TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 775
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....16,89,353/- made by the AO as unexplained credit in the books of the assessee u/s 68 of the I. T. Act, 1961?" 3. Any other ground which may be adduced at the time of hearing. 3. The brief facts of the case are that, the assessee has filed its Return of Income for the AY 2016-17 on 05.10.2016, declaring total income at Rs. 10,01,510/ -. Subsequently, survey proceedings have been conducted on the premises of few other assessee's, namely M/s Abhishek Enterprise, Pratyush Steels etc, wherein statement of Shri Abhishek Agrawal (Proprietor of M/s Pratyush Steels) and Shri Gitesh Agrawal (Prop. M/s Abhishek Enterprises) were recorded on 24.01.2019, both these persons have admitted that they are in business of providing bogus bills without physically delivered of goods. Accordingly, it was concluded that these entities were involved in providing of bogus accommodation entries to their clients on commission. Reportedly, the assessee company has made bogus sales to M/s Pratyush Steel and Abhishek Enterprises to the tune of Rs. 76,14,323/- and Rs. 77,41,242/-, respectively. Therefore, reopening assessment on the basis of aforesaid information was initiated against the assessee....
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....6/- on account of unexplained credits u/s 68 of the Income Tax Act. The appellant has submitted that the provision of section 68 of the Act will not apply to facts of the case since all the transactions have been duly recorded in the books of the accounts. The appellant has also relied on various case laws to substantiate his contentions. The Ld. AO in his order as stated that the appellant has made bogus sales to M/s Pratyush Steels and M/s Abhishek Enterprises to the tune of Rs. 76,14,323/- and Rs. 77,41,242/- respectively. The same was based on survey conducted on these two entities wherein it was admitted that they were business of providing bogus bills without physical delivery of goods, The Ld. AO being not satisfied with reply of the appellant made the said addition of Rs. 1,47,64,966/- u/s 68 of the Act. During the assessment and appellate proceedings, the appellant has furnished his financial statements, VAT returns, copy of ledger of M/S Abhishek Enterprises and M/S Pratyush Steels, confirmation from buyers, copy of invoices with details of vehicles. It can be seen that the VAT has been duly paid and has been debited as an expense P&L account TDS has als....
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....t discharged is onus of disproving the transactions between the M/S Pratyush Steels and M/S Abhishek Enterprises as a sham arrangement from the documentary evidence at hand. The entire case of the Ld. A.O. rests on the information received from the Investigation Wing without any inquiries. Hence, the addition made by the AO cannot be sustained. Further, the Ld. AO although made the impugned addition on bogus purchases, no comments have been made on the nature of sales made by the appellant. Neither has the AO rejected the books of the accounts of the appellant nor has he recast the trading results based on gross profit. The additions cannot be sustained on these grounds as well. In view of the above addition of Rs. l,47,64,966/- made u/s 68 by the Ld. AO is hereby deleted. The ground no. 2 is allowed. Ground no.3 :- pertains to addition of agricultural income of Rs. 16,89,353/- as unexplained credits u/s 68 of the Act. The appellant has put forth the argument that the basis of findings of the Ld. AO are incorrect and contrary to the material and facts on record. During the course of assessment proceedings, the Ld. AO observed that the assessee ha....
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....sions of the appellant, the seed of any fruit, vegetable or other agricultural produce is much costlier than the crop. The Ld. AO has not got the rates of maize seeds correct. Further, the accounts of the appellant are audited and the auditor has not found any discrepancy in respect of agriculture income. In view of the above discussion, the addition made by the AO is not sustainable and the same is being directed to be deleted. The ground no.3 is allowed. 6. Aggrieved with aforesaid decision of the Ld. CIT(A), wherein the additions made by the Ld. AO are entirely deleted, the revenue have carried the matter by way of filing an appeal before this tribunal, which is under consideration in the present case. 7. At the outset, it is noticed that an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 has been filed by the assessee, raising certain legal grounds, stating that the same goes to the root of the matter, placing reliance on certain judgments of the Hon'ble High Courts and Hon'ble Apex Courts. The application u/r 27 filed before us on 6th June 2024, is culled out as under: Before the Hon'ble Income Tax Appellate Tribunal, ....
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....al contention that the mandatory approval in the present case u/s 151 of the Act, was granted by the Principal Commissioner of Income Tax-1, Raipur (Pr. CIT-1), whereas, he was not the specified authority under the prescribed provisions of section 151 of the Act. To substantiate the contention so raised, Ld. AR further submitted that the reopening assessment in the present case was initiated after 3 years from the end of the relevant assessment year and the present case is covered by the amended provisions brought into the statute by Finance Act, 2021, accordingly, the specified authority for present case happened to be the Ld. Chief Commissioner of Income Tax and other authorities specified in the Act, but not the Ld. Pr. CIT, who eventually had granted approval u/s 151 in the present case. To substantiate about this factual aspect, Ld. AR drew our attention to page no. 1 & 2 of Assessee's Paper Book (APB) comprising of notice u/s 148 dated 27.07.2022, the same is extracted as under: 9. Based on aforesaid document, Ld. AR argued that as per para 3 of the aforesaid notice u/s 148 dated 27.07.2022, an approval was granted by Pr. CIT on 22.07.2024, vide reference no. F. No .: ....
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....ded the time limit for issuing reassessment notices under section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from J April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury' Borough Council [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."] Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income-tax Act read....
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....decision under section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on I May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between I May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of th....
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....March 2020 and 31 March 2021, then the specified authority under section 151(2) has extended time till 31 March 2021 to grant approval; f) The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period I April 2021 and 30 June 2021; g) The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h) The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with 'TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside; 12. Based on aforesaid submission, Ld. AR submitted that since the order u/s 148A(d) along with notice u/s 148 was issued to the assessee dated 02.07.....
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.... the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of section 151(ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from Pr.CIT as stated in the notice under section 148 itself. Therefore we see merit in the contention of the assessee that the notice under section 148 for AY 2016-17 is issued without obtaining the prior approval from the appropriate authority. Accordingly, we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed. (ii) Manoj Rajput vs DCIT-1(1) in ITA No. 360/RPR/2023, vide order dated 22.10.2024. 15. We, thus, in terms of our aforesaid observation concur with the Ld. AR that in the present case before us for A.Y.2017-18, wherein notice u/s. 148 of the Act was issued on 30.06.2022, i.e. beyond a period of three years from the end of the assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities specified u/s. ....
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..... The following extracts would be relevant: - 9.The record clearly indicates that the sanction in the present case was issued by the Principal Commissioner which can only be in respect of cases if three years or less than three years have elapsed from the end of the relevant assessment year, as would fall under the provisions of clause (i) of Section 151 of the Act. As in the present case the assessment year in question is 20 16-17 and the impugned notice itself has been issued on 30 July. 2022, it is issued after a period more than 3 years having elapsed from the end of the said assessment year. hence, clause (ii) of Section 151 of the Act was applicable, which required the sanction to be issued by either Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General. Chief Commissioner or Director General for issuance of notice under Section 148 of the Act. 10. As rightly pointed out at the bar, such issue fell for consideration of the Division Bench of this Court in Siemens Financial Services Pvt. Ltd. (supra), wherein the Division Bench considered the provisions of Section 151 of the A....
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.....2024, (Bom HC). 8. On a plain reading of Section 148A it is clear that the Assessing officer before issuing any notice under section 148 is required to follow the procedure as set out in clauses (a) to (d) of Section 148A. One of the pre-conditions as ordained by clause (d) of Section 148A is that an order under such provision can be passed by the Assessing Officer only with the approval of "Specified Authority". Thus, necessarily when clause (d) of Section 148A provides for prior approval specified authority, it relates to the provisions of Section 151 of the Act providing for 'Specified authority for the purposes of Section 148 and Section 148A of the Act'. In the present case, Section 151 as amended by the Finance Act, 2021 and Section 148A as also introduced by Finance Act, 2021 have become applicable, as although the assessment year in question is 2016-17 in respect of which the assessment is sought to be reopened by issuance of notice under section 148, which is dated 30 July, 2()22. Such amended provision would squarely become applicable the date of notice under section 148 itself being 30 July, 2()22. 9. The record clearly indicates that the sanct....
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....s) Act, 2020 (for short, 'TOLA') was concerned, the Court held that such notification was a subordinate legislation and it could not override the statute enacted by the Parliarnent and in that regard, the position in law was discussed by the Division Bench in paragraph 27 of the said decision. 12. In the present ease, it is not in dispute that an appropriate sanction of the specified authority as per the provisions of Section 151(ii) of the Act was not obtained and {Or such reason, certainly, as held by this Court in Siemens Financial Services Pvt. Ltd. (supra), the impugned notices would be rendered bad and illegal. The petition accordingly needs to succeed on such ground of the Court requiring to delve on such issues of challenge as raised by the petitioner as also prior procedure adopted in that regard. 14. On this issue, Ld. Sr. DR, Dr. Priyanka Patel, placed her reliance on the orders of revenue authorities. She further referred to the report submitted by the concerned Assessing Officer dated 24.05.2023 along with copy of CBDT Circular dated 28.02.2023, extending clarifications on the issues of jurisdiction and approval u/s 151, the report so submitted by t....
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....se of UOI and other Vs Shri Ashish Agrawal & others was given by the Hon'ble Supreme Court on 04.05.2022. In compliance of the said verdict of the Apex Court, the information/material available on record which suggested for income escaping assessment within the meaning of the provisions of section 147 of the Act were provided to the assessee on 24.05.2022 seeking reply as to why order u/s 148A(d) of the Act should not be passed in the case of the assessee. In response, the assessee filed its reply and after considering the reply of the assessee and making a detail discussion, the order u/s 148A(d) of the Act was passed on 26.07.2022 and notice u/s 148 of the Act was issued on 27.07.2022 with the prior approval of the specified authority i.e. Pr. CIT-1, Raipur. As in the case of the assessee, the order u/s 148A(d) was passed after the direction issued by the Hon'ble Apex Court and the proceeding for reopening of the case of the assessee was initiated well within the time as allowed as per the Act, therefore, the Specified Authority to grant approval u/s 148A(d) is the Pr. CIT-1, Raipur. In view of the said facts, the contention of the assessee that approval granted ....
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.... The aforesaid OM has been relied upon by the Hon'ble High Court of Calcutta while disposing of writ petition WPO/1549/2023 in the case of Sanghi Steel Udyog Private Ltd Vs Union of India and Ors in its order dated 13th September, 2023 [TS-5831- HC-2023(CALCUTTA)-O]. The Hon'ble Court has dismissed the writ petition filed by the petitioner challenging the issue of notice u/s 148 of the Act by the jurisdictional Assessing Officer and not by the National Faceless Assessment Centre as required by section 151A of the Act. The Hon'ble Court has upheld that the jurisdictional Assessing Officer retains the jurisdiction over a particular assessee or with respect to procedures not falling under the ambit of section 144B of the Act (copy enclosed for kind reference). 3.3 Further, it is also submitted that in a similar case, the Jurisdictional High Court of Chhattisgarh in the case of Raj Bachani Vs Union of India & others in the W.P. 127 of 2023 has dismissed the petition of the assessee wherein it was contended by the assessee that issuance of notice under Section 148A(b) of the Income Tax Act, 1961 by the JAO is contrary to the scheme formulated by Central Government n....
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.... "Faceless assessment of income escaping assessment. 151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be ....
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....48 of the Act is information made available to the Assessing Officer. To this end, as provided in the section 148 of the Act, the Directorate of Systems randomly selects a number of cases based on the criteria of the Risk Management Strategy. The Assessing Officer has no role to play in such selection. Consequent to such selection, the information is made available to the Assessing Officer who, with the prior approval of specified authority, determines which of these cases are fit for proceedings under the section 147 of the Act as per the procedure provided in section 148A of the Act. This involves conducting enquiry, if needed and giving the assessee an opportunity of hearing. Thereafter, leaving aside the cases covered by exceptions given in section 148A of the Act, an order is passed by the Assessing Officer, after due approval by specified approval, determining whether proceedings under section 147 of the Act may be determined in that case. If it has been concluded in the order under section 148A of the Act that it is a fit case for re-assessment proceedings, the Assessing Officer may issue a notice under section 148 of the Act to commence proceedings under section 147 of the ....
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....ime. This is also totally as envisaged in the scheme dated 29.03.2022. 3.2 Further, consequent to the issuance of notice under section 148 of the Act as per the procedure discussed above are again randomly allocated to the Assessment Units by the National Faceless Assessment Centre as per clause (i) of sub-section (1) of section 144B of the Act. Thereafter the assessment is conducted as per the procedure provided in section 144B of the Act in a faceless manner, as is also stated in the scheme. From the above, it is quite clear that the procedure for issuance of notices under section 148 of the Act as well as the consequent assessment proceedings are following the scheme notified under section 151A of the Act. 3.3 The petitioner in the instant writ petition has challenged the jurisdiction of the Assessing Officer issuing notice under section 148 of the Act in its case in light of the notification S.O. 1466(E) dated 29.03.2022. Here it is pertinent to note that the said notification does not state whether the notice is to be issued by the NFAC or the Jurisdictional Assessing Officer ("JAO"). The said notification only speaks of the scope of the scheme with regards t....
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.... Therefore, the parent section takes in to account that procedures may be modified under the Act or laid down taking into account their technological feasibility at the time. Further, instead of laying down specifics of the procedure, the section clarifies that the scheme so notified should make optimal utilisation of resources through economies of scale and functional specialisation. Reading it in tandem with the scheme as given in notification S.O. 1466(E) dated 29.03.2022, it is quite clear that neither the section nor the scheme speak about the detailed specifics of the procedure to be followed therein. They lay down the general principles that should be followed so as to impart greater efficiency, transparency and accountability to the procedures contained therein. The said scheme lays down that the issuance of notice under section 148 of the Act shall be through automated allocation in accordance with the risk management strategy and that the assessment shall be in a faceless manner to the extent provided in section 144B of the Act. 5.1 The specifics of the various parts of the procedure will evolve with time as the technology evolves and the structures in the Inc....
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....d of 3 years from the end of impugned AY, which got elapsed on 31.03.2020. Accordingly, as per provisions of section 151(ii) (extracted supra), the sanctioning authority under the new regime brought in the statute by Finance Act, 2021, are Principal Chief Commissioner or Principal Director General or Where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, whereas in present case, the approval was granted by Ld. PCIT-1, Raipur, who is not vested with the jurisdiction to grant such approval. The aforesaid facts are on record and are not disputed by the revenue. Since, the issue of sanctioning authority is no more res integra, as has been specifically deliberated upon and guided by the Hon'ble Apex Court in the case of Rajeev Bansal (supra), analysing the order of Hon'ble Apex Court in the case of Ashish Agrawal (supra), wherein it is categorically held that, as per the provisions of new regime the sanctioning authority shall be decided, as prescribed amended section 151(new regime). In the present case because the reopening has been initiated after 3 years, therefore, clause(ii) of section 151 shall apply. We, thus....
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.... VARDA ENERGY AND ENGINEERING PRIVATE LIMITED 215,DESHBANDHU COMPLEX, AGRASEN CHOWK RAIPUR 492001, Chhattisgarh India PAN A.Y. Dated DIN & Notice No: AACCV7196F 2016-17 27/07/2022 Notice Under section 148 of the Income Tax Act, 1961 Sir/Madam/ M/s, 1. (A) I have the following information in your case or in the case of the person in respect of which you are assessable under the Income Tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2016-17. Information flagged by the risk management strategy formulated in this regard; Final objection has been raised by the Comptroller and Auditor General of India to the effect that the assessment has not been made in accordance with the provisions of the Act; A survey was conducted under section 133A of the Act, other than under section 133A(2A) or section 133A(5) of the Act, Information which requires action in consequence of the judgement of the Hon'ble Supreme court in the case of the Union of India Vs. Ashish Agarwal, Civil Appeal 3005/2022, dated 40 May, 2022. Suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-se....