NISHIT SHRIPAL BHANDARI,MUMBAI vs. ITO, WARD-19(2)(4), MUMBAI

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ITA 1898/MUM/2023Status: DisposedITAT Mumbai26 September 20235 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice for reassessment was invalid because the Assessing Officer failed to obtain the necessary approval from the Principal Commissioner of Income Tax as required by Section 151(1) for reopening after four years. Therefore, the reassessment proceedings were quashed.

What were the facts?

The assessee filed a return of income, and the case was reopened after 4 years based on information about accommodation entries for unsecured loans. The Assessing Officer added the loan amount to the total income as unexplained.

What were the issues?

The primary issue was the validity of the reassessment notice issued after four years without the proper sanction from the Principal Commissioner of Income Tax.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 147,Section 68

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI AMARJIT SINGH

Hearing: 04.09.2023Pronounced: 26.09.2023

आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC, dated 28.03.2023 for A.Y. 2009- 10. 2. Fact in brief is that return of income declaring total income at Rs.95,050/- was filed on 27.07.2009. Thereafter, the case was reopened by issuing of notice u/s 148 of the Act on 09.03.2016 on the basis of information obtained from the DGIT(Investigation), P a g e | 2 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) Mumbai, in respect of accommodation entries of unsecured loans provided by Shri Gautam Jain group /Sanjay Chaudhary group. The assessing officer stated that during the F.Y. 2008-09 the assessee has obtained accommodation entries to the tune of Rs.8,80,000/- from M/s Parshwnath Gems Pvt. Ltd. one of the concern of the above referred accommodation entry provider group. The assessing officer stated that assessee failed to prove the identity, creditworthiness and genuineness of the aforesaid loan transactions, therefore, the same was treated as unexplained amount u/s 68 of the Act and added to the total income of the assessee.

3.

Aggrieved, the assessee filed the appeal before the ld. CIT(A). Before the ld. CIT(A) the assessee submitted that loan transactions were genuine after referring the loan confirmation letter, ITR acknowledgment of the lenders, bank statement highlighting the transactions. However, the ld. CIT(A) has not agreed with submission of the assessee and sustained the addition made by the assessing officer.

4.

During the course of appellate proceedings before me at the outset the ld. Counsel submitted that reassessment made in the case of the assessee is invalid as assessing officer has not obtained the approval of Pr. CIT under subsection (1) of Sec. 151 of the Act prior to issue of notice u/s 148 of the Act as in the case of the assessee the reassessment has been made after the expiry of 4 years from the end of the relevant assessment year. The assessee has also referred the similar submission made before the ld. CIT(A).

1.

P a g e | 3 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) On the other hand, the ld. D.R supported the order of lower authorities.

5.

Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the case of the assessee was reopened u/s 147 of the Act by issuing of notice u/s 148 of the Act dated 09.03.2016 on the basis of information obtained from the DGIT(Investigation) Mumbai that assessee has taken accommodation entries from one of the concern of M/s Gautam Jain group/Sanjay Chaudhary group. On perusal of the assessment order it is noticed that assessment in the case of the assessee pertaining to assessment year 2009-10, was reopened on 09.03.2016 after expiry of 4 years from the end of the assessment year. As per provision of subsection (1) of Sec. 151 of the Act, the assessing officer has to obtain approval of Pr.CIT prior to issue of notice u/s 148 of the Act as in the case of the assessee the reassessment has been made after the expiry of 4 year from the end of the assessment year. However, I find that assessing officer has categorically mentioned at para 1 of the assessment order that the case was reopened u/s 147 of the Act by issuing of notice u/s 148 dated 09.03.2016 after recording reason and with the approval of the Joint Commissioner of Income Tax 19(2) Mumbai. In this regard, I have perused the provision of Sec. 151 of the Act dealing with sanction for issue of notice u/s 148 of the Act. Subsection (1) of Sec. 151 as amended by the Finance Act 2015 w.e.f 01.06.2015 clearly provides that no notice u/s 148 of the Act shall be issued by assessing officer after expiry of a period of 4 years from the end of the relevant assessment years, unless the Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner is satisfied, on the reason recorded by the assessing officer, that it is a fit case for the issue P a g e | 4 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) of such notice. I have also perused the judicial pronouncements referred by the ld. Counsel in the case of Voltas Ltd. Vs. ACIT (2022) 154 taxman.com 127 (Bombay) held as under: “As per provision of section 151(1), sanction of Commissioner or Principal Commissioner is a pre-requisite for issuance of a reopening notice under section 148 after expiry of four years from end of relevant assessment year, therefore, impugned reopening notice issued with sanction of Additional Commissioner and not Principal Commissioner, being legally invalid, was liable to be set aside.” And Hon’ble High Court of Allahabad in the case of Reliable Finhold Ltd. Vs. Union of India (2015) 54 taxman.com 318 (Allahabad) wherein it is held as under: “Where original assessment was made under Section 143(3) issuance of notice u/s 148 after four years from the end of relevant assessment year without sanction of Commissioner was invalid.” And ITAT Mumbai benches in the case of Anil Jaggi Vs. ACIT, Circle 30(1) vide ITA No. 3049/Mum/2016 dated 20.12.2017 wherein it is held as under: “Failure on part of Assessing Officer to take sanction of appropriate authority contemplated under section 151(1) would go to very root of validity of assumption of jurisdiction by Assessing Officer.” In view of the above facts and finding the assessing officer has failed to obtain the approval of Pr. Commissioner of Income tax as provided in sub-section (1) of Sec. 151 of the Act, therefore, the 148 notice issued in the case of the assessee is quashed and set aside as invalid. Therefore, ground of appeal

no. 1 of the assessee is allowed.

6. Since, I have quashed the notice issued and treated the assessment proceedings as invalid, therefore, ground no. 2 of the assssee is not required any adjudication and the same left open.

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