TaxTMI 
TaxTMI 
2026 (9) TMI 324
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.... of the Act, covering the Assessment Years spanning from 2014-15 to 2022-23, as detailed in the schedule below: * A.Y. 2014-15 to A.Y. 2020-21: February 26, 2024 * A.Y. 2021-22: March 21, 2024 * A.Y. 2022-23: March 2, 2024 2. Since the above captioned appeals and cross objections were heard together and the facts in issues are identical, all the 9 appeals and 9 cross objections are being disposed of by this common order for the sake of convenience and brevity. 3. The grounds of appeal raised by the Revenue across all nine appeals are identical, differing only in the specific amounts involved for each year. The grounds in ITA 243/DDN/2026 for AY 2015-16, taken as a lead year, are reproduced below: 1. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 6,22,80,0231- made on account of unaccounted purchases. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the application of section 69B on the unaccounted purchases made by the assessee. 3. That the order of Ld. CIT(A)-3, Noida being erroneous in law and f....
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....adun is illegal, bad in law and without jurisdiction as no valid order under Section 127 of the Act was passed. The notice under Section 148 was issued by the ITO, Kotdwar and the order is passed by Assistant Commissioner of Income Tax, Central Circle, Dehradun rendering the proceedings and the order illegal and bad in law. 7. That, the addition made in the assessment order dated 26.02.2024 is illegal and bad in law. The alleged addition made by the AO basis third party material and dumb documents is unsubstantiated and without any corroborative evidence and is merely on the basis of surmises and conjectures. 8. That, the AO has erred in making the addition of under Section 69B of the Act read with Section 115BBE which has no applicability on the facts of the instant case. The said addition being based on a purported loose sheet/ tally is vague, generic, unsubstantiated, without any legal and justifiable basis and thus liable to be deleted. 9. That, the addition being based on digital data, without the certificate under Section 65B of the Evidence Act, 1872, is illegal, bad in law and unsustainable. 10. That, the addition having been made without....
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....s reproduced as under: Sr no Asst.Year Addition made by AO u/s 69B (In INR) (alleged unaccounted purchases) Addition made by AO for alleged undisclosed profit (In INR) Action by CIT(A) 1 2014-15 3,68,81,488/- 1,36,461/- The CIT(A) has held that the alleged unaccounted purchases would have led to sales and the AO has already separately made an addition on the profit as well. Hence, the CIT(A) deleted the addition of alleged unaccounted purchases and restricted the addition only to the profit element and to the extent of the addition made on profit by the AO. Reliance in this regard is placed on several judicial precedents correctly followed by the CIT(A) wherein it has been held that only the profit element can be brought to tax. 2 2015-16 6,22,80,023/- 2,36,664/- 3 2016-17 6,48,95,020/- 3,05,006/- 4 2017-18 4,96,27,412/- 2,87,838/- 5 2018-19 5,79,52,937/- 2,54,992/- 6 2019-20 4,76,87,294/- 2,09,824/- 7 2020-21 3,77,36,909/- 1,62,268/- 8 2021-22 3,62,47,164/- 1,12,366/- 9 2022-23 1,45,36,561 39,248/- Given the facts as above, we shall now deal with the var....
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....come, if any, chargeable to tax on such transactions can only be the real income/profit arising therefrom and not the gross value of the purchases. The aforesaid position is further fortified by the fact that even the learned Commissioner of Income-tax (Appeals) has restricted the addition to the profit element allegedly embedded in the impugned purchase and sale transactions. Thus, the ultimate income alleged to have escaped assessment is confined to the real income/profit attributable to the said transactions and is admittedly below Rs.50 lakh in each of the relevant assessment years. Accordingly, even proceeding on the assumption that the alleged transactions constitute income which had escaped assessment, the quantum of such income is admittedly below the statutory threshold of Rs.50 lakh prescribed under section 149 for issuance of notice beyond the period of three years from the end of the relevant assessment year. It is therefore respectfully submitted that the AO could not have invoked the extended limitation prescribed under section 149 in the facts of the present case. Once the AO himself accepted that the alleged unaccounted purchases were subs....
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.... cash sales made were not recorded in its books of accounts. The assessee was one of the entities to whom cash sales were made by Ravinder Oil Group which was not disclosed by the assessee in its books of account. With such information of unaccounted purchase made from M/s Ravinder Oil Group, the AO issued notices u/s 148 dated 29.03.2023 for the AY 2014-15 to 2018-19. 9. We note that section 149(1)(a) prescribes time limit for issuance of notice u/s 148 upto only three years from the end of the relevant assessment year. The provisions of section 149(1)(b), however, extends the period upto ten years from the end of the relevant assessment year with certain conditions. The conditions are that a notice under section 148 can be issued only where the AO is in possession of books of account or other documents or evidence which reveal that the 'income chargeable to tax', which has escaped assessment, amount to or is likely to amount to 50 lakh or more. We find from the assessment order of the AO, that the AO himself has accepted the unaccounted purchases have resulted in corresponding sales and therefore has considered the profit embedded in the unaccounted purchases as well as the un....
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....ut issuing a notice under Section 148 is void ab initio and liable to be quashed. Further, while passing the assessment order under Section 143(3) of the Act, the AO further obtained approval from the JCIT (as mentioned in the assessment order) which itself is an act of illegality as if no notice is issued under Section 148 and jurisdiction is not assumed under Section 148, then there was no basis for the AO to obtain an approval. As no approval is required or contemplated by law for passing an order under Section 143(3) of the Act, seeking an approval when passing an order under Section 143(3) is itself illegal. In Chemical Agencies v. ACIT (ITA No. 7092/Del/2025), Delhi ITAT held that obtaining such non-statutory approval constitutes impermissible interference with the AO's independent quasi-judicial function and vitiates the assessment. Thus, the JCIT's approval cannot cure the jurisdictional defect and, rather, independently renders the assessment order void. Even in the case of Vimal Kumar vs. DCIT (ITA No. 4830/Del/2026) recently on 12.08.2026,1 Delhi ITAT has taken the same view. The relevant judgments relating to this issue are as follows: ....
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....26 at Pg. No. 15 and 21 of the PB, the written submission of the Assessee has been reproduced whereby the Assessee has specifically submitted that opportunity of cross examination should have been provided to the Assessee in light of principles of natural justice. Reliance in respect of this issue has been placed on the following: 1. Chandra Mohan vs ACIT ITA No. 7 to 14/DDN/2026 (ITAT, Dehradun)- Relevant Paras: 36-37 (arising from the same search and similarly placed Assessee) (Pg. 483-521 of Case law compilation)- Hon'ble Court has noted that denial of Assessee's specific request for cross-examination deprived the Assessee of a fair and a reasonable opportunity. Further, it is legal dictum that the statements/material relied by AO having not being tested through cross-examination, lose their evidentiary value and cannot be the basis for sustaining any addition. 2. M/s Andaman Timber Industries v. Commissioner of Central Excise, Kolkata, Civil Appeal No. 4228 of 2006 [Supreme Court]- PB Pages 525-527 3. CIT v. Ashwani Gupta, ITA 1264 of 2008 [Delhi High Court)- Relevant Paras: 6-7 15. From the perusal of the assessment order and the CIT(A) or....
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....a defect in its was not procedural but a condition precedent to the assumption of jurisdiction. 15. Although the above decision was rendered under the Income Tax Act, 1922, still the ratio laid down in the aforementioned decision in our opinion, holds good, for the Income Tax Act, 1961. Since the Assessing Officer in the instant case has admittedly given a period of 90 days from the date of notice i.e. 28.03.2024 instead of giving 3 months clear time from the end of relevant month, therefore, such notice issued u/s 148 of the Act is invalid and therefore, all proceedings based on such invalid notice are liable to be quashed being null and void." The notices for AY 2014-15 (Pg 257), AY 2015-16 (Pg 795-796), AY 2016-17 (Pg 1277), AY 2017-18 (Pg 1721), AY 2018-19 (Pg 2184), AY 2019-20 (3053), AY 2020-21 (Pg 3277) and AY 2021-22 (Pg 3864) of the paper book are already on record. 18. To adjudicate on the issue, it would be prudent to reproduce the provision of law u/s 148, during the relevant period i.e., prior to 01.04.2023, as under: "Issue of notice where income has escaped assessment. 148. Before making the assessment, reassessment or recomputa....
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.... CIT(A) correctly deleted the addition of unaccounted purchases and restricted the addition only to the profit element and to the extent of the addition made on profit by the AO. Reliance in this regard is placed on several judicial precedents, correctly followed by the CIT(A), wherein it has been held that only the profit element can be brought to tax. 1. [2024] Principal Commissioner of Income-tax vs Nandkishor Huaschand Jalan 161 taxmann.com 80 (Gujarat) 2. [2024] Principal Commissioner of Income-tax vs Nandkishor Hulaschand Jalan 161 taxmann.com 81 (SC) 3. [2024] Principal Commissioner of Income-tax vs Max Flex and Imaging Systems Ltd. 161 taxmann.com 775 (Bombay HC) 4. [2022] Principal Commissioner of Income-tax vs S.V. Jiwani 145 taxmann.com 230 (Bombay) 5. [2021] 129 taxmann.com, 257 (Allahabad - Trib.) L.P.R. Construction vs. DCIT 6. [2015] 63 taxmann.com 370, (Ahmedabad - Trib.), DCIT vs. Ashok Weaving Works 7. 2019 (8) TMI 830-ITAT, AGRA, SHRI OM PRAKASH SINGH VERSUS ACIT 8. [2012] 20 taxmann.com 368, (JP)/[2011] 7 ITR(T) 61 (JP), Assistant Commissioner of Income-tax vs. Kanhiya Lal Choudhary ....