TaxTMI 
TaxTMI 
TaxTMI 
2025 (4) TMI 1728
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....of the case, the Ld. CIT(Appeals), NFAC, Delhi, erred in quashing the order when the Ld. CIT(A) has no jurisdiction to deal with the question whether the 148A(d) order was passed validly or properly as an order u/s. 148A(d) is not an appealable order before Ld. CIT(A) as per Section 246A. iv) That on the facts and circumstances of the case, the Ld. CIT(Appeals), NFAC, Delhi, failed to appreciate the decision of Hon'ble Supreme Court in the case of Ashis Agarwal dated 04.05.2022 dealing with notices u/s. 148 Issued between 01.04.2021 to 30.06.2021 which was followed by the AO by treating notice u/s. 148 issued in un-amended provisions as show cause notice u/s. 148A(b) and passing Order u/s. 148A(d). v) That on the facts and circumstances of the case, the Ld. CIT(Appeals), NFAC, Delhi, failed to perceive the para 3.1 of the decision in the case of Ashis Agarwal, wherein the Hon'ble Supreme Court has noted as under: "3.1 In pursuance to the power vested under Section 3 of the Relaxation Act, 2020, the Central Government issued following notifications inter-alia extending the time lines prescribed under Section 149 for issuance of reassessment notices....
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....ncial transactions. xii) That on the facts and circumstances of the case, the Ld. CIT(Appeals), NFAC, Delhi, erred in deleting the addition relying upon the Hon'ble Kolkata High Court's order in the case of Girdhar Gopal Dalmia ignoring the background of the dismissal by the Supreme Court wherein the case was dismissed for the delay of 399 days in filing SLP. xiii) That the appellant craves leave to add/alter any/all grounds of appeal before or at the time of the hearing of the appeal. 2. Facts in brief are that the assessee filed his return of income for the Assessment Year 2016-17 on 27.09.2016 showing total income at Rs.65,42,380/- which was processed u/s. 143(1) on 30.04.2017. The AO had credible Information received as uploaded on insight portal by DDIT/ADIT(Inv), 6(3), Mumbai, regarding coordinated and premediated trading on the Bombay Stock Exchange by engaging in reversal/expiry trades in illiquid stock options/derivatives resulting in non-genuine business loss/gains to the beneficiary assessee and that the present assessee is a beneficiary party to such manipulation. From the data made available under Project Falcon on the ITBA, the AO found th....
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....mended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A(b) of the Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b) of the Act. The Hon'ble Apex Court directed that the AO shall, within thirty days from that date provide to the respective assesses information and material relied upon by the Revenue, so that the assesses could reply to the show-cause notices within two weeks thereafter. It was further provided in the said decision that the requirement of conducting any enquiry, if required, with prior approval of specified authority under section 148A(a) of the Act is hereby dispensed with as a one-time measure vis-à-vis those notices which have been issued under section 148 of the un-amended Act from 01.04.2021 till date. The Court further directed that the AO shall thereafter pass orders in terms of section 148A(d) of the Act in respect of each of the concerned assessee: Thereafter after following the procedure as required under section 148A may issue notice under section 148 (a....
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....ion of the notice u/s 148 issued by the AO. 6.2.1 The appellant has stated in his submission that the order passed by the AO u/s 148A (d) was passed after taking approval/sanction of the PCIT-5, Kolkata but as per section 151 (ii), the approval was to be taken from PCCIT. Therefore the order passed u/s 148A (d) and notice issued u/s 148 is invalid. The appellant has based his submission on the basis that the reopening has been done for A. Y. 2016-17 through notice u/s 148A(b) issued on 2.6.2022 and order u/s 148A(d) passed on 30.7.2022 which is after an expiry of five years and thus the approval of Pr. CCIT was required in this case. The appellant has relied on the following case laws of the Jurisdictional Hon'ble Kolkata High Court in the cases of Fabulous Travel Services Pvt. Ltd. vs. ITO Ward 13(1) & others WPO/1037/2023 and K.K. Aggarwal and Sons HUF vs. ITO- Ward 30(1), Kolkata & others WPA 25770 of 2022. The Hon'ble Kolkata High Court in the case of Fabulous Travel Services Pvt. Ltd. in WPO/1037/2023 has held as under: "By this writ petition, petitioner has challenged the impugned order dated 31.7.2022 under section 148 A (d) of the Income Tax Act, 1....
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....concern Assessment Year (AY) 2016-17 and AY 2017-18. 2. The core issue involved in the writ petitions is whether the impugned notices and orders are sustainable in law, having regard to the contention of the petitioners that they are not backed by the approval of the specified authority. 3. Since the issue is common to the above-captioned writ petitions, the broad facts concerning one of the matters le., titled Rajesh Gupta HUF v Asstt. CIT (WP (C) No. 7289 of 2023] are noted hereafter. 3.1 The petitioner/Hindu Undivided Family (HUF) filed its return of income (ROI) qua AY 2017-18 on 9-6-2017 declaring an income of Rs. 66,88,500/-, The ROI was processed by the revenue and an intimation was issued to the petitioner/HUF under section 143(1) of the Act on 21-11-2017. 3.2 In the aftermath of the judgment in Union of India v Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC)/ [2023] 1 SCC 617, the revenue issued a notice dated 26-5- 2022 under section 148A (b) of the Act to the petitioner. 3.3 The petitioner filed a reply dated 14-6-2022 qua the said notice. 3.4 Thereafter, the revenue passed an order under sectio....
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.... 6.1 For the sake of convenience, the provisions of Sections 148, 149 and 151, before and after amendment are extracted hereafter. Prior to Finance Act 2021 "148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and subsequently a notice has been served under sub-section (2) of section 143 after the expir....
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....148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself." Post Finance Act 2021 "148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in t....
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....de on behalf of the revenue. 9. We may also note that in Ganesh Dass Khanna's case (supra), we were considering the provision of Section 149 of the Act and have taken the view that since the escaped income was less than Rs. 50,00,000/-, the time limit as prescribed in section 149(1)(a) of the Act would apply. 10. As indicated above, the specified authority changes depending on the time Simit prescribed in Section 151 of the Act. It is on this account that there is linkage between ruling rendered in Ganesh Dass Khanna's case (supra) and the instant matters 11. It may also be noted that in Ganesh Dass Khanna's case (supra), we had recorded the stand of the revenue that the issue concerning limitation and the specified authority are "intertwined". For convenience, the relevant part of the judgement is extracted hereafter: "24. On behalf of the revenue, the following broad submissions were made :... (viii) Both under the unamended 1961 Act and amended 1961 Act the issue concerning limitation is inextricably intertwined with two aspects: (a) First, the rank of the authority granting approval/sanction for triggering reasse....
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....the aforesaid, the impugned notices and orders in each of the above-captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law. 14. Needless to add, the rights and contentions of both the sides will remain open, in the event the revenue triggers reassessment proceedings. 15. The above-captioned writ petitions are disposed of, in the aforesaid terms. The appellant has also cited the judgment of the Hon'ble Guwahati High Court in the case of Dhansri Roller Flour Mills vs. UOI (2020) 460 ITR 326 in support of its contention. 6.2.3 The appellant has also submitted that the order passed u/s 148 A(d) and notice u/s 148 issued by the AO is invalid because as per CBDT notification No. 15/2022 dated 28.3.2022 the proceeding u/s 148A(b) was required to be initiated and order u/s 148A(d) was to be passed and notice u/s 148 was to be Issued in faceless manner by the NaFAC, however in the case of the appellant all these proceedings were com....
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.... 6.4 The appellant in his grounds of appeal 3 to 7 has assailed the AO for making an addition of Rs. 13,68,850/- u/s 68. As all the grounds of appeal are related they are being adjudicated together for the sake of convenience and to avoid repetition. 6.4.1 The AO during the course of the assessment proc proceedings made an addition of Rs. 13,68,850/- being the fictitious profit earned by the appellant through the broker M/s V.G. Capital Market Pvt. Ltd. The AO based his addition on the ground that the findings have been made by DDIT (Inv.) under Project Falcon and established beyond doubt that the transactions made by the appellant with M/s V.G. Capital Market Ltd. are sham transactions. The AO held that merely fumishing of contract notes, demat account, bank account does not make the transactions genuine. 6.4.2 The appellant in his submission has stated that he had entered into transactions in shares via VG Capital Market P Ltd. which resulted in profit of Rs. 16,64,106/- and not Rs. 13,68,850/- as alleged. He stated that he had paid tax at maximum marginal rate 1.e.30% plus surcharge on Rs. 16,64,106/- and the transactions of Rs. 13,68,850/- are already inc....
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....is reply to the same but the same was not accepted by the AO who completed the assessment proceeding by making an addition of Rs. 75,60,00,000/- u/s 69A of the Income Tax Act. 6.5.2 The appellant in his submission during the appellate proceedings has raised the following contentions in respect of the addition of Rs. 75,60,00,000/- made by the AO 1. The AO has issued the show cause with proposed variation without providing any opportunity of explaining the same. The appellant has submitted that during the assessment proceedings no notice u/s 142(1) regarding the addition of Rs. 75,60,00,000/- was asked but the issue was directly raised in the show cause notice issued 2. The appellant was given less than a day's time to respond to the proposed variation of Rs. 75.60 cr. The appellant has stated that SCN proposing the said variation has been signed on 19.5.2023 at 22.41 hrs and with no working day in between the response was sought on 22.5.2023 by 16.30 hrs. The appellant has also cited a number of cases in support of its contention 3. The appellant has further stated that the AO has made the addition on the basis of the probable suspicious tran....
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....from had copies obtained from DDIT(please refer Annexure in excel version for further details) * Potential cash borrowed from various lenders- Rs. 7.45 crore * Probable names grouped under the group name * Dalmia * GG Dalmia * GG Dalmia A/c * G.G Dalmia * G. G. Dalmia * DALMIA TEA * GH Agarwal (Anushree) * GH Agarwal A/c G.G. Dalmia * Dalmia Laminator 8. From the above information, it is not clear as to how reopening of the assessment could have been resorted to. The report is as vague as possible as it states that possible financial transactions could be deduced and decoded from hard copies obtained from DDIT. Further, it says there is potential cash borrowed from various lenders and the probable names of the group have been mentioned and set out without any particulars. Assuming that material was available as annexures to the said report of the DDIT, such documents should have been made known to the assessee so as to enable them to give an effective reply. 9. As could be seen from the communication dated 21st January, 2022 referred above, in more than one place the....
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.... the DDIT which is the basis of the addition made in the case of the appellant the addition of Rs.75,60,00,000/- is set aside. The grounds of appeal 8 to 15 are allowed. 6.6 The grounds of appeal 16 and 17 are general in nature hence are not being commented upon. 6.7 The appellant vide his prayer dated 31.1.2024 had pleaded for admission of additional grounds of appeal 18 and 19. In the interest of natural justice the same was forwarded to the AO for his comments vide this office letters dated 24.4.2024, 14.5.2024 and 22.5.2024. However no reply has been received from the AO. It is also seen that the appellant has also not pressed for these grounds of appeal. In view of the same the grounds of appeal 18 and 19 are not being adjudicated upon. 7. The appeal is allowed. 4. Ld. CIT-DR strongly relied on the order of AO and submitted that the case of the assessee has been reopened after following the decision of the Hon'ble Apex Court in the case of Ashish Agrawal (Civil Appeal No. 3005/2022) dated 04.05.2022 though legal position was subsequently changed by the subsequent decision of the Hon'ble Apex Court in the case of Rajeev Bansal (Civil Appeal....
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....h read as under :- Notice under sec 148 of the old regime was issued on 1.4.2021 and thus Calcutta HC in a writ petition by the assessee quashed the notice. Later, the department applying the Apex Court decision of Ashish Agarwal deemed the notice under sec 148 as deemed notice under sec 148A(b) and provided the reasons for reopening on 2.6.2022. However, in view of the decision of Rajeev Bansal (SC), it is settled that TOLA didn't apply to AY 2016-17 where the escaped Income was more than Rs. 50 lakh. Since after 1.4.2021, the time limit for cases where escaped Income was more than Rs. 50 lakh was 31.3.2023 (as applicable in the present facts), the department conceded before the Apex Court in Rajeev Bansal case that TOLA is not applicable for AY 2016-17 where the escaped income was more than Rs 50 lakh since the 6 year period had not expired. In Para 19 of the SC decision, the revenue has conceded that TOLA shall not apply to cases where the six year time limit was not falling between 20.3.2020 to 31.3.2021. Thus in the present case, since TOLA was not applicable to AY 2016-17 as escaped income was more than Rs. 50 lakh, the department could not have deemed the notice....
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.... 148 was issued beyond three years, the approval should have been obtained from the Pr Chief Commissioner and the notice issued taking approval from PCIT is invalid. Prior to the decision of Rajeev Bansal (SC) also, the Calcutta HC in the case of Fabulous Travel Services Private Limited v ITO Wd 13(1) & Ors. WPO/1037/2023, K K Agarwal and Sons HUF v ITO, Wd 30(1) Kolkata & Ors., WPA 25770 of 2022 also expressed the above view. Reasons mentioned in the order under sec 148A(d) in relation to notice under sec 148 dated 5.8.2022 does not survive after the CIT(A) order, thus addition on other issues not forming part of reasons cannot be made. There are two reasons to reopen as per the new 148 notice dated 5.8.2022. Same is evident from 148A(d) order dated 30.7.2022. One reason being income from derivative trading of Rs. 13,68,850 and another reason being purchase of immovable property of Rs. 1.75 crore. The assessment was completed without making addition of Rs. 1.75 crore and after making the addition of Rs. 13,68,850 and another addition of Rs. 75.60 crores. This 75.60 crore did not form part of reasons for reopening. The appellant argued that Rs. 13.68 lakh was already offer....
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...., Mohd. Shafiq Cement Store v. ITO 168 taxmann.com 72 (Amritsar). On Merits A borrower cannot be considered as owner u/s 69A by any stretch of imagination. Department is of the view that the purported amount received is loan (refer Page 30 Para 4.2.6.5 of the assessment order), then assessee cannot be said to be owner of money, bullion, jewellery or other valuable article. Also refer Sati Nath Chatterjee v ITO ITA No. 298/Kol/2020 dated 25.2.2021 Addition made on the basis of probable suspicious transactions without any definite finding and the suspicious transactions do not contain the name of the assessee. Calcutta HC in the case of Girdhar Gopal Dalmia v. UOI 150 taxmann.com 54 on the basis of the same search of Sanwaria and Kasera Group held that the report of the Investigation Wing which is based on "potential cash borrowings and 'possible' financial transactions is not called for and set aside the reassessment proceedings. Relevant portion of said order reads as under: 7. If the assessing office fails to obey the directions issued by the Court, stringent action should be taken and it is not clear as to whether the Principal....
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....aw Dictionary, it is defined as "extending any possibility but not in Act". It was further pointed out that the said word would mean to be naturally and probably expected to come into existence at some future time, though not now existing. "Possibility" has been defined in "WHARTON" to mean expectation, an uncertain thing which may or may not happen. Under the provisions of the Income Tax Act, tax is levied on the actual income of the previous year and the facts must be taken as they existed during the previous year. It is relevant to take note of the decision of the Hon'ble Supreme Court in Sir Kikabhal Prenchand Versus Commissioner of Income Tax (Central) Bambay, (1953) 24 ITR 506 (SC) page 506 wherein it was held that the State has no power to tax the potential future advantage and all it can tax is income, profits and gains made in the relevant accounting year. This decision if applied to the facts and circumstances of the case on hand, the only conclusion that can be arrived at is to hold that the reopening of the assessment was bad as it was based on certain alleged "potential" cash borrowings and certain alleged "possible" financial transactions. That apart, the assessin....
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....d specifically sought an opportunity for cross examine the persons whose statement was being relied upon by the department. But the same was not granted to the assessee. This renders the proceedings as invalid. Gee Bee Nirman Co Pvt Ltd. v. ITO in MAT 1667 of 2023 with IA No. CAN 1 of 2023, Dineshkumar Chhaganbhai Nandani v. ITO 153 taamann.com 187, CT. DM Joshi, [1999] 239 ITR 315 (Gujrat), CIT v. Eastern Commercial Enterprises, (1954) 210 ITR 103 (Kolkata), Mahes Gulbrai Joshi v. CIT, (2005) 95 ITD 300 (Mumbai)(SMC), Sona Electric Co. v. CIT. (1984) 19 Takman 160 (Delhi) to proper opportunity of being heard The show cause notice proposing variations has been signed on 19 May 2023 at 22:41 hours and with no working days in between, the response has been sought Say 22 May 2023 by 16:30 hours. An additon of over 150 times of returned income was proposed to be made without issuing any show cause notice in the past, without giving any proper opportunity of being heard, without providing any evidence on the basis of which department sought to make the addition. It is completely unjustified and uncalled for and in violation of principles of natural justice. Borrowed satisfactio....
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.... has, clarified on the issue of sanction as under :- 81. This Court in Ashish Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned. Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under section 148-A." Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148, These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable. 8. We also note that the decision of the Hon'ble Apex Court has been further followed by the coordinate benches of the Tribunal in the cases of Manish Financial, passed in ITA No.5055&5050/Mum/2024, dated 02.12.2024 and Surya Ferrous Alloys Pvt....
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....ction 2 of section 148, the prerequisite is there should be a valid notice. Admittedly, in the case on hand, the notice was held to be not sustainable. If that be so, the assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during the reassessment proceedings. The foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid the entire edifice sought to be raised on such foundation has to collapse. 9. Considering the above facts and circumstances, we are inclined to uphold the order of the ld. CIT(A) by dismissing legal proposition raised before us by the revenue. 10. So far as merits of the case are concerned, we note that the assessee was stated to be the borrower of the money from various parties/entities aggregating to Rs.75.60 crores. We note that the AO has invoked the provisions of Section 69A of the Act while making the addition which is applicable to the assessee which is found to be the owner of money, bullion, jewellery or other valuable article and the assessee could not offer any explanation about the sources thereof. In the present case, the as....