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Judgment
PER VIKAS AWASTHY, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 19.12.2025, for Assessment Year 2019-20.
Shri Nitin Kanwar, appearing on behalf of the assessee submits that the assessee is engaged in the business of manufacturing of rikshaw body under the proprietorship concern M/s. Miglani Rikshaw Body Maker. The assessment in the case of assessee for AY 2019-20 was reopened on the basis of search conducted in the case of M/s. Gurdip Cycle Industries on 21.10.2021. The Id. Counsel referred to notice issued u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 31/03/2023 (at page 76 of the paper book) to contend that the notice is vague and ambiguous. He pointed that from perusal of notice it is not clear as to whether the notice is issued to the other person or a searched person. Such vague and ambiguous notice demonstrate non application of mind by the Assessing Officer (AO) and thus, very assumption of jurisdiction on the basis of vague notice is bad in law.
On merits of the addition, the ld. Counsel submits that the AO has invoked Explanation 2 to section 148 of the Act, the said provision cannot be invoked in the absence any incriminating material against the assessee. A perusal of the assessment order would show that while making addition of Rs.2,94,745/- u/s.69C of the Act, the AO has not referred to any incriminating material relating to assessee. The purchases made by assessee from M/s. Gurdip Cycle Industries is duly recorded, supported by invoices, paid through banking channels and also confirmed by the said party in response to notice u/s.133(6) of the Act. The ld. Counsel submits that the CIT(A) without appreciating submissions of the assessee on the legal issue as well as on merits has dismissed appeal of the assessee in a summary manner. The impugned order suffers from non-application of mind and failure to exercise jurisdiction vested in it. The ld. Counsel thus prayed for quashing reopening of assessment.
The ld. Counsel further contended that the Division Bench of Tribunal in the case of Gurdip Cycle Industries in ITA No.705/CHD/2023 decided on 23.07.2024 has held that it is not a case of under invoicing. The sale reason to make addition in the hands of assessee is purchases made by assessee is under invoiced. Once addition based on under invoicing in the case of seller is not sustained by the Tribunal, the said addition would not be sustainable in hands of purchaser.
Per contra, Shri Manoj Kumar, representing the department vehemently supported the impugned order and prayed for dismissing appeal of the assessee.
Both sides heard, orders of the lower authorities examined. The assessee has inter alia assailed validity of reopening of assessment on the ground of ambiguous/vague notice u/s.148 of the Act. Before proceeding further, it would be imperative to examine the notice issued u/s.148 of the Act by the Assessing Officer. The relevant extract of notice issued u/s.148 of the Act dated 31.03.2023 is reproduced herein under:-
A bare perusal of the notice reveals that the AO has issued notice u/s.148 of the Act to the assessee without clearly indicating whether the assessee is a searched person or the assessee is a person other than searched person. Further, the notice is ambiguous in stating that the books of accounts and documents seized u/s.132 of the Act in case of M/s. Gurdip Cycle Industries pertains to the searched person or the other person. The manner in which notice u/s.148 of the Act has been issued clearly shows non application of mind and issuance of notice in a mechanical manner. The said notice has been stated to be issued with the prior approval of PCIT, Rohtak. Even, the approving authority has not bothered to look at the content of the notice forwarded for approval. The approving authority in a mechanical and causal manner, as a formality granted the approval. Since, the notice is vague and ambiguous, the same is invalid. Any proceedings arising from invalid notice are vitiated, hence, liable to be quashed.
Thus, in light of above findings, the notice u/s.148 of the Act dated 31.03.2023 is held to be invalid, as a sequitur the assessment proceedings arising therefrom are liable to be quashed. I, hold accordingly.
In the result, appeal of the assessee is allowed.