ITO WARD-58(3), DELHI vs. B.C.ENTERPRISES, VIVEK VIHAR, DELHI

That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being made without requisite/valid sanction u/s 151 of 1961 Act. 1 4. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being without being passed with fleeting and changing basis/reasoning with every stage of the proceedings which vitiates the impugned reopening action w/s 148/148A of the Act 5. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being contrary to sec 151A/CBDT notification dated 29.03.2022 6. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as there is non rejection of books u/s 145(3) which is fatal to impugned assessment where recorded trading (purchase/sale) transaction are adversely treated without doubting/rejecting audited book results u/s 145(3), which amounts to impermissible aprobate and reprobate.

That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as there is lack of valid notice u/s 143(2) of the Act.

Facts of the case may be narrated as that the assessee has filed its return of income for the A.Y. 2019-20, on 31.10.2019 declaring total income of Rs. 3,51,740/-. As per the information received in the case of assessee in accordance with the Risk Management Strategy formulated by CBDT, on insight portal maintained by the Income Tax Department, under the head High risk CRIU/VRU cases, the assesse, M/s BC Enterprises, has carried out certain transactions during the financial year 2018-19, relevant to the assessment year 2019-20 and the case was selected for reassessment under Section 147 r.w.s. 148 of the Income Tax Act, 1961, (“the Act”, for short). In compliance with notice u/s 148, the assessee filed its return of income on 09.02.2024 declaring a total income of Rs. 3,51,740/-. The Assessment has been completed on a total income of Rs. 4,28,83,467/-, thereby making alleged addition in income aggregating to Rs. 4,25,31,727/-. 4

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A), which is partly allowed vide order 30.08.2024, by restricting the addition from Rs. 4,25,31,727/- to Rs. 3,23,241/-.

Against the aforesaid order of the Learned CIT(A), both the Revenue and the assessee have preferred the present appeal and Cross-Objection respectively before the Tribunal.

We have heard the rival submissions and carefully scanned the material available on record. 5

In the course of hearing, the Learned AR submitted that no any approval u/s 151 of the Act supplied to assessee alongwith notice u/s 148 of the Act and 148A(d) as mandate in CBDT guidelines dated 01-08-2022 and non supplying the same is fatal. It is also submitted that the assessee by way of reply sought for adverse material and cross examination but none of them was provided and same is fatal as held by the coordinate bench in assessee’s own case for AY 2018-19 dated 04-04-2025 to same effect of the judgement in the case of Multimetal Ltd v/s DCIT (DBCWP 9007/2022 dated 19-03-2025) .It is also submitted that the lack of cross examination being provided to assessee despite request is fatal. From the perusal of assessment order, it reveals that vide response dated 16-03-2023 and19-03-2023, placed request for opportunity of cross examination of Shri Ashok Gupta on whose statement, case was reopened for the assessment u/s 147 of the Act but desired cross examination couldn’t took place and the addition in question made on the basis of uncrossed

There is material substance in the submission advanced on behalf of the assessee that the Learned AO solely relied upon the statement of Shri Ashok Kumar Gupta recorded during search and held that Shri Ashok Kumar Gupta himself admitted that he was engaged in providing accommodation entries of non-genuine purchases and non-genuine sales to various parties. The Learned AR in support to above submissions, relied upon assessee’s own case for A.Y. 2018-19 in ITA 4972/Del/2024 in the case of ITO Delhi v/s B.C. Enterprises, order dated dated 04-04-2025 which is squarely identical with present case, relevant extract thereof as under: -

Further from the perusal of the order passed u/s 148A(d), we observed that the AO in para 3 of the order observed that the information was self-sufficient and it was considered that further enquiries u/s 148A(a) of the Act are not required. However, when we see the information as provided to assessee along with notice u/s148A(a) as "Annexure" and reproduced herein above, we find that such information did not speak about the real transactions. It is simply stated that assessee has made bogus purchases in the form of accommodation entries provided by Ahok Kumar Gupta and other entities operated and controlled by him. It is also stated that such information was received through insight portal. However, nowhere it is stated as to how department was having such information, who is Ashok Kumar Gupta, what is the nexus between assessee and Ashok Kumar Gupta, which are the entities managed and controlled by him and which of such entities had sold good to assessee alleged as accommodation entry. Further the details of purchases made, date of transactions, item, value of each individual transaction of purchases etc. were never brought on record as provided in sub-section (a) to section 148A of the Act. Further, AO has never provided the statements of such Ashok Kumar Gupta and the other relied upon material based on which of transactions were alleged as accommodation entry of purchases alongwith the notice u/s 148A(b) of the Act. It appears that the AO simply proceeded to reopen the case of the assessee based on the information available on the insight portal which is uploaded under Risk Management Strategy formulated by CBDT and no independent application of mind by AO before using such information against the assessee nor any enquiry was made as provided in section 148A(a) of the Act. This action of AO is highly arbitrary as he failed to appreciate the intent of the legislation behind introduction of provisions of section 148A beforessue of notice u/s 148 of the Act. The AO not only proceeded to issue notice u/s 148A(a) without making verification of the vague and insufficient information available with him to satisfy himself that income chargeable to tax has escaped assessment but at the same time also failed to provide the material relied upon to the assessee along with notice u/s 148A(b) of the Act. The Hon'ble Supreme Court in the case of Ashish Agarwal (supra) has held that AO should supply the relied upon material to the assessee so as to enable him to respond the show cause notice issued by AO. We also observed that Id. CIT(A) while dismissing this plea of the assessee in para 5.4.3 of the order has observed that 8 ITA No.- 4975/Del/2024 B. C. Enterprises. department was in possession of the material which also include the statement of Shri Ashok Kumar Gupta. However, at no stage of proceedings u/s 148A of the Act, such statements were supplied to the assessee for rebuttal.

Further, from the perusal of the assessment order, it is seen that the Assessing officer has relied upon the statements of Sh. Ashok Gupta and also referred the results of the enquiry conducted u/s 133(6) of the Act from the respective parties, however, despite of request made by the assessee for cross examination of all such parties, no such opportunity was provided to assessee. It is settled proposition of law that if the Revenue is using the statement of third parties, the assessee should have been allowed an opportunity to cross examine those witnesses as has been held by the Hon'ble Supreme Court in the case of Adman Timber Products reported in281 CTR 241. The relevant observations of the Hon'ble Court as under: "6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flow which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross examine those dealers and what extraction the appellant wanted from them." [Emphasis supplied)"

The Co-ordinate Bench of Tribunal in the case of Best City Infrastructure Ltd. vide order dated 31.05.2016 has held that not providing opportunity of cross examination makes the addition invalid. This order is upheld by Hon'ble Delhi High Court as reported in 397 ITR 82. Similar view is expressed by Hon'ble High Courts in following cases: -PCIT vs. Pavitra Realcom Pvt. Ltd. in (Delhi) -PCIT vs. Esspal International Pvt. Ltd. in (Rajsthan) 9

On the basis of foregoing fact situation, the judicial precedents mentioned hereinbefore, and by following the order of the coordinate bench in the assessee’s own case for A.Y. 2018, we find that the addition made without providing an opportunity for cross examination is invalid in the eyes of law and there is material substance in the plea of assessee that the Learned AO supposed to provide all the relied-upon materials and relevant information alongwith notice u/s 148A(b).

As we have decided the legal issue in favour of the assessee, the remaining grounds of Cross Objection as well as grounds of appeal of the Revenue need not be adjudicated.

Consequently, the appeal filed by the Revenue is dismissed, and the cross objection filed by the assessee is allowed.