TaxTMI 
TaxTMI 
2026 (2) TMI 64
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.... of Jasjit Singh v.Union of India dated JULY 29, 2024. 2. That, without prejudice to the above and even otherwise, the Ld. CIT (A)-NFAC, Delhi has erred in confirming the action of the Ld. AO in passing the order u/s 147/143(3) without appreciating that the reasons are based on borrowed satisfaction and there is no independent application of mind by the Ld. AO and nor any enquiry have been made before issue of notice u/s 148. 3. That the information relied upon by the Ld. AO in the shape of so called EXCEL SHEET as well as approval sought for relevant authority for reopening of the case had not been shared by the Ld. AO with the assessee which vitiates the assessment proceedings in the light of judgment of M/s Sabh Infrastructure Ltd. v. ACIT [(2017) 398 ITR 198 (Del)]. Further, the appeal u/s 151 as may have been granted by PCIT appears to be mechanical. 4. That the assessment order has been passed by the Ld. AO on the basis of third party information recovered from the premises of some third party in the shape of some EXCEL SHEETS during the course of survey at their premises and such third party information cannot be used as an evidence without any cor....
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....ening was based on information received from the Investigation Wing in consequence to a search conducted on World Window Group, including Futuristic Metal Trading Pvt. Ltd., a concern alleged to be engaged in providing accommodation entries and unaccounted cash transactions in scrap trade. 3.1 During the course of search proceedings at the premises of the said third party, an excel sheet titled "Cash & CH Report 14.11.17" was allegedly found. According to the Assessing Officer, the said excel sheet contained certain entries reflecting cash payments and unaccounted transactions purportedly relatable to the assessee. Relying solely on the said excel sheet, the Assessing Officer concluded that the assessee had made cash payments outside the books of account towards purchase of scrap material and accordingly made an addition of Rs. 55,02,640/- under section 69A of the Act. 4. Against the order of the AO the assessee went in appeal before the Ld.CIT(A). 5. The Ld. CIT(A) upheld the addition by observing that the excel sheet constituted incriminating material found during search, that the assessee failed to rebut the same, and that the reopening was validly initiated on the basi....
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....eted by the Jurisdictional Assessing Officer (JAO), whereas under the Faceless Assessment Scheme, such powers vested only with the Faceless Assessing Officer (FAO). In this regard, reliance was placed on the decision of this Bench in Vikas Jain v. ACIT, ITA No. 838/Chd/2024. 7.6 The Ld. AR further relied upon the decision of the Chandigarh Bench in Akbar Ali v. ACIT, ITA No. 868/Chd/2025, to submit that uncorroborated third-party excel sheets cannot form the sole basis of addition. 7.7 Ld. AR also submitted the written submission during the course of hearing content of which read as under: 1. The assessee concern is a private limited company engaged in a business of manufacturing of steel ingots, steel casting and metal rolling and the assessee is in same business since 1980 and regularly filing its return of income for past many years as per audited books of accounts of the assessee. 2. In the year under consideration i.e. AY 2016-17 the assessee has filed its original return of income declaring an income of Rs. 16,90,550/- against the total turnover of Rs. 67,57,30,991/- as per page 19 of PB and the books of account of the assessee are duly audited and ass....
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....al to the objections in order passed u/s148A(d) 6. It is submitted that, the detailed objections to the reopening were challenged by the assessee vide its reply dated 28.03.2023 consisting of 5 pages as per pages 65 to 69 were not considered by the AO and no specific disposal to the various objections as raised by the assessee have been disposed off by way of speaking order which is completely bad in law on the basis of judgement of Bombay HighcourtM/s. Browntape Technologies Pvt Ltd vs. ACIT in Writ petition No. 627 of 2022 wherein assessee order passed u/s 148A(d) was set sided by the Hon'ble court for not disposing off the objection raised by the assessee. Copy of said judgement is placed at pages 94-97 of the JS.Further reliance is being placed on judgement of Amarpadma Credits (P.) Ltd. vs. Income-tax Officer [2025] 179 taxmann.com 144 (Gujrat) as per copy placed at pages 212 to 214 of JS-II wherein it is held as under: INCOME TAX : Where Assessing Officer issued reopening notice under section 148A(b) on ground that a search conducted upon a party revealed that said party provided accommodation entries in form of loan to assessee, since Assessing Officer fail....
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....e in the case of Srimanta Kumar has been analysed at page 48 onwards to 53 and findings has been given at pages 54 to 55 separate set. Another judgement is at page 38 of the separate set and findings is at page 42 is being relied upon. This, it is prayed before your good self that the further additional technical ground taken above may please be considered and assessment may please be quashed. 9. Notwithstanding the above facts, the reopening is otherwise bad in law on account of followings: Non-Disclosure of any failure on the part of assessee a) Firstly it submitted that the reopening in the case of the assessee is wrong in the facts since the Ld. AO has failed to disclose the facts of original assessment proceedings while recording the reasons that the assessment have been already completed u/s 143(3) dated 30.10.2018, copy of said order is as at pages 60 to 61 of PB. Further, it is submitted that in the reasons as recorded u/s 148A(d) which is beyond four years, there is no mention about original assessment proceedings and about any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment....
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....ssued after four years on account of change of opinion was to be set aside - Whether special leave petition filed against order of High Court was to be dismissed - Held, yes [Para 3] [In favour of assessee] [2023] 155 taxmann.com 290 (SC) SUPREME COURT OF INDIA Commissioner of Income-tax v. Canara Bank* Section 36(1)(viia), read with section 148, of the Income-tax Act, 1961 - Bad debts, in case of banks (Reassessment) - Assessment years 2006-07 and 2007-08 - High Court by impugned order held that where notice under section 148 is to be issued after expiry of four years or before expiry of six years, assessee should have failed to disclose material facts, hence, where Assessing Officer had not even stated or alleged that there was failure on part of assessee to disclose fully and truly all material facts in respect of claim of deduction under section 36(1)(viia), Tribunal rightly held that reopening assessment initiated beyond four years was bad in law - Whether SLP filed by revenue against said impugned order was to be dismissed - Held, yes [Para 4] [In favour of assessee] [2015] 59 taxmann.com 391 (Punjab & Haryana) HIGH COURT OF PUNJAB & HARYANA State B....
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....COME TAX : Where AO issued a reopening notice on ground that assessee had debited certain expenditures such as such as delayed remittance of employees contribution to EPF on one occasion, consultancy for project, registrar and share transfer agent fees, etc. which were not allowable as per different provisions under Income Tax Act, since there was not even allegation in reasons recorded for reopening that there was any failure on part of assessee to fully and truly disclose all material facts necessary for assessment, impugned reopening notice issued after four years was to be quashed 2021 (5) TMI 122 - GUJARAT HIGH COURT GHANSHYAMBHAI ADARBHAI PATEL VERSUS UNION OF INDIA No new material surfaced during the reassessment proceedings on which the AO could have formed a requisite belief with regard to escapement of assessment and the assessee had disclosed all the materials fully and truly during the previous assessment proceedings. Under the circumstances, the impugned Notice under Section 148 of the Act dated 26.02.2019 assuming jurisdiction under Section 147 of the Act after the expiry of four years from the end of the relevant assessment year is clearly without j....
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....the assessment concluded on the basis of such invalid notice u/s 148 of the Act is void ab initio and hence, deserve to be quashed Reopening Based on Change of Opinion is not permitted 11. Further, our submission on the ground, where original assessment was already completed u/s 143(3) and the AO merely relied upon the information received. The said information was required to be corroborated and without verifying the facts that the assessment in the case of the assessee was already completed u/s 143(3) after examining books of the assesse and our reliance is being placed on judgement of jurisdictional High court having identical and similar circumstances as in the case of assessee, in the case of Supertech Forgings (India) Pvt. Ltd vs. Pr. Commissioner of Income Tax-1, Jalandhar in ITA-101-2022 (O&M) (P&H), and the summary of the same case is as under alongwith the relevant extract from the judgement order:- Summary of the case In the above said case, it is summarized as, the original assessment in the said case was completed u/s 143(3) on 12.06.2012, later on case of the assessee was selected for reopening u/s 147 dated 30.03.2017 on account of state....
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....bove referred case laws, it is submitted that, the case of the assessee has similar/identical facts as per case laws referred above, wherein, assessment has been reopened after four years and it has been clearly laid down in the Act itself that the case cannot be re-opened beyond four years, unless, it is proved with corroborating and tangible material on record that proves there is any actual failure on the part of the assessee during original assessment. Reopening based on Borrowed satisfaction 13. It is submitted that the case of the assessee was reopened based upon borrowed satisfaction and without conducting independent enquiry and same is lack of application of mind. Further, it is submitted that, in the case, it is just a suspicion of the CIT(A) and AO without being backed by any documentary evidence against the Assessee. In our considered view, mere information from investigating wing without bringing any concrete evidence on record cannot be a valid reason for reopening of a case and reliance is being placed on latest judgement of jurisdictional ITAT Chandigarh Bench 'A' Bench in the case of Akbar Ali vs. JAO in ITA No. 868/CHD/2025 copy placed at pages 2....
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....ima facie arriving at a finding that it was a fit case to reopen assessment for escaping income - Whether since reasons recorded were cryptic, vague having no nexus and no application of mind, Assessing Officer could not assume jurisdiction to reopen assessment - Held, yes- Whether, therefore, impugned notices for all three assessment years were to be quashed and set aside - Held, yes [Paras 9 and 10] [In favour of assessee] 15. It is submitted that, in the case of the assessee unsigned Excel sheet was recovered from premises of M/s. Futuristic Metal Trading Pvt. Ltd which is third party information and not valid and our reliance is being placed on judgment of Ahmedabad - Trib in the case of DCIT vs. MahalaxmiInfracontract Ltd reported in [2025] 173 taxmann.com 399 [12-03-2025] wherein it is held as under: INCOME TAX : Where Assessing Officer made addition under section 69C on ground that assessee had paid interest in cash to a third-party, since said addition was made solely on basis of unsigned Excel sheets recovered from premises of third party, without any further corroborative evidence, same was to be deleted. 16. Reliance is being placed on other ju....
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....d to assessee or that any amount of on-money was ever paid by assessee to developer, impugned reassessment order passed on basis of said unsigned Excel sheet was to be quashed., Form the above, it is very much evident that, the reason in the case of the assessee, are fully vague as no information have been supplied to the assessee that forms valid reasons for reopening, therefore the judgements above may please be considered and the assessment may please be quashed 19. Further, it is submitted that, no opportunity of cross examination has been afforded to the assessee by the Ld. AO during the course of reassessment proceedings, which was specifically requested by the assessee vide reply dated 11.09.2023 placed at pages 81 to 84 of the PB and relevant page is 83. Moreover, the assessee has requested the same before Ld. CIT(A) vide ground no 7 of the Written submission filed by the assessee which is placed at pages 175-192 of the PB. Reliance in this regard is being placed upon the same judgement supra in the case of M/s. Malbros International Pvt. Ltd in ITA No. 992 & 993/CHD/2024 vide order dated 25.06.2025, wherein this fact has been accepted by the Hon'ble court....
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....iness premises of assessee, department made additions on account of suppressed turnover through under-invoicing based on third-party statements, since said statements were recorded at back of assessee and without giving proper opportunity for cross-examination, Tribunal rightly deleted said addition From perusal of above referred case laws, it is submitted that, wherein the opportunity of cross examination has not been provided to assessee then the assessment framed will be considered as invalid assessment, thereby violating the principal of natural justice, therefore, needs to be quashed. Merits of the case 21. It is submitted that, in the case of the assessee the Ld. AO has not provided any copy of Excel sheet recovered during the survey u/s 133A at M/s. Futuristic Metal Trading Pvt Ltd and the said copy was sought by the assessee vide its reply 11.09.2023 as per copy placed at 83 to 83 of the PB, relevant page 83, in the said reply to the questionnaire, it has been stated by the assessee that, the material recovered by department in the shape of 'Excel sheet' cannot be considered as tangible material without confronting the same to assessee, and no suc....
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.... pages 24-31 of JS. b. Judgment in the case of Sh. Gopal Sharan vs. ITO in ITA No. 51/ASR/2012 vide order dated 05.09.2012 as per copy of judgment placed at pages 32-39 of JS. c. Judgment in the case of Sh. MohdYousufWani vs. ITO in ITA No. 372/ASR/2009 vide order dated 06.06.2011 as per copy of judgment placed at pages 40-51 of JS. d. Judgment in the case of Sh. Sanjeev Aggarwal vs. DCIT in ITA NO. 547/ASR/2011 vide order dated 01.11.2012 as per copy of judgment placed at pages 52-61 of JS. Thus from the above facts it is prayed before your goodself that the reopening in the case of the assessee bad in law as no individual satisfaction of information received have been recorded by the AO and no evidence concrete evidence of relying on excel sheet found have been proved by the AO and there is no such statement of any person recorded and provided to assessee that forms valid reason for reopening of the case of assessee 25. It is submitted that the assessee during the course of assessment proceedings as well as before CIT(A) has filed the all such documentary evidences before the AO relating to the actual transaction made with the doubtful....
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....pies of C-Form as issued by assessee's customer etc. The assessee thus duly discharged its onus of proving the sales transactions as genuine transactions. No adverse inference could be drawn only because the confirmation from the customer was not furnished. As against this, Ld. AO merely relied upon information received from investigation wing and did not carry out any independent examination or verification of the transaction. No cash trail in support of accommodation entry has been established. The sales have been accepted and no defect has been pointed out in the books of accounts. Adding the sale transaction again as alleged accommodation entry would tantamount to double addition which is impermissible. Therefore, on the given facts, the adjudication of Ld. CIT(A) could not be faulted with. We order so. The purchase made by the assessee are fully vouched in the books of the assessee and the said purchase are high sea sales purchase made by the assessee directly from the port and the assessee has filed all the documentary evidences that proves the genuineness of material sold to assessee by M/s Futuristic Metal Trading Pvt.Ltd i.e. from import from other countries which....
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....e incurred expenditure for purchase of chemicals for production of products - A search was carried out at premises of one FHR in which it was found that FHR was running ten concerns which were mainly used for issuing bogus purchase bills and assessee had also purchased chemicals from one of its concerns - Assessing Officer made additions under section 69C to income of assessee on account of bogus purchases - Commissioner (Appeals) noted that during relevant assessment year assessee had yielded profit ratio at 107.95 per cent and it was impossible to generate anything from thin air, thus, assessee had produced goods by utilising such bulk drugs purchased by it - In light of such finding of fact, he had restricted additions on account of bogus purchases to 25 per cent - Tribunal also upheld such finding of fact recorded by Commissioner (Appeals) - Whether since conclusion arrived at by Tribunal was based upon a finding of fact that there were corresponding sales in respect of alleged bogus purchases, impugned order passed by Tribunal could not be said to give rise to any substantial question of law, warranting interference - Held, yes [Paras 15, 17 and 19] [In favour of assessee] ....
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....ween assessee and 'D' were not bogus or fraudulent and, thus, addition could not be made under section 69C, SLP filed against decision of High Court was to be dismissed. d) CIT Vs Leader Valves Ltd. as reported in [2007] 285 ITR 435 (P&H). Section 145 of the Income-tax Act, 1961 - Method of accounting - Rejection of accounts - Assessment year 1986-87 - Commissioner (Appeals) deleted additions made by Assessing Officer on account of bogus purchases from seven parties as also addition in trading account besides allowing triple shift allowance on machinery etc. - Tribunal concurred with analysis and conclusions drawn by Commissioner (Appeals) on appreciation of material on record, after taking notice of fact that trading results of assessee had all along been accepted and purchases of scrap from seven parties could also be not termed as bogus for reason that in subsequent assessment year purchases from those very parties stood accepted by department to a very substantial extent - Tribunal also took notice of Revenue's contradictory stand in as much as firstly specific additions were made in assessment on account of alleged bogus purchases and then assessee's ....
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.... finding of Commissioner (Appeals) - Whether there was any perversity in order of Tribunal - Held" * Judgement in the case of CIT v. Anil Kumar & Co as reported in[2016] 67 taxmann.com 278 (Karnataka). "IT: Where books of account of assessee had not been rejected and assessment having not been framed under section 144, entire addition made by Assessing Officer based on estimation of income was to be deleted" * Judgement in the case of Smt. Tripta Rani vs. ACIT as reported in [2022] 142 taxmann.com 278 (Chandigarh - Trib) "INCOME TAX : Where cash deposits made in bank accounts of proprietorship concern during demonetization period were routed through regular books of account of assessee which were not rejected by AO and no incriminating material was found during search conducted at premises of sister concern of assessee to point out that assessee introduced her own unaccounted money in her proprietorship concern in garb of sale to its sister concern, additions made by AO in respect of such cash deposit were merely based on surmise and conjectures and, thus, same were to be deleted" * Judgement in the case of PCIT vs. Forum Sales (P.) Ltd.....
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....re not rejected u/s 145, and no defect in stock, yield or consumption is found. * Judgments of Various Hon'ble Apex Court, High Courts and different Tribunals that bogus purchases cannot be added when sales, stock records and books are accepted. Since addition of Rs. 55,02,640/- is not maintainable as provision of section 69A are not applicable and before the CIT(A) we had submitted statement of fact at page 2 & 3 of the order of CIT(A) and then detailed submission with regard to the reopening u/s 148A and on merits of the case the opportunity to cross examination was not allowed and cited various cases starting from page 3 to 22 of the order of CIT(A) and the CIT(A) has dismissed detailed submission without any application of mind. Therefore, the reassessment proceedings are void ab initio and liable to be quashed; alternatively, the impugned additions deserve deletion in full. 8. Per contra, the Ld. DR strongly supported the orders of the lower authorities. 8.1 It was submitted that the excel sheet was found during the course of search proceedings and contained date-wise entries indicating cash transactions with the assessee. According to the Ld. DR, the A....
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....sent case is invalid on this count alone. As the reopening was made contrary to law therefore the assessment proceeding which predicated on the basis of wrong reopening are liable to be quashed. Issue regarding Borrowed Satisfaction and Lack of Independent Application of Mind 9.5 The entire basis of reopening rests on information received from the Investigation Wing relating to an excel sheet found during search/survey proceedings at the premises of a third party, namely M/s Futuristic Metal Trading Pvt. Ltd. There is nothing on record to show that the Assessing Officer conducted any independent inquiry or verification to establish a live nexus between such information and escapement of income in the hands of the assessee. 9.6 The reasons recorded merely reproduce the information received and mechanically conclude that income has escaped assessment. Such an approach clearly reflects borrowed satisfaction, which has repeatedly been disapproved by various Courts and Tribunals. 9.7 We find support from the coordinate bench decision in Akbar Ali v. ACIT and the judgment of the Hon'ble Gujarat High Court in J.K. Bullions (P.) Ltd., wherein it has been held that mere informat....
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....s conferred under section 119 of the Act are binding on the tax authorities. This legal position stands fortified by the judgment of the Hon'ble Supreme Court in UCO Bank v. CIT (1999) 237 ITR 889 (SC), wherein the Hon'ble Court, in paragraph 6 of the judgment, has held as under: "The Board, thus, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 which are binding on the authorities in the administration of the Act. Such circulars, however, are not meant for contradicting or nullifying any provision of the statute." Further, the Hon'ble Supreme Court clarified the scope and limitation of such circulars in paragraph 7, observing that: "Such circulars are binding under section 119 so long as they are issued for proper administration of the Act and for mitigating the rigour of the law in favour of the assessee. However, they cannot override the provisions of the statute nor can they impose obligations or confer rights dehors the Act." 9.14 Though certain Coordinate Benches of the Tribunal have taken a view favourable to the assesse....