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Facts
The assessee's case for AY 2018-19 was reopened under Section 147 based on information that the assessee invested Rs. 16,96,271/- in Eicher Motors Ltd. shares through Vagabond Tradex Pvt. Ltd. using unaccounted cash. The Assessing Officer treated this amount as unexplained money and added it to the assessee's income under Section 69A, taxing it under Section 115BBE.
Held
The Tribunal held that the Assessing Officer's action in reopening the assessment was bad in law due to the absence of a valid approval from the competent authority. Furthermore, even on merits, considering the assessee's plea that shares were purchased in 2009, the lower authorities should have further investigated rather than making additions based solely on investigation wing information.
Key Issues
Whether the reopening of assessment under Section 147 was valid without proper approval from the competent authority, and whether the addition under Section 69A was justified on merits.
Sections Cited
147, 148, 143(3), 153C, 132(4), 69A, 115BBE, 148A, 151, 139(1)
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of ld. CIT(A) dated 28.10.2024 for A.Y. 2018-19. The assessee has raised following grounds of appeal:
“a. That the action of Id.NFAC(A) has exceeded its jurisdiction by confirming the order of NFAC without appreciating the fact that id. JAO has grossly failed to show that his action of reopening was in accordance to the law laid down u/s.147-151 of the Act, and hence, the decision confirming the assessment order is bad in law being void ab inito. It is trite law that power of CIT(A) is curtailed by the power of the JAO. b. Ld. AO erred to do something indirectly which could not have done directly and in the process, he initiated the proceeding even before invoking s.148A(a) of the Act by seeking the information as if it is a case of 143(3) in the proceeding initiated u/s. 147 of the Act and thus, it is a case of extension of limitation period u/s.143(3) of the Act in the pretext of assessment of escapement of income s.147 of the Act which is bad in law being void ab initio. c. Ld. JAO has erred to invoke s.147 of the Act instead of s.153C of the Act in the wake his reliance being placed on information received from the statement recorded u/s.132(4) of the Act. d. Ld.AU is precluded to invoke s.69A of the Act when such transactions itself and resultant income have disclosed and resultant taxes thereon have paid. e. Appellant craves to add, alter, amend or withdraw to/from the grounds of appeal raised here above.”
Brief facts of the case are that case of assessee for A.Y. 2018-19 was reopened under section 147 on the basis of information available with the department that assessee invested unaccounted cash of Rs. 16,96,271/- for purchasing equity share of Eicher Motors Ltd. through Vagabond Tradex Pvt. Ltd. As per the information forwarded by Investigation Wing, New Delhi, Deepak Goel and Vikash Gupta facilitated purchase of shares of reputed listed companies in cash. The cash was collected from persons who were interested to purchase share in cash, which were introduced to such companies and one of them is Vagabond Tradex Pvt. Ltd. Thus, in order to verify the transaction, the case of assessee was reopened. The notice under section 148 dated 13.04.2025 was issued. In response to notice under section 148, the assessee filed return of income on 24.05.2022 declaring same income as declared in income under section 139(1) at Rs. 49.95 lacs.
During the reassessment, the assessing officer issued show cause notice to the assessee on 17.04.2023 for seeking certain information. In response to such show cause notice, the assessee filed his reply dated 24.04.2023. In reply, the assessee asked for material and the information about escapement of income along with approval of higher authorities under section 151 r.w.s. 148A(b). The assessing officer in para 4.3 of assessment order recorded that assessee was informed that notice under section 148A(d) was issued after obtaining prior approval of competent authority.
The assessee was asked about certain details before issuing such notice.
The assessee has not furnished such information. The assessee is questioning the validity of notice and asking for supporting documentary evidence. The assessing officer recorded that despite giving notice to the assessee, he has not furnished any information to disprove accommodation entry arranged through Vagabond Tradex Pvt. Ltd. In the statement of Deepak Goel and Vikas Gupta who were managing Vagabond Tradex Pvt. Ltd. clearly stated that assessee is one of the beneficiaries of their practice of accepting cash and transferring share through accommodation entry. The assessee was given repeated opportunity but he failed to disprove such accommodation entry. The assessing officer recorded that final show cause notice dated 11.09.2023 was issued as to why an amount of Rs. 16,96,271/- used for purchase of shares of Eicher Motors Ltd. should not be treated as unexplained money. The assessing officer recorded that no information or reply was furnished by assessee. The assessing officer treated Rs. 16,96,271/- as unexplained money and added under section 69A and assessed to tax under section 115BBE in the assessment order dated 14.12.2023.
Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detail written submission and statement of facts. In the statement of fact, the assessee submitted that case of assessee was reopened under section
Notice under clause (b) of section 148A was issued on 29.03.2022 alleging that it was issued after obtaining prior approval of ld. PCIT, Mumbai – 17 afforded on 29.03.2022. It was further stated on examination of information which was flagged the stage of conducting enquiry under section 148A(a) is not required. The order under section 148A(d) was passed wherein in para 2 of said order it was recorded that a search and seizure action under section 132 was carried out by DDIT (Inv.) Unit – 54, New Delhi on 25.03.2017. The enquiries were conducted and it was established that Deepak Goel and Vikash Gupta facilitated to purchase shares of reputed listed companies in cash. The cash was taken from clients who were interested to purchase shares in cash and introduced into their companies and one of them is Vagabond Tradex Pvt. Ltd. The assessee invested Rs. 16,96,271/- in the share of companies. The assessee sought copy of all materials and information which was basis of taking view about escapement of income as well as necessary approval for issuing notice under section 148. No information is provided to the assessee. The assessment was completed without providing required details and evidences. Copy of approval under section 151, statement of parties and other documents were not provided. The assessee furnished contract note of purchase of shares, which is not penny stock companies.
The shares were purchase in 2009.
The ld. CIT(A) on considering the submission of assessee and the contents of assessment recorded that assessee is harping that he is not provided material about escapement of income from assessment. The information available with the assessing officer based on the risk management strategy formulated by Board from time to time and was forwarded to the assessing officer by Investigation Wing is a tangible material for reopening the assessment. The case was reopened with prior approval of ld. PCIT dated 29.03.2022. The details of the information available with the department was furnished to the assessee in the notice under section 148A(b). The assessee has not furnished any evidence to counter such information. The assessee has not furnished any detail about the transaction for purchase of share of Eicher Ltd. through the broker company Vagabond Tradex Pvt. Ltd. till the assessment was completed.
On considering the statement of facts and the material on record, the ld. CIT(A) rejected the contention of assessee against reopening. Against the addition on merit, the ld. CIT(A) submitted that it was for the assessee to provide details in connection entered with broker. The assessee stated that contract note was provided. But the assessee has not provided any documentary evidence to examine the transaction either at the time of assessment proceedings or before appellate proceedings to prove the transaction and upheld the addition under section 69A. Further, aggrieved the assessee has filed present appeal before Tribunal.
We have heard the submission of ld. Authorised Representative (ld. AR) of the assessee and the ld. Senior Departmental Representative (ld. DR) for the revenue. The ld. AR of the assessee submits that assessing officer failed to provide any material either during assessment or in response to right to information application about approval obtained from competent authority. The assessing officer merely reopened the case on the basis of report of Investigation Wing along there is no application of mind nor any material except the information. The assessee has purchased share in 2009 that is more than 12 years back. The assessing officer instead of applying his mind independently straightway made addition on the basis of information without any verification of fact. The assessee has not made any transaction of purchase of share of Eicher Ltd. in the year under consideration. The ld. AR further submits that there is no approval by competent authority. Even the assessing officer/revenue failed to furnished proper approval before Tribunal. To support his submission, the ld. AR of the assessee relied upon the following decision: Sejal Jewellary &Anr. Vs Union of India &Ors. (W.P. No. 3057 of 2019) Subhash Chander Gupta vs ITO in Sabh Infrastructure Ltd. vs ACIT (W.P. No. 1357 of 2016) ACIT vs Sabh Infrastructure Ltd. SLP (Civil) Appeal No. 20522 of 2018 CIT vs Videsh Sanchar Nigam Ltd. (IT Appeal No. 4235 of 2010)
On the other hand, the ld. Sr. DR for the revenue submits that he has obtained report from assessing officer but his report is not received till date. The ld. AR furnished the copy of communication with assessing officer. The ld. Sr. DR submits that he supports the order of lower authorities on reopening as well as on merit.
We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that order under section 148A(d) was passed in case of assessee on 13.04.2022. In the said order, the assessing officer recorded that notice under section 148A(b) was issued with prior approval of competent authority dated 29.03.2022. We find that assessee is seeking repeatedly about such approval for issuing notice till date neither such approval was provided to the assessee nor copy of which is placed before Tribunal. We further find that before CIT(A) the assessee specifically submitted that impugned shares were purchased by the assessee in 2009. The ld CIT(A) has not given any finding on such facts. We further find that right from the beginning the assessee is seeking copy of approval of competent authority. No such approval is provided by the assessing officer or by ld CIT(A) by directing the assessing officer to share copy of approval. Even before us, the ld Sr DR for the revenue in writing submitted that approval of ld Pr.CIT is not on record or on ITBA portal. The communication sent by assessing officer to Sr DR for the revenue contained the reference of physical approval; still copy of such approval is not filed before this Bench, nor is requisite supporting documents shown to us. Thus, we have no hesitation to conclude that there is no approval of competent authority. Thus, the action of assessing officer in reopening in absence of valid approval is bad in law. Even on merit, we find that when the assessee took plea that he has purchased the impugned shares in 2009, it was the duty of lower authority in further investigate the matter instead of making addition on the basis of mere information from investigation wing. In the result, the ground No. 1 of the appeal is allowed. Considering the facts that we have allowed ground No. 1 of the assessee which is legal issue, hence, adjudication on other grounds of appeal has become academic.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 11/11/2025 as per Rule 34(5) of ITAT, Rules 1963.