TaxTMI 
TaxTMI 
2026 (2) TMI 1236
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....Limited were clubbed together for the purpose of hearing and adjudication. For the purpose of recording the facts, the appeal in ITA No. 1870/Hyd/2025 for the A.Y 2014-15 is taken as "lead" case. 2. The assessee has raised identical grounds for all these six assessment years, except some extra grounds raised for the assessment year 2019-2020. The grounds of appeal in ITA No. 1870/Hyd/2025 are reproduced as under: 1. "On the facts and circumstances of the case, the Learned CIT(A) erred in both law and facts while passing the Order. 2. On the facts and circumstance of the case, Learned CIT(A) is not justified in dismissing the ground that the issue of Notice U/s 148 by the Assessing Officer is without Jurisdiction. 3. On the facts and circumstances of the case, Learned CIT(A) is not justified in dismissing the ground that the issue of Notice U/s 148 by the Assessing Officer is bad in law as the Assessing Officer has not fulfilled the prescribed conditions laid down under Section 148 and consequently the Assessment is void abinitio. 4. On the facts and circumstances of the case, Learned CIT(A) is not justified in dismissing the ground that the no....
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....nd recorded for several financial years. Sri Ramesh Kumar Sanka in his statement explained that the transactions recorded in the Focus 5.5 software is unaccounted receipts generated from sale of scrap, scrap of intermediate mixing products, scrap generated in packing products etc. This software also contains the expenditure incurred in cash for all the three companies put together specifically for the purpose of business. This software also includes loans given and repaid back and some Contra entries etc., Based on the unaccounted transactions the MD of the group admitted unaccounted income of Rs. 107.63 crores for the three companies put together. Out of such unaccounted income, an amount of Rs. 26.22 crores pertained to the appellant company. For the year under consideration i.e. A.Y 2014-15 the Appellant company admitted an amount of Rs. 2.33 crores. However, the Assessing Officer has made further addition of Rs. 2.89 crores towards unaccounted income emanated from FOCUS 5.5 software. Further, the Ld. AO had also made addition of Rs. 2.37 crores towards unaccounted income from evidence found in factory. 4. Aggrieved by the order of the Assessing Officer, the assessee preferre....
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....power is given to do certain things in certain way, the thing has to be done in that way alone and not in other manner which is otherwise not provided in the law as held by the Hon'ble Supreme Court in the case of Chandra Kishore Jha vs. Mahaveer Prasad (1999)8 SCC 266 as well as in case of Cherrukuri Mani v. Chief Secretary, Govt. of A.P (2015) 3 SCC 722. The learned Counsel for the assessee has submitted that the Hon'ble Supreme Court has held time and again that where the law prescribes the things to be done in a particular manner following a particular procedure, it shall have to be done in the same manner following the principles of law without deviating from the prescribed procedure. He has relied upon the judgment of the Hon'ble Bombay High Court in the case of Municipal Corporation Greater Mumbai (MCGM) vs. Abhilash Lal (2019) 111 taxmann.com 405 as well as in case of Opto Circuit India Ltd vs. Axis Bank (2021) 127 Taxmann.com 290. Therefore, if law require something to be done in a particular manner, then it must be done in that manner; if it is not done in that manner then it would have no existence in the eyes law. By following the said principles, the Hon....
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.... more for each of the A.Ys taken up for initiation of proceedings u/s 147/148 of the Act. He has referred to the reasons recorded for reopening of the assessment and submitted that the Assessing Officer in the reasons recorded has not pointed out which asset is constituting the income assessable to tax escaped the assessment. Further, the details of the receipts and payments as found in the laptop during the search are not the entries in the books of account and therefore, the said condition as provided u/s 149(1)(b) of the Act is also not satisfied for initiation of proceedings u/s 147/148 of the Act. In support of his contention, he has relied upon the decision of the Rajkot Bench of the Tribunal dated 10/06/2025 in the case of Mukesh Manekchand Sheth vs. Dy. CIT in ITA Nos. 581, 545 to 547/RJT/2024 and submitted that the Tribunal has stated the exercise of jurisdiction u/s 147/148 of the Act in pursuant to the search & seizure action is not meant to determine during the re-assessment as to whether an item represents an asset or an expenditure or whether it exceeds a threshold limit of Rs. 50 lakhs. Such exercises are required to be carried out prior to or at the time of recordin....
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....he assessment does not reveal the fact that the income escaped the assessment represents the asset or expenditure or an entry/entries in the books of account of the assessee for any of the years under consideration. In support of his contention, he has relied upon the judgment of the Hon'ble Supreme Court in case of Chhuganmal Rajpal vs. SP Chaliha (1971) 79 ITR 603 as well as the judgment of the Hon'ble Andhra Pradesh High Court in the case of P Munirathnam/Chetty and P. Satyanarayana Chetty vs. Income Tax Officer (1975) 101 ITR 385. Thus, the learned Counsel for the assessee has submitted that the exercising power u/s 151 of the Act in a casual and routine or mechanical manner without application of mind is not a valid sanction. He has relied upon the following case laws: i) CIT vs. S Goyanka Line & Chemical Ltd (2015) 56 Taxmann.com 390 (MP) ii) CIT vs. S Goyanka Line & Chemical Ltd (2015) 64 Taxmann.com 313 (SC) iii) United Electrical Co (P) Ltd vs. CIT (2002) 258 ITR iv) SBC Minerals (P) Ltd vs. ACIT (2024) 475 ITR 360 v) P Munirathnam Chetty and P Satyanarayana Chetty vs. Income Tax Officer (1975) 101 ITR 385 (AP). ....
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....satisfied that the income amounting to exceeding Rs. 50 lakhs may have escaped the assessment. He has further submitted that the Hon'ble High Court has held that at the time of issuance of notice u/s 148, the Assessing Officer may not have an occasion to undertake a detailed or in-depth examination of the evidence collected or come to a definite information with respect to the total income which may have escaped the assessment. Since the computation and estimation of income i.e. likely to have escaped the assessment would at this stage be provisional and the proceedings initiated for re-assessment cannot be quashed on this objection. The learned DR has further submitted that the seized material had found in the Laptop of the Sr. Accounts Manager of the assessee during the search, however, a separate warrant was required for search of the premises of the individual persons, though part of the assessee's group of concern. He has relied upon the Judgment of the Hon'ble Madras High Court in the case of S.R. Trust vs. ACIT dated 12.03.2021 in Writ Petition No.2221 of 2018 and submitted that the material seized by the Department from the Sr. Accounts Manager of the assessee&#....
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....ction u/s 132 of the Act carried in case of the assessee and group concerns on 04/01/2023 as under: The reasons recorded for reopening of the assessment recorded are as under: 1. A search and seizure operation u/s 132 of the IT Act was carried out by the ADIT- (lnv.), Unit-I (1), Hyderabad on 04.01.2023 covering the group cases of M/s Exel Rubber Group and related entities/ individuals. The case of the assessee, M/s Ace Tyres Private Limited, a group company, in which search u/s.132 was conducted on 04.01.2023 was centralized to this office ACIT-CC- 1(2), Hyderabad. 2. During the Search proceedings, details of various unaccounted cash receipts, viz. scrap sales, cash generated from adjustment purchase transactions, cash received on sale of lands, etc. were found and seized in certain cases. After analysis of the seized material and investigation, the ADIT (Inv.), Unit-(1) has quantified the undisclosed income detected in the hands of the assessee company M/s Ace Tyres Private Limited, as under: Asst. Year Undisclosed Income Quantified by ADIT Additional Income admitted by the assessee out of the Undisclosed Income Detected 2014-15 1,62,60,0....
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....rs of Exel Rubber Group of assessee's business concerns. On verification of the Laptop, the Department found that there was a FOCUS 5.5 Software and some MS Excel work books containing the details of several 100s of transactions representing receipts and payment in cash from the financial year 2013-14 to 2022-23. A statement of Shri Ramesh Kumar Sanaka was recorded during the course of search wherein he explained the transactions as found in FOCUS 5.,5 Software as unaccounted receipts generated from sale of scraps generated under various process of manufacturing of products and packaging material etc. There were also transactions recorded regarding expenditure incurred in cash. These transaction as found recorded in FOCUS 5.5 Software are in the nature of cash receipts as well as cash ITA Nos 1084 to 1088 and 1207 of 2025 ACE Tyres P Ltd expenditure and pertain to three companies namely Exel Rubber (P) Ltd, M/s. ACE Tyres (P) Ltd and M/s. Vilas Polymers (P) Ltd. The relevant part of the statement of Shri Ramesh Kumar Sanaka recorded u/s 132(4) of the Act on 04/01/2023, 05/01/2023 and 06/01/2023 during the course of search & seizure action at his residential premises at Flat No.....
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....ications. M/s VPPL is into the business of manufacturing of automotive flaps. The company does the job for the CEAT tire company using the raw material supplied by them and as per their specifications. Further, the company also does the job work for Apollo and Bridgestone using the raw material purchased by us and as per their specifications. Q.9 Please explain your role and responsibilities in the company M/s ERPL and in overall Exel group of business concerns. Ans: I am working as Sr. Manager (Accounts) in the company, M/s Exel Rubber Private Limited. I prepare quotations to the customers quarterly for the material manufactured by the company. I prepare CMA (Credit Monetary Appraisal) data of the company to the banks for renewal of credit limits. I follow up the payments from customers. Further, I attend to the works assigned by the management from time to time. Further, I am the Finance Head looking after the entire Exel group of business concerns and report directly to Sri G. Raghunath Reddy. Q.10 Please give details of key employees of accounts department of M/s ERPL and Its group concerns. Ans: Besides myself as Sr. Manager (Accoun....
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....ts and payments made in cash for the FY 2020-21 of M/s ATPL. This excel workbook was created by Sri Jwala Prasad, Asst. Manager (Accounts) and records in it were updated by me and him. The transactions mentioned in this excel workbook were not recorded in the books of accounts of M/s ATPL These transactions were downloaded from Focus 5.5 software maintained in my laptop and the complete transactions are available in the software. Q.60. I am showing you excel workbooks named "CASH ACE 21-22", "CASH EXEL 20-21", "CASH EXEL 21-22" and "CASH VILAS 21-22" found in the folder named "CASH" on desktop of your Dell laptop which was found during the course of search and seizure proceedings at this premise. Please confirm the same and explain the contents in them. Please also state that the transactions in the excel workbooks were recorded in the books of accounts. Ans. Yes sir, I confirm that an excel workbooks named "CASH ACE 21-22", "CASH EXEL 20-21", "CASH EXEL 21- 22" and "CASH VILAS 21-22" found in the folder named "CASH" on desktop of my Dell laptop. The excel workbooks contain the details of receipts and payments made in cash for the FY 2021-22 of M/s ATPL, FY 2020-2....
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.... and his personal belongings, assets, bank account lockers as well as Laptop were subject matter of the search during the action by the Department. There was a simultaneous search & seizure action in case of Exel Group of companies comprising M/s. Exel Rubber (P) Ltd, M/s. Ace Tyres (P) Ltd, M/s. Vilas Polymers (P) Ltd, M/s. Spinmax Tyres (P) Ltd and M/s. Laxes Machine (P) Ltd vide warrant of authorisation and Panchanama as under: 17. In the said search & seizure action in case of Exel Group, statement of Shri Gangaram Raghunath Reddy, M.D of Exel Group of companies was recorded on 17/01/2023 u/s 132(4) of the I.T. Act. During the said statement, Shri Gangaram Raghunath Reddy was confronted with the statement of Shri Ramesh Kumar Sanaka recorded on 04/01/2023 to 06/01/2023 at his residence at Flat No.401,Chestiya Estates as well as statemennt dated 06/01/2023 again recorded in the search & seizure operation in case of Exel Rupper (P) Ltd a group entity at the Corporate Office at Plot No.7 Thrushna Building, TGHC Layout, Infocity, Madhapur, Hyderabad. During the said statement at the Corporate Office of Exel group of entities Shri Ramesh Kumar Sanaka was confronted with his....
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.... As stated earlier, these unaccounted cash transactions as recorded above contain details of cash generated from sale of scrap, purchase adjustments/accommodations, sale of raw materials, sale of immovable property, interest received on loans advanced, repayment of such loans advanced by M/s Exel Group and its Management in their individual capacity. I would like to further state that amounts mentioned in the table above for different financial years include amounts realized from the debtors to whom either the Group concerns or the individual directors have advanced loans earlier which have to be adjusted for arriving at the actual cash generated over years. " 18. Thus, the financial year wise summary of unaccounted cash transactions of the entire Exel Group of companies was given by Shri Ramesh Kumar Sanaka which reveals that for the A.Y 2011-12 to 2017-18 i.e. relevant to the A.Y 2012-13 to 2018- 19 no specific unaccounted cash receipts is attributed to individual company i.e. Exel Rubber (P) Ltd and Ace Tyres (P) Ltd. Only from the financial year 2018-19 onwards, the details of specific amount of unaccounted cash receipts in case of these 2 entities wer....
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....upto 04-01-2023) 25996415 16180065 8027794 50204274 TOTAL 56,25,98,679 60,42,95,828 37,59,06,768 154,28,01,275 20. This apportionment of the unaccounted income on the part of the Assessing Officer during the assessment proceedings for year-wise and entity-wise and specifically for the assessee M/s. Ace Tyres (P) Ltd is not matching with the details as given by the Assessing Officer while recording the reasons for reopening of the assessment in case of Ace Tyres (P) Ltd. Therefore, at the time of recording the reasons, the Assessing Officer was not reasonably ascertain the amount of unaccounted income escaped the assessment for the A.Ys 2014-15 to 2018-19. Even these details as recorded by the Assessing Officer in the reasons for reopening of the assessment as well as in the assessment order are not matching with the details as furnished by Shri Ramesh Kumar Sanaka being reproduced in the statement recorded u/s 132(4) of the Act as well as the actual transaction as found in the Laptop of Shri Ramesh Kumar Sanaka. The total sum of the receipt and payment side of the Excel Sheets as taken from the Laptop of Shri Ramesh Kumar Sanaka are Rs. 233,32,59....
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....s in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of i) an asset ii) expenditure in respect of a transaction or in relation to an event or occasion; or iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more; Provided further that the provisions of this sub-section shall not apply in a case for the relevant assessment year beginning on or before 1st day of April, 2021 if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub- section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021: If a notice u/s 148 or section 153A or section 153C could not have been issued at that time on account of being beyondc the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section or section 153A or section ....
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.... authorization is executed or (c) a requisition made u/s 132A Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause () of section 148A does not exceed seven days], such remaining period shall be extended to seven days and the period of limitation under this sub- section shall be deemed to be extended accordingly. Explanation - For the purposes of clause (b) of this sub- section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (1A) Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an ass....
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....corresponding cash or any other assets were found during the course of search and seizure action representing these entries. It is not the case of either party that these transactions as found in the Laptop in question are in respect of purchase or acquisition of any asset. Therefore, the business transactions of sale of scrap or commission income etc, as well as the expenditure incurred in relation to the business activity would not constitute of an asset in terms of section 149(1)(b) of the Act. It is also a matter of fact and record that these transactions as found in the Laptop in a software FOCUS 5.5 are not in the nature of any accounts much less the books of account. These are the simple details of cash receipts and cash payments in respect of the transaction of scrap sale etc, as well as payment towards expenditure and that too the consolidated details of the entire Exel Group not a separate account of each company is maintained. Further, these are only the details of selective transaction in cash and not the transactions of other then cash. Therefore, these details found in the Laptop of the Sr. Accounts Manager, Shri Ramesh Kumar Sanaka would not constitute the books of a....
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....to 2018-19. Thus it is a simple case of non-application of mind and a borrowed satisfaction on the part of the Assessing Officer while recording the reasons for reopening. 25. Apart from the non-application of mind regarding the nature of the transaction, quantification of the income and allocation of the amounts of receipts and payment to each of the group companies, the Assessing Officer has though recorded that the income chargeable to tax represented in the form of an asset and an entry or entries in the books of account as per the provisions of section 149(1)(b) of the Act. However, not a single word is stated by the Assessing Officer either in the reasons recorded for reopening of the assessment or in the assessment order to prima facie show that the income escaped assessment represents an asset and further what kind of an asset. Similarly, these details as recorded in the software Focus 5.5 in the Laptop of Shri Ramesh Kumar Sanaka do not constitute the entries in the books of account, therefore, two statements of the Assessing Officer in the reasons recorded for reopening of the assessment is very vague and without any basis. The Assessing Officer ought to have giv....
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....aka and the assessee company cannot obliterate the fact of 2 separate search & seizure operations. Section 148A casts an obligation on the Assessing Officer to conduct an inquiry with the prior approval of specified authority before issuing notice u/s 148 of the Act. However, the proviso to the said section carves out an exception in the cases where a search is initiated u/s 132 or books of account, other documents or any asset are requisitioned u/s 132A of the Act in the case of the assessee on or after 1/4/2021. Therefore, only because of this proviso, the Assessing Officer need not to conduct any inquiry u/s 148A before issuing notice u/s 148 of the Act. In the case in hand, though the search was conducted in the case of the assessee u/s 132 of the Act on 4th January, 2023, however, the alleged incriminating material which is the basis of the initiation of proceedings u/s 147/148 of the Act is found and seized from the possession of Shri Ramesh Kumar Sanaka under a separate search & seizure operation. Thus, that being the case, the proceedings u/s 147/148 could be initiated only as per clause (b) and clause (c) of the proviso to section 148A of the Act. For ready reference, sect....
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.... 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 70 relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. Explanation.- For the purposes of this section, specified authority means the specified authority referred to in section 151. Prior approval for assessment, reassessment or re- computation in certain cases. 148B. No order of assessment or reassessment or re- computation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause () or clause or clause (ii) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director." 27. Therefore, if the Assessing Officer has not followed the procedure as provided in clause (b) and clause (c) of the proviso t....
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....irector General of Income Tax (Inv.), Hyderabad for issuance of u/s. 148 of the I.T Act. Date: 08/09/2023 Sd/- M NAVEEN, IRS Additional Commissioner of Income Tax, Central Range- 1, Hyderabad. 28. Though there is a recommendation by the Pr. CIT, however, the sanction/approval granted by the DG reveals that it has concurred with the proposal that the impugned matter covered u/s 149(1)(b) of the Act and issue of notice u/s 148 is approved. This sanction/approval granted by the DGIT (Inv) Hyderabad in the light of the facts as discussed in the preceding part of this order clearly shows that the crucial aspects of the matter were overlooked while granting the sanction/approval. The seized material was found and seized from the possession of one Shri Ramesh Kumar Sanaka in a separate search & seizure operation which is the very basis of the initiation of the proceedings. However, the proceedings are initiated on the premises that the seized material is found from the possession of the assessee during the search & seizure operation of the assessee. The other glaring aspect of the matter is that only the receipt side of the details of the transactions found in t....
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....mation leading to allegation of escapement of income must be clear and explicit at the initial stage itself prior to recording of the reasons and then issue of notice pursuant to the reasons. The show cause notice (SCN) having used both the phrases at a time, it suffers from vagueness and demonstrates absence of initial judgment itself, as to whether the information represents assessee`s asset or expenditure. As a result, the notice becomes bad in law and assessment order deserves to be quashed. The exercise of jurisdiction u/s the new sections 147 and 148 of the Act, is not meant to determine during reassessment, as to whether an item represents an asset or an expenditure or whether it exceeds the threshold of Rs. 50 lakhs. The said exercise is required to be carried out prior to or at the time of recording the satisfaction and the reasons and while obtaining the requisite approvals of higher authorities. Obviously, this has not been done and hence the notice suffers from an inherent jurisdictional lack of power. The assessee submitted before the assessing officer that in the assessee`s case, no 'asset' or 'expenditure' is identified in the entire Annexure (Reason)....
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....the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration." 31. Thus, the Hon'ble High Court has held that granting the sanction mechanically in order to discharge the statutory obligation goes to indicate that the authority did not apply its mind while granting the sanction. The satisfaction has to be with the objectivity on the objective material. Therefore, the Hon'ble Hig....
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.... the ground of non-application of mind by the authorities before granting the approval. 34. In the case of SBC Minerals (P.) Ltd. v. Assistant Commissioner of Income-tax (Supra), the Hon'ble Delhi High Court while considering an identical issue has held in para 14 and 15 as under: "14. Perusal of the record reveals that the request for approval under section 151 of the Act in a printed format was placed before the Principal Chief Commissioner of Income-tax ["PCCIT"] on 20-3- 2023. PCCIT granted the approval the same day. The approval accorded by the PCCIT in Column No. 22 is extracted below:- 22. Reasons for according approval/rejection by the specified authority to der u/s 148A(d) AND/OR issuance of notice under section 148 of the Income-tax Act, 1961? Remarks : Approved u/s 148A(d) as a fit case. Name: RAJAT BANSAL Designation: PCCIT, DELHI Date: 20/03/2023 15. It is evident that the approval order is bereft of any reasons. It does not even refer to any material that may have weighed in the grant of approval. The mere appending of the word "approved by the PCCIT while granting approval under section 151 to the re- opening under ....
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....cts contained in those communications. All that he has said was that from those communications it appeared that the alleged creditors are name- lenders and the transactions are bogus. The Income-tax Officer did not even come to a prima facie conclusion that the transactions to which he referred to are not genuine transactions. He appeared to have only a vague feeling that they may be bogus transactions. Further, in his report he stated, "hence proper investigation regarding these loans is necessary. In those circumstances the Supreme Court pointed out that the conclusion of the Income-tax Officer was that there was a case for investigation as to the truth of the alleged transactions which is not the same thing as saying that there are reasons to issue notice under section 148. In this case, however, the Income-tax Officer refers to the order of the sales tax authority determining a turnover at a higher figure and levying penalty for the suppression of turnover. On the basis that the turnover has been suppressed he was prima facie entitled to assume on the strength of the order of the sales tax authorities, the Income-tax Officer had reasonable grounds to say that there was omission....
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....ied at all having regard to the facts and circumstances of the case, the court would not hesitate to say that the requirements of section 151(2) are not satisfied even though the Commissioner might have said against column 8 that he was so satisfied. But, in this case, I am unable to say that the Commissioner could not have applied his mind or could not have been satisfied. The form like the one which is being used containing an endorsement merely saying "Yes" would justifiably cause apprehension that the act of the Commissioner is a mechanical act. In order to obviate this impression and to infuse more confidence in the assessee, it would be proper if the Commissioner also briefly states why he has given his sanction to the proceedings under section 147, thus avoiding all arguments in courts of law whether he applied his mind or he would have been satisfied in the circumstances of the case or not. The writ petition is dismissed but in the circumstances without costs. 37. It was held by the Hon'ble High Court that merely putting the word 'yes' against the column would not satisfy the requirement of section 151 of the I.T. Act. 38. The Hon'....
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....ad in the body of the "reasons to believe" stated that the approval u/s 151 of the Act was to be obtained from the Commissioner of Income-tax (OSD), Range-VI, Pathankot, while for the same as per the form of approval was obtained from the Additional CIT, Range-VI, Pathankot is concerned, we are of the considered view, that the said assertion of the ld AR is based on misconceived and half-baked facts. As stated by the Ld DR, and rightly so, as the Commissioner of Income-tax Range-VI, Pathankot was at the relevant point of time holding the charge as that of the Additional CIT, Range-VI, Pathankot, therefore, it was incorrect on the part of the Id AR to claim that the AO had obtained the approval from an authority different from that as stated in the body of the "reasons to believe". We, thus, finding no substance in the aforesaid claim of the Id AR are constrained to reject the same. 8. Adverting to the claim of the Id AR, that the authority granting the sanction u/s 151 of the Act, viz. Addl. CIT, Range-VI, Pathankot had granted the approval in a mechanical manner, ie, without application of mind, we find substance in the same. On a perusal of Column No. 12 of the form of a....
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....ord his satisfaction as regards the reasons recorded by the AO for reopening the case of the assessee, in a manner, which would reveal that as per him it is a fit case for issuance of notice u/s 148 of the Act. In our considered view, mere scribbling of "Yes" by the approving authority can by no means suffice the statutory obligation cast upon him for granting approval after due application of mind for issuance of notice u/s 148 of the Act by the AO, because, if that be so, then, the said statutory check on the part of the superior authorities would be rendered as mere an idle formality, nugatory or in fact nothing better than an eye wash, which would beyond any doubt defeat the very purpose for which the said supervisory jurisdiction of the superior authorities had been made available on the statute by the legislature. Our aforesaid conviction is supported by the recent order of this Tribunal in the case of Shri Charanjiv Lal Aggarwal, Prop. M/s. Premier Rubber Mills, Amritsar Vs. ITO, Ward-4(1), Amritsar, ITA No. 598/Asr/2015. Also, a similar view had been taken by this Tribunal in the case of S/shri Tralochan Singh & Narotam Singh Vs. ITO, Ward 1(4), Mansa in ITA Nos. 306 & 307/....
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....ction in a mechanical manner without application of mind. He accorded the sanction for issuing notice under section 148 of the Act in a mechanical manner. 14.1 On a similar issue the Hon'ble Guwahati High Court in the case of Ladhuram Laxmi narayan Vs. ITO, Additional 102 ITR 595 (supra) held as under: 22. Sub-section (2) of Section 151 requires that before issuing a notice under Section 148, the Commissioner must be satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. The submission of the learned counsel is that in the instant case there was no real satisfaction of the Commissioner or in other words there could not be satisfaction of the Commissioner as contemplated under Subsection (2) in the facts and circumstances of the case. In the column of the report whether the Commissioner was satisfied, the Additional Commissioner said "Yes". 23. We have already found that the first ground given by the Income-tax Officer in his report praying for sanction for acting under Section 148 is admittedly a mistaken ground and, therefore, non-existent. That being so, the satisfaction of the Additional Comm....
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....ase of CIT Jabalpur Vs. S. Goyanka Lime & Chemical Ltd. reported at (2015) 56 Taxmann.com 390 by following its own decision in the case of Arjun Singh Vs. ADIT (2000) 246 ITR 363 (M.P) held as under: 7. We have considered the rival contentions, and we find that while according to sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court, and the following principles are laid down:- The Commissioner acted, of course, mechanically in order to discharge is statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material. 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by....
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....13-14, so respectfully following the aforesaid referred to order dt. 29/06/2021 the reopening of the assessment under section 147 of the Act by issuing the notice under section 148 of the Act is quashed. Since we have decided the legal issue in favour of the assessee therefore no finding is given on the other grounds raised by the assessee on merit." Also, we find that a similar view had been taken by the ITAT, Chandigarh Bench in the case of Shri. Tek Chand Vs. The ITO, Ward-2, Karnal, ITA No. 255/Chd/2020, dated 15.03.2021. In the said case the approving authority, i.e., Principal CIT, Karnal had granted the approval for issuance of notice u/s 147 of the Act, as under:- "Yes, satisfied, it is a fit case for issue of notice under section 148 Sd/- Pr. CIT, Karnal" The Tribunal by drawing support from the judgments of the Hon'ble High Court of Madhya Pradesh in case of CIT Vs. S. Goyanka Lime & Chemical Ltd (2015) 56 taxmann.com 390 (MP) and that in the case of Arjun Singh Vs. Asst. DIT reported in (2000) 246 ITR 363 (MP), had observed, that as the reopening of the case of the assessee u/s 148 was on the basis of a mechanical approval....
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....him u/s 147/143(3) of the Act, dated 24.02.2014 is herein quashed." 41. Therefore, in view of the fact that notice issued u/s 148 of the Act in respect of A.Ys 2014-15 to 2018-19 after the expiry of 3 years from the end of the A.Y, the approval of the specified authority granted in a mechanical way renders the reopening of the assessment itself bad in law. Accordingly, in view of the facts and circumstances as cited above and various decisions as stated above, we hold that the reopening of the assessment is not valid and liable to be set aside. Apart from the invalid approval/sanction u/s 151 of the Act, the Assessing Officer has also failed to bring the case in the category where mandatory conditions u/s 149(1)(b) of the Act are satisfied for initiation of proceedings u/s 147/148 of the Act after the expiry of 3 years from the end of the relevant A.Ys and therefore, the reopening of the assessment for want of the satisfaction of mandatory condition u/s 149(1)(b) of the Act is also invalid and liable to be quashed. We order accordingly." 14. In this view of the matter and considering the facts and circumstances of the case and also by respectfully following the Order da....
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....plied the provisions of Section 149 of the Income Tax Act. 5. On the facts and circumstances of the case, Learned CIT(A) erred in dismissing the legal grounds. 6. In the facts and circumstance of the case that the Assessment Order Passed U/s 143(3) read with Section 148 is vitiated and has become unsustainable in law since the approval U/s 148B has been accorded by AddICIT/JCIT- (Range head in a mechanical manner. 7. On the facts and circumstance of the case, sanction under Section 151 of the Act, has been granted mechanically and without satisfaction that how it fits under Section 149(1)(b)(i) and Section 149(1)(b)(iii). Accordingly grant of sanction is liable to be declared as nullity and invalid and resultantly, Impugned notice under Section 148 is bad in law. 8. On the facts and circumstance of the case, Learned CIT(A) is not justified in sustaining the addition of Rs. 2,97,38,307/-. 9. On the facts and circumstance of the case, Learned CIT(A) is not justified in sustaining the addition of Rs. 1,64,69,846/-. 10. Any other ground or grounds that may be urged at the time of hearing of the appeal." 16. So far as the facts an....
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....nd notice u/sec.148 was issued based on the same material/ information in the possession of the Assessing Officer arising from the search & seizure action and hence, the proviso to section 148A is applicable for issuing 2nd notice u/sec.148 of the Act. Thus, the learned DR has submitted that there is no infirmity or illegality in the notice issued by the Assessing Officer u/sec.148 dated 14.11.2023. 19. We have heard both the parties, perused the material on record and had gone through the orders of the authorities below. We find that, on identical set of facts in the case of M/s. ACE Tyres (P) Ltd., Hyderabad vs. ACIT, Central Circle-1(2), Hyderabad in ITA.Nos.1084 to 1088 and 1027/Hyd./2025 for the assessment years 2014-2015 to 2019-2020, [one of the Excel Group of Companies] the Coordinate Bench of this Tribunal vide Order dated 24.09.20225 has held that after dropping the notice issued u/sec.148 of the Act dated 18.03.2023, the AO cannot issue 2nd notice u/sec.148 of the Act dated 14.11.2024, without following procedure provided u/s 148A of the Act, and thus, second notice issued u/s 148 dated 14.11.2024 is invalid and liable to be quashed. The relevant observations of the T....
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....ing the return of income. In the absence of fresh material or change in the facts, the Assessing Officer cannot be allowed to reinitiate the proceedings already dropped by issuing a second notice u/s 148 of the Act and that too when the reasons for dropping of the earlier proceedings was not beyond the control of the Assessing Officer. Therefore, we are of the considered view that the notice issued u/s 148 on 14/11/2024 after dropping the proceedings initiated vide notice u/s 148 issued on 18/03/2023 is invalid and liable to be quashed on this ground alone. We order accordingly." 20. In the present case, there is no dispute with regard to the fact that the Assessing Officer has issued notice u/sec.148 of the Act on 18.03.2023 in response to which the assessee has filed return of income on 15.11.2023. Further, the Assessing Officer dropped the re-assessment proceedings initiated vide notice issued u/sec.148 of the Act dated 18.03.2023 and had issued a fresh notice u/sec.148, without issuing notice u/s 148A(b), calling for explanation if any, from the assessee and passing an order u/sec.148A(d) of the Act disposing of the objections if any, filed by the assessee before issuing the....
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....is bad in law and liable to be quashed. Thus, we quash second notice issued u/s 148 of the Act, dated 14.11.2024 and consequent assessment order passed by the Assessing Officer for the assessment year 2019-2020. 21. In the result, all the six appeals i.e., ITA Nos. 1870, 1871, 1872, 1873, 1874 and 1875/Hyd/2025 of the Assessee for the assessment years 2014-2015, 2015-2016, 2016-2017, 2017-2018 and 2019-2020 are allowed. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 18.02.2026. ============= Document 1 Ans. No sir. Bon 61/ 25 4-1: DEPONENT बी. दिनेश आदितà¥à¤¯, à¤à¤¾.रा.सै. 9. DINESH ADITYA, IR.S. 1-2. # 06/1/23 (S-RAMBLA LUMAR) Deputy Director of Income Tax (hov.) ==- 1(3). 22712/ Unit-1(3), Hyderabad 1 Document 2 PANCHANAMA Party No. H O M/s Ramesh Kumar Sanaka [A] Warrant in the case of Flat No. 401, Chestiya Estates, Near Nagarjuna High School, Rajeev Nagar, Khairatabad, Hyderabad - 500045. (B) Warrant to search : (Details & Ownership of place of search) Telephone Numbers ....
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....following were found but not seized ; [] Gold and Jewellery as per Annexure - C. 6. In the course of the search, the authorized officer Bandla Dinesh Aditya, DDIT(Inv.) recorded the statement of Sri Ramesh Kumar Sanaka on solemn affirmation/oath, in our presence. No coercion, threat, inducement, promise or other undue influence was brought to bear on the above deponent. The statement was rend over / explained-in-the-local language-via -__ to the deponent's, who have signed the statement in token of having understood its contents and of agreeing that it had been correctly recorded. 7. The following other important persons were present in the place of search an either took an active part or helped the search proceedings Name Relationship Jhansi Rani Sanaka Wife 8. The search commenced on 04.01.2023 at 06.50 a.m./p.m. The proceedings were closed 06.01.2023 at 10.15 a.m./p.m as finally-concluded / temporarily concluded for the day to be commenced subsequently for which purpose seals were placed the locker inside Almirah in the Bed room, situated at the North-west corner of the residence premises at Flat No. 401, Chestiya Estates, Near Nagarjuna High School, Raje....
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.... 04.01.2023 PAGE NO.1 LIST/INVENTORY OF JEWELLERY FOUND/SEIZED List of Bullion (Primary Gold, Silver etc.)/gold ornaments and jewellery/silver articles found in the case of N/6./Shri/Smt Ramesh Kumar Sanakta at Flat No. 401, Chestiya Estates, Near Nagarjuna High School, Rajeev Nagar, Khairatabad, Hyderabad - 500045 in the course of search. Specific place where found_in the almirah situated in Bedroom and locker no. 422 of Central bank of india, Kalyan Nagar Branch. Items claimed to be belonging to Emt Jhansi Rani Sanaka, Smt Soufanya Jampa & Master. Thanvik. Value Net Wt. Metal Stones Caratage Gross Wt. Description of the articles/stones No. SI.No. As per the valuation report of the government approved valuer dated 04.01.2023 Signature of party (With Name & Position) Signature of Authorised Officer (With Name & Designation) Signature of panchas Merciz 1 S PERESO POMAR 2. 2 2 65 Document 6 RUNNING PANCHANAMA IN THE CASE OF SRI RAMESH KUMAR SANAKA, Flat No. 401, Chestiya Estates, Near Nagarjuna High School, Rajeev Nagar, Khairatabad, Hyderabad - 500045 DATE: 05.01.2023 AT 03:00 PM. During the course of Search....
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....anchas : 1 Sr. Kadaveru Srikanth (Asst. G-III, FCI) 2. Sri Ravindranadhan T M. (Asst. G-III, FCI) S/o Sn Kadaveru Venkatadri. H. No 4-82. Bandaruvirala, Hayath Nagar, Runga Reddy, Telangana - 501505 Aadhar No. 376832658076 Mobile No. 9491878341 S/o Late Sri Parameswaran Nambiar. Flat No. 103. H No: 1-5-145/146. Akshay Fortune, Near Ambedkar Statue, Old Alwal Secunderabad - 500010. Aadhar No- 204618198258 Mobile No. 9346927827 On being called by Sri V A T Venkata Kumar, DDIT(Inv.), on 04.01.2023 at 06:45 AM /pm. we, the above named panchas, presented ourselves at the above place of search. The authorized officer. Sri V A T Venkata Kumar showed the warran of authorization dated 03.01.2023 Issued under section 132 of the income tax Act 1961 / 37Auf-the W.T Aut-4957 in the case of (AI above to search the place of mentioned at (D) above and duly signed and sealed by the Pr. Director of Income tax (Inv.), Hyderabad to Shiri Satendra Sharma (Security incharge) who was present in the said place at the time and after-reading the end-authorization/-after the authorization was explained to him in local language von. Hindi by Shri Rajesh Kumar Meena, Inspector of Income Tax, signed it....
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....hrushna Building TGIIC Layout, Infocity, Madhapur, Hyderabad in our presence. 9. An order under 132[3] of the [ T. Act 1961 in respect of the sealed premises was served to Shri G.Raghunath Reddy by the said authorized officer Sri V A T Venkata Kumar 10. Relare leaving the above mentioned place of the search, the entire search patty again offered themselves for personal search which was taken / dechned. The above panichanuma has been read by uk / explained to us in lucel linguage by Shr+ /-8mt- and is certified that it has been correctly receaded Signature of the Panchas has with date Recibe (0 1 =3 Signature of the person receiving the copy of the panchuriama Signature of the Det Muthorsed Officer WINKu 07/01/23 V.A.T.V. KUMAR. I.R.S Name: 5. RAMESH KUMAL position in / relationship to 'A' Finance Excel Robben 81 kad Dite Document 9 Q.21 Please furnish the Financial Year wise summary of the unaccounted cash transactions of M/s Exel Group of entities. Ans: I am herewith furnishing the Financial Year wise summary as shown below: S.No |Financial Year Unaccounted cash receipts of ERPL Unaccounted cash receipts of ATPL Total Unaccounted cash ....
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....ring 17 Whether the provision of Sec.150(1) are applicable. [Yes/No/NA] If yes, relevant facts to be provided 18 Reasons for the belief that income has escaped assessment. As per enclosed Annexure 314 & 315, Coca Cola Road, Ameenpur Road, Bachupally Village, Hyderabad [] Order u/s148A(d) required for issuance of notice u/s148 Glu/$149(1)(a)-for 3 years under El u/s149(1)(b)-for more than 3 years but no more than 10 years If yes, date(s) of hearing If yes, relevant facts to be provided Reasons for the belief that income has escaped assessment. Date: 05.09.2023. Document 12 3 20 Recommendations of the CIT / PCIT as per annexue attached. . Date: 119121 0 (YOGESH KUMAR VERMA, IRS) Principal Commissioner of Income Tax (Central), Hyderabad. 21 Reasons for according approval / rejection by the specified authority to order u/s 148A(d) and / or issuance of notice under section 148 of the Income Tax Act, 1961 covered w/(199(1) (b). Isone of motive a/s 148 6/10/23 Date: (SANJAY BAHADUR, IRS) Director General of Income Tax (Inv). Hyderabad. Document 13 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DE....