TaxTMI 
TaxTMI 
2026 (8) TMI 178
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....tal income of the Appellant Company at Rs. 2,02,28,960/- as against returned income of Rs. 2,28,964/-. 2. That the order dated 09.12.2025 passed u/s. 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Income Tax Department is against law and facts on the file in as much as he was not justified to uphold the action of the Ld. Assessing Officer, Ward-15(2)(1), Mumbai in resorting to reassessment proceedings and issuing notice under section 148 of the Act. 3. That the order dated 09.12.2025 passed u/s. 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Income Tax Department is against law and facts on the file in as much as he was not justified to uphold the action of the Ld. Assessing Officer, Ward-15(2)(1), Mumbai in making an aggregate addition of Rs. 2,00,00,000/- on account of alleged amount received by the Appellant Company from M/s Evalina Powertec Systems Pvt Ltd (Rs. 1,50,00,000/-) and M/s Vandam Technologies Pvt Ltd (Rs. 50,00,000/-) on account of sale of shares of M/s Delight Resorts Pvt Ltd by treating the same as, alleged, unexplained money u/s. 68 r.w.s. 11....
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....ated 22.03.2025 was issued to the assessee as to why the amount of Rs. 2 crores should not be treated as assessee company's unexplained and unaccounted income and should not be brought to tax u/s. 68 read withSection115BBE of the Act. In response to the show cause, the assessee filed its submissions dated 24.03.2025 stating that the assessee company has sold shares of M/s. Delight Resorts Pvt. Ltd.to M/s. Evalina Powertec Systems Pvt. Ltd. and to M/s. Vandam Technologies Pvt. Ltd. and the amount has been received from these entities towards the sale consideration of the shares sold by the assessee company. It was also submitted that the shares were purchased way back on 24.03.2012 and the same have been duly reflected in the books of accounts and the payments have been made through the banking channel and necessary filing with the Registrar of companies pursuant to section 75(1)of the Companies Act were also submitted. Further, the confirmation as well as the tax returns and the audited financial statements of these two entities were also submitted before the Assessing Officer. The submissions so filed were considered but not found acceptable to the Assessing Officer. As per th....
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....is not clear as to how a transaction for sale of shares to legally incorporated bodies can be equated with or lead to a conclusion as income having escaped assessment. It was submitted that the information relied upon and the various parameters which have been referred to are merely based on some kind of a cursory, even superficial overview of the accounts with no underlying concrete evidence to disprove the genuineness of the transactions and that they are accommodation entries. The various arguments/reasons furnished are merely conjectural whereby it cannot be said to any extent or nature whatsoever that the assessee company has failed to disclose all material facts leading to a conclusion that income has, allegedly, escaped assessment. It was submitted that it is clear that, prima facie and ab-initio, there is no ground to suggest let alone conclude that any income has escaped assessment whereby the notice in question needs to be set-aside at this stage itself. 7. It was further submitted that the Assessing Officer has observed that the funds received by the assessee company on account of sale of shares from two companies namely M/s Evalina Powertec Systems Private Limited (R....
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....he 1st day of April, 2021, pertains or pertain to, or any information contained therein relate to the assessee, the Assessing Officer shall be deemed to have information which suggests that income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. (iii) In addition, section 149 of the Act dealing with time limit for issue of notice provides that no notice under section 148 shall be issued for the relevant assessment year, - (1) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause(b); (2) If three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has 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; ....
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....t years, the Assessing Officer has to conclusively demonstrate that he has in his possession the books of account or documents or evidence represented in the form mandated in clause (b) of section 149(1) which would suggest that income which has escaped assessment amounts to or is likely to amount of Rs. 50 lakh or more. 11. It was submitted that in the instant case, the case has been reopened on the basis of search u/s. 132 of the Act conducted on 17.11.2021 on Galaxy Group, Shri Pradeep Indra Prasad Agrawalla and entry providers Shri Deepak Agarwal and Shri Himanshu Verma showing that the assessee company had, allegedly, obtained accommodation entries to the tune of Rs. 2,00,00,000/- from the entities, allegedly, controlled by them. However, a copy of the said information and the underlying basis, including statements, documents, credible information etc., were not provided to the assessee company. The ld. AR submitted that the fact of an assessee having undertaken certain transactions which are otherwise fully compliant with law and regulatory procedural requirements while itself not leading to any conclusion as to income having escaped assessment cannot also be termed as inf....
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....blish income having, allegedly, escaped assessment in order to ensure a legally defensible issue of notice u/s. 148 which is evidently not the situation here. 13. The ld. AR submitted that in the instant case, the notice relates to A.Y 2017-18. As postulated by section 149(1)(b) as applicable for the year under consideration "No notice under section 148 shall be issued for the relevant assessment year, if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year". The ld. AR submitted that in terms of the above, a direct link is postulated between the "books of accounts, document or evidence" and they being "represented in the form of assets". In the instant case, information related to receipts against sale of shares which has been duly recorded in the books of accounts and none of which can be equated to being represented in the form of assets. A paymen....
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.... self- evident. The ld. AR submitted that the use of the word "reveal" multiplies manifold the onus and responsibility cast on the Department to back up any claim for income having allegedly escaped assessment by evidence which is iron-clad as opposed to evidence which is merely circumstantial, suggestive and conjectural or based on assumption and surmises as in the instant case. The fact of movement of funds, even if of large amounts and of ostensibly at frequent intervals, being transactions in the ordinary course of activity, by themselves do not reveal any escapement of income and which fact cannot be the basis to arrive at a conclusion that income has, allegedly, escaped assessment. This being the case, since the evidence does not "reveal" as per the mandatory specification of section 149(1)(b) that income has escaped assessment, the mandatory conditions specified therein are not fulfilled rendering the notice issued as barred by limitation on this ground also. 17. It was further submitted that while the information forming the basis for issue of notice u/s. 148 does not decisively fall as being "represented in the form of an asset", the entries to which the sums pertain al....
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....ings made by the Assessing Officer including a brief reference to the information received, the purported analysis and subsequent enquiry etc. However, the underlying basis i.e. the information received which forms the basis for the action of the Ld. Assessing Officer, the documentary evidence of the enquiry conducted by him and the process followed for obtaining the requisite and mandatory sanction u/s. 151 of the Act have not been provided to it thereby defeating the very purpose, rationale and logic behind the reassessment provisions in the Act. In particular, the reasons provided to the assessee company were incomplete in as much as the underlying basis, including statements, documents, credible information etc. received on the basis of search u/s. 132 of the Act conducted on 17.11.2021 on Galaxy Group Shri Pradeep Indra Prasad Agrawalla and entry providers Shri Deepak Agarwal and Shri Himanshu Verma showing that the assessee company had, allegedly, obtained accommodation entries to the tune of Rs. 2,00,00,000/- from the entities, allegedly, controlled by them was not provided to the assessee company. Further, the approval of the "Specified Authority" was also not provided to t....
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.... his opinion on a matter which has already been deliberated upon and examined, in particular, when an assessment has been completed vide order dated 10.06.2019 passed u/s. 143(3) after scrutiny of books/records and examination of books of accounts which predicates a due application of mind before finalizing the assessment. Thus, when a matter has been duly examined in earlier assessment proceedings and a view formed on that basis, subsequent reopening of the case on the grounds of income has allegedly, "escaped assessment would amount to exercise of a power to review tantamount to a change of opinion and which action should not and cannot stand the test of law. It was further submitted that in the instant case, the matter had been duly dealt with by the Ld. Assessing Officer in the course of original assessment framed vide order dated 10.06.2019 passed u/s. 143(3) of the Act wherein relevant documents/evidence were duly filed before him and who after due verification/examination of the same did not draw any adverse inference in respect thereof. In the light of these facts, it is clear that issue of notice u/s. 148 of the Act is only based on a change of opinion which goes beyond th....
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.... Verma engaged in providing entries on a huge level by utilizing web of bank accounts in different banks in the name of paper companies. During the search proceedings on 17.11.2021 at the office of the premises of Shri Deepak Agarwal ie B-7, 2nd floor, Ashoka Niketan, New Delhi certain incriminating WhatsApp chats were noticed and extracted from the phone of Shri Rasik Agarwal (son of Shri Deepak Agarwal) whereby various photos of rupees notes and chats of cash/kg transfer were found. In his statement on oath on 17.11.201 Shri Rasik Agarwal was confronted with these extracted WhatsApp chats and he was asked to explain the content of these chats. While explaining these chats, Shri Agarwal admitted that the chats pertained to providing bank entries by their entities on the directions of his father Shri Deepak Agarwal against cash. He admitted that kg in the chat denotes Lakh and thus 100kg refer to 100 Lakh i.e. 1 crore. In one of such transactions Shri Rasik Agarwal accepted about picking up of cash amounting to Rs. 40 lakhs against Rs. 10 note bearing number 47V685223 using it as token for delivery as per the directions of his father Shri Deepak Agarwal. An exerci....
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.... employee of Sh. Rajesh Agarwal (C.A of Sh. Deepak Agarwal) and the address on which these documents were used to send is the office premises of Sh. Deepak Agarwal i.e.. B-7, Second Floor, Ashoka Niketan, Anand Vihar, New Delhi-92. On the basis of the above information received from the Investigation Wing wherein it has been stated that the documents seized during search u/s. 132 in the case of Galaxy group pertain to or information contained therein related to the assessee M/s. Pace Iron and Steel Pvt. Ltd. for the A.Y. 2017-18. As discussed above, I am satisfied that this case is covered under the provisions of explanation 2(iv) of the Section 148 of the Income Tax Act, 1961. As the information referred above suggests that the income chargeable to tax has escaped assessment in this case for the A.Y. 2017-18. Therefore, approval may be accorded to initiate proceedings u/s. 148 of the Act, if deemed fit." 21. It was submitted by the ld. DR that the Assessing Officer was seized of the credible information in accordance with the risk management strategy formulated by the Central Board of Direct Taxes that the assessee has obtained accommodation entries from two entities n....
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....sessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such a notice. 25. Further, as per clause (iv) of explanation (2) to Section 148, where the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned u/s. 132 or section 132A in case of any other person on or after the 1stday of April, 2021, pertains or pertain to, or any information contained therein, relates to the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search has initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. 26. Further, Section 149 talks about time limit for issuance of notice u/s. 148 of the Act. Clause (a) of Sub-section (1) of section 149 ....
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....assessment as represented in the form of an asset, expenditure in respect of a transaction or in relation to an event or occasion or an entry or entries in the books of account. The revelation of income escaping assessment therefore has to be demonstrated with some concrete/tangible material and such revelation of income which has escaped assessment necessarily has to be evident in form of an asset, expenditure in respect of a transaction or in relation to an event or occasion or an entry or entries in the books of account. 29. In light of aforesaid statutory mandate, let's see how the Assessing officer has recorded his satisfaction in the instant case. From perusal of the reasons so recorded, we find that firstly, the Assessing officer has referred to the information so received from the Investigation Wing and thereafter, the Assessing Officer has stated that the information so received from the investigation wing, wherein the documents seized during the search u/s. 132 in the case of the Galaxy Group pertains or pertain to, or any information contained therein, relates to the assessee and he accordingly recorded his satisfaction stating that the matter is covered under Explana....
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.... chargeable to tax has escaped assessment as against the language used in Section 148, which talks about the information with the Assessing Officer which suggests that income chargeable to tax has escaped assessment. We find that the phrase "suggest" and "reveal" cannot be read as synonyms given the context in which they have been provided in the statute which is evident from the fact that where the notice is issued within 3 years from the end of the relevant assessment year so long as the conditions of Section 148 are satisfied, there are no additional condition which needs to be satisfied. The factum of the additional conditions to be satisfied as so provided u/s. 149(1)(b) of the Act clearly demonstrates that these are specific conditions which needs to be satisfied, in addition to conditions u/s. 148, and these conditions are more onerous than what has been provided u/s. 148 and the same needs to be fulfilled before the Assessing Officer acquires jurisdiction where the matter is reopened beyond 3 years from the end of the relevant assessment year. In such cases, the information in the possession of the Assessing Officer not only pertains to or any information contained therein,....
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.... that income chargeable to tax has escaped assessment in the hands of the assessee company. In other words, the fact that these entities are controlled and managed by Deepak Agarwal, whether the same is sufficient enough to hold that the ledger entries in the books of accounts so maintained by these entities are nothing but accommodation entries and by default, reveal that the income has escaped assessment in the hands of the assessee. To our mind, before arriving at any conclusion in this regard, one need to determine how the assessee has accounted for these transactions in its books of accounts and treatment thereof for tax purposes. What happens where the assessee has already offered these transactions in its return of income, what happens where the assessee disputes these transactions as doesn't belong to it or wrongly entered in its name by these entities. Therefore, unless the assessee is confronted with the nature and contents of the ledger entries in the books of accounts of the person searched, which admittedly has not happened in the instant case, one cannot determine that these ledger entries on standalone basis reveal income escaping assessment in the hands of the asses....