as provided under the amendment section 148A of the Act and thus the consequent reassessment order passed is hereby quashed. The grounds of appeal No. 1 & 2 taken by the assessee are allowed.
Since, we have already allowed the legal issue raised in Grounds of appeal No. 1 & 2, the other grounds taken on merits are not adjudicated.
In the result, the appeal of the assessee is allowed.