TaxTMI 
TaxTMI 
2026 (9) TMI 1153
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....s of Bathwal group indulged in providing accommodation entry of bogus billing in connivance with seven other shell companies, one in the present case namely Silverlake Marketing Pvt. Ltd. In view of the above details, the Assessing Officer held that the transaction made by the assessee with the bogus shell company through bogus billing to the tune of Rs. 1,79,13,000/- was the income chargeable to tax as the same had escaped assessment within the meaning of Explanation 2(b) of section 147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Accordingly, the jurisdictional Assessing Officer, after recording reasons, reopened the assessment and issued notice u/s 148 of the Act on 31.03.2021 and the same was served on the assessee electronically through ITBA portal. 3. The assessee in response to the same filed its return of income on 28.07.2021 declaring total income of Rs. 9,44,260/-. The Assessing Officer issued notice u/s 143(2) which was duly served on the assessee and thereafter the Assessing Officer issued notice u/s 142(1) along with a questionnaire. The assessee in its reply categorically denied to have done any transaction with the said concern M/s. Silverla....
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....arity of even the transaction of receipt or payment, transactional details, details of bank accounts etc. Further, the show cause notice indicates some section, addition is made in some other and computation mentions again some other section. This fact was also admitted by the Assessing Officer. He, therefore, held that the addition made by the Assessing Officer is baseless and without any documentary evidence. According to the Ld. CIT(A), the Assessing Officer cannot merely harp on information received from the Investigation Wing without verifying the same and getting necessary documentary evidences through enquiries. In view of the above, he deleted the addition made u/s 69A. Since the main addition was deleted, he deleted the addition made by the Assessing Officer u/s 69C on account of commission expenses. 6. Aggrieved with such order of the Ld. CIT(A) the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether in law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,79,13,000/- made by the AO u/s 69A of the I.T. Act 1961 on account of availing of bogus billing accommodation entry th....
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....s; reopening u/s 148 is unsustainable & invalid & assessment made u/s 147 dt.29-3-22 is invalid & is liable to be quashed, Vikram Sujitkumar Bhatia (2023) (SC), Sejal Jewellery (2025) (Bom HC)." Gr.No.3 "On facts & circumstances of the case and in law, notice u/s 148 dt.31-3-21 for AY 15-16 is invalid; it is merely based on unidentified/ unrelated transaction & without verifying the information of Rs. 1,79,13,000 which having been allegedly received from Silverlake Marketing, when assessee had not made any transaction with the alleged party (Silverlake); there is no live link/ nexus between the 'information & the "formation of reason to believe' for alleged escaped income of Rs. 1,79,13,000; notice u/s 148 is invalid & therefore, assessment made u/s 147 would also be invalid & is liable to be quashed; relied on Lakhmani Mewaldas (1976) (SC)." 8. It was argued that the above grounds raised in Rule 27 are legal in nature and raised for the first time before the Tribunal which goes to the root of the matter and the respondent-assessee is entitled to urge legal issue by way of application under Rule 27 on the basis of facts already available on record which....
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....of, within 30 days of the notice, file a memorandum of cross objections verified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presented within the period of limitation prescribed under Sub-section (3). Therefore, on a plain reading of the provision, it transpires that a party has been granted an option or a discretion to file cross objection. 17. In case a party having succeeded before Commissioner (Appeals) opts not to file cross objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof which was against the respondent. The Tribunal has, in the present case, unfortunately drawn such an inference which is not supported by the plain language employed by the provision. 18. If the inference drawn by the Tribunal is accepted as a correct proposition, it would render Rule 27 of the Tribunal Rules redundant and nugatory. It is not possible to interpret the provision in such manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected R....
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....g of a cross-objection. (ii) After deliberating on the contentions of the assessee, the Hon'ble High Court found favor with the same. Adverting to the issue as to whether the assessee could have assailed the validity of the jurisdiction u/s.153C of the Act before the Tribunal without filing any cross-objection, the Hon'ble High Court observed that as the assessee wished to raise an issue that was at least prima facie going to the root of jurisdiction to initiate proceedings under Section 153C of the Act, therefore, having regard to the provisions of Rule 27, the Tribunal should have permitted the assessee respondent to have supported the order of CIT (Appeals) on this ground, even without the necessity of filing any cross-objections. Relying on the judgment of the Hon'ble High Court of Gujarat in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. Vs. CIT (2006) 200 CTR 265 (Guj), the Hon'ble High Court observed that the right that accrued to the assessee respondent under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 could not have been taken away by the Tribunal by referring to the provisions of Section 253(4) of the Act. The Hon'ble High Court had observed tha....
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....cordingly submitted that the legal grounds raised by the assessee through the application under Rule 27 be accepted. 13. The Ld. DR on the other hand strongly objected to the admission of the legal grounds raised by the assessee in the application under Rule 27. 14. After hearing both the sides and considering that the facts for adjudication of these grounds are already available on record which though not arose before the Assessing Officer or the Ld. CIT(A), we, respectfully following the decision of the Hon'ble Bombay High Court in the case of Peter Vaz vs. CIT (supra) and the decision of the Hon'ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. (supra), admit the legal grounds raised by the assessee through the application under Rule 27. 15. The Ld. Counsel for the assessee at the outset submitted that the assessee filed the return of income on 05.11.2015 declaring total income of Rs. 9,44,260/-. The Assessing Officer reopened the assessment after recording reasons and issued notice u/s 148 of the Act on 31.03.2021. While reopening the assessment the Assessing Officer obtained the approval u/s 151(1) from the PCIT, Raipur on 30.03.2021. He su....
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....he following decisions and various other decisions: i) Vijaykumar Mangilalji Chordiya vs. NFAC, Delhi vide ITA No.1075/PUN/2024 order dated 19.09.2024 for assessment year 2013-14 ii) PCIT vs. VSL Mining Co (P) Ltd. reported in (2025) 479 ITR 433 (Kar) 17. So far as ground No.3 raised in the application under Rule 27 is concerned, the Ld. Counsel for the assessee submitted that the reopening of the assessment was based on unidentified / unrelated transactions without verifying the information of Rs. 1,79,13,000/- which have been allegedly received from Silverlake Marketing Pvt. Ltd. He submitted that since the assessee had not made any transaction with the alleged party and since there is no live link / nexus between the information & the formation of reason to believe for the alleged escaped income, such notice is invalid and therefore, the assessment completed would also be invalid and is liable to be quashed. 18. So far as the merit of the case is concerned, the Ld. Counsel for the assessee referring to page 38 of the paper book drew the attention of the Bench to the remand report submitted by the Assessing Officer. Referring to the findings given by the L....
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....ed to keep silence after the appellant has proven with documents that the account was closed by 2009. It clearly means that mention of this bank account in the order before jumping to conclusion by the AO has become meaningless. 4. Now the AO has admitted that the narration in bank account of M/s Silverlake Marketing Pvt, Ltd in DCB bank is of one - Satkar Caterers and not Satkar Caterers Pvt, Ltd ( name of the appellant). 5. Inspite of opportunity the AO has not been able to find any link or detail of alleged transaction with the appellant. Further, the assessment order clearly lacks any basis, clarity of even the transaction - receipt or payment, transactional details, details of bank accounts etc. It is also evident from the fact that show cause indicates some section, addition is made in some other and computation mentions again some other section. The AO has even admitted this fact. I clearly find this addition to be baseless without any documentary evidence. The AO cannot merely harp on information received from Investigation wing. It's the AOs duty to confirm the information received, verify the same, get necessary documentary evidences through....
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....al u/s 151 on 30.03.2021 which reads as under: 23. A perusal of the provisions of section 148 would show that for assessment year 2015-16, 4 years time would be ended on 31.03.2020. However, due to Covid-19 pandemic the Legislature enacted the TOLA, 2020 and by virtue of the TOLA all actions that were supposed to be completed on 20.03.2020 were extended to 31.03.2021. By virtue of this enactment, the period of 4 years did not expire before 31.03.2021 and therefore, the specified authority u/s 151(2) has time till 31.03.2021 to grant approval for assessment year 2015-16. 24. We find an identical issue had come up before the Hon'ble Bombay High Court in the case of Swami Shanti Prakash Ashram Trust Ulhasnagar vs. ACIT (supra) where the Hon'ble High Court quashed the notice u/s 148 for obtaining the approval from the CIT(Exemption) as against the approval from the JCIT. The relevant observations of the Hon'ble High Court read as under: "10. We have heard the learned Senior Advocate appearing on behalf of the Petitioner as well as the learned Counsel appearing on behalf of the Revenue. 11. At the outset, we are unable to agree with Mr. Saxena that in the facts o....
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....w regime comes into effect on April 1, 2021." (emphasis supplied) 12. As can be seen from the above reproduction, Section 3(1) of TOLA relaxes the time limit for completion from 20th March, 2020 to 31st March, 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under Section 151 of the Act. In the aforesaid paragraph, the Hon'ble Supreme Court has categorically stated that in the case of Section 151 of the old regime (i.e. prior to 1st April, 2021), the test is if the time limit of four years from the end of the Assessment Year falls between 20th March, 2020 and 31st March, 2021. If it does, then, the specified authority under Section 151(2) has time till 31st March, 2021 to grant approval. In other words, if the time limit of four years from the end of Assessment Year 2015-16 falls between 20th March, 2020 and 31st March, 2021, the Joint Commissioner would be the authority that would have to give sanction for issuance of notice under Section 148 of the Act. 13. In the facts of the present case, the Assessment Year in question is A. Y. 2015-16. The notice under Section 148 of the Act has been issued on 28th....
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....ection 151 of the Act. Consequently, the impugned notice must be construed to have been issued within a period of four years from the end of the relevant Assessment Year 2015-16. In our view, the Apex Court in its decision in the case of Union of India v. Rajeev Bansal (supra) has settled the issue and held that TOLA extends the period of limitation with respect to sanction under section 151 of the Act. The Apex Court has been categoric in expressing its views in paragraphs 73, 74 and 77 of the said judgment, where the Court held as under: Regime Time limits Specified authority Section 151(2) of the old regime Before expiry of four years from the end of the relevant assessment year Joint Commissioner Section 151(1) of the old regime After expiry of four years from the end of the relevant assessment year Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner Section 151(i) of the new regime Three years or less than three years from the end of the relevant assessment year Principal Commissioner or Principal Director or Commissioner or Director Section 151(i) off of the new regime More than three years hav....
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....cts in Prabhakar Nerulkar (Supra) are almost identical to the facts of the Petitioner's case. Accordingly, we are unable to accept the argument of the of the Respondents that the impugned notice issued under section 148 of the Act falls beyond the period of four years from the end of the relevant Assessment Year 2015-16. Firstly, such an argument is contrary to the decision of the Apex Court in case of Union of India v. Rajeev Bansal (supra). Secondly, the argument of the learned counsel of the Respondents cannot be accepted because it is contrary to the averment made by Respondent No. 3 in the affidavit-in-reply to the present Petition, because Respondent No. 3 has made a categorical averment that the contention of the Petitioner that the impugned notice being beyond a period of four years from end of relevant Assessment Year is incorrect. 21. Hence, the case of the Petitioner is governed by Section 151(2), where it is the Joint Commissioner, who should be satisfied with the reasons recorded by the Assessing Officer that it is a fit case for issuance of notice under section 148 of the Act. However, the notice under section 148 of the Act has been issued after obtainin....
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.... not the competent Authority. 31. The observations in the case of Ghanshyam K. Khabrani (supra) clearly come into play where it was observed thus: "There is merit in the contention raised on behalf of the assessee that the requirement of section 151(2) could have only been fulfilled by the satisfaction of the Joint Commissioner that this is a fit case for the issuance of a notice under section 148. Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. That expression has a distinct meaning by virtue of the definition in section 2(28C). The Commissioner of Income-tax is not a Joint Commissioner within the meaning of section 2(28C). In the present case, the Additional Commissioner of Income-tax forwarded the proposal submitted by the Assessing Officer to the Commissioner of Income-tax. The approval which has 21st July 2025 WP 443 OF 2024. ODT been granted is not by the Additional Commissioner of Income-tax but by the Commissioner of Income-tax. There is no statutory provision here under which a power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionar....