EARTH STAR CRANES,KALAMBOLI, NAVI MUMBAI vs. ITO WARD 1 PANVEL, PANVEL

Briefly stated, the facts of the case are that the assessee is a partnership firm and engaged in the business of renting of immovable property. For assessment

Before the Ld. CIT(A) / NFAC, the assessee apart from challenging the addition on merit, challenged the validity of the re-assessment proceedings as well. However, the Ld. CIT(A) / NFAC dismissed the appeal of the assessee both the legal ground as well on merits. So far as the validity of the re-assessment proceedings, he dismissed the same by observing as under:

So far as the additions on merit are concerned, he dismissed the same by observing as under:

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following revised grounds: 1. On the facts and circumstances of the case and in law the reopening of the assessment being bad in law on various counts, the order passed in consequence to such reopening itself is being bad in law the assessment should be annulled. 2. On the facts and circumstances of the case and in law the notice issued under section 148 and reopening as a consequence being bad in law the order passed in consequence thereto should be annulled. 3. On the facts and circumstances of the case and in law the order passed by the AO in violation of natural justice as also in disregards to principles of jurisprudence should be annulled.

The assessee has also raised additional ground which reads as under: “On facts and in law, Without prejudice to original grounds of appeal, - The assessee submits that the notice u/s 148 for A.Y. 2017-18 was issued on 26.07.2022 by obtaining approval u/s 151 from Pr. CIT-1, Thane vide Reference No. THN/Pr.CIT-1/148/2022-23/1484 who is not the Authority prescribed for obtaining sanction u/s 151 for issuing the notice u/s 148 after lapse of three years from end of A.Y. 2017-18 and therefore, the notice u/s 148 and the corresponding asst. order u/s 147 may be declared as null and void in law.”

The Ld. Counsel for the assessee referring to the above additional ground submitted that the additional ground raised is purely legal in nature which goes to the root of the matter and all the necessary facts are already available on record. Referring to the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute

The Ld. DR, on the other hand, strongly objected to the admission of the additional ground raised by the assessee.

After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely legal in nature and all material facts necessary for adjudication of the issue are already available on record and no new facts are required to be investigated, therefore, in view of the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT (supra) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication.

The Ld. Counsel for the assessee relying on the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal reported in 469 ITR 46 submitted that the notice issued u/s 148 is bad in law being barred by limitation. He further submitted that the approval for issue of the said notice was not in accordance with law and the same was granted by Pr.CIT-1, Thane but it should have been obtained from Pr. CCIT since the assessment in the instant case has been reopened u/s 148 after three years from the end of the assessment year i.e. assessment year 2017-18.

So far as merit is concerned, the Ld. Counsel for the assessee submitted that allegation of the Revenue that the assessee is a beneficiary of bogus accommodation entry from Aneri Fincap Ltd. is not correct. He submitted that the loans obtained from the said NBFC viz. Aneri Fincap Limited were repaid and all the transactions were done through the applicable banking channels. He further submitted that the assessee had during the course of assessment proceedings as well as first appellate proceedings submitted confirmation of the Aneri Fincap Limited which are duly recorded by both the parties in their respective books of accounts. There is no incriminating material brought on record by the Revenue to corroborate the addition so made. He submitted that the assessee had also submitted balance sheet of M/s Aneri Fincap, return of incomes filed by them where total income declared by the said Aneri Fincap is Rs.40,63,848/-, loan confirmation letter, bank statement of the assessee showing transactions have been carried out through banking channel and the Ld. AO did not find any fault with the above details / documents submitted nor he has brought on record any incriminating material. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be set aside and the grounds raised by the assessee be allowed.

The Ld. DR, on the other hand, filed detailed written submissions on the legal issue raised by the assessee by way of an additional ground opposing the submissions of the Ld. AR, which reads as under:

We have heard the rival arguments made by both the sides, perused the material available on record and the paper book filed by the Ld. AR on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the Ld. AO while reopening the assessment has issued notice u/s 148 of the Act on 26.07.2022 by taking prior approval of the Pr.CIT-1, Thane which is as under:

We find that in the instant case, the assessment year involved is assessment year 2017-18 and the notice u/s 148 has been issued on 26.07.2022. We find the provisions of section 151 of the Act read as under:

A perusal of the above provisions clearly shows that w.e.f. 01.04.2021 the Principal Chief Commissioner or the Principal Director General is the competent authority for giving sanction for reopening if more than 3 years have elapsed from the end of the relevant assessment year.

We have also considered the submissions of the Ld. DR, however, we find that the impugned issue is covered in favour of the assessee by the Hon’ble Jurisdictional High Court and the Revenue has not brought on record any other decision of the Hon’ble Bombay High Court in favour of the Revenue. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of Hareshkumar Dungarmal Jain vs. DCIT & Anr vide ITA Nos.1933/PUN/2024 and 1934/PUN/2024 order dated 24.02.2025 for assessment year 2018-19. We find the Tribunal after considering various decisions including the decision of the Hon’ble Bombay High Court in the case of Vodafone Idea Limited vs. DCIT in WP No.2768 of 2022, order dated 06.02.2024 has observed as under: “11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find clauses 1, 2, 6 and 7 of the order dated 13.04.2022 passed under clause (d) of section 148A of the Income Tax Act, 1961 read as under: “GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, KOLHAPUR.

Since in the instant case also the approval has been granted by the Pr.CIT and not the Principal Chief Commissioner (Pr. CCIT) or Principal Director General or Chief Commissioner or Director General, therefore, such approval being not in accordance with law, the re-assessment proceedings are vitiated and are liable to be quashed. We, therefore, quash the re-assessment proceedings. Since the assessee succeeds on this legal ground, therefore, the grounds challenging the addition on merit are not adjudicated being rendered academic in nature. The effective grounds raised by the assessee are accordingly allowed.

In the result, the appeal filed by the assessee is partly allowed.

Both the parties have unanimously consented and submitted that the facts of the case are same as narrated in the above ITA No. 3143/PUN/2025 for assessment year 2017-18. In this the case also, the assessee has challenged the addition of Rs.3,00,000/- u/s 68 made by the Ld. AO in his order passed u/s 147 r.w.s. 144B of the Act on 18.03.2024.

On appeal, the Ld. CIT(A)/ NFAC dismissed the assessee’s appeal relying on his decision rendered on the impugned issue against the assessee for AY 2017- 18 by observing as under: “5. Analysis and Decision: 5.1 I have duly considered the statement of facts, grounds of appeal, assessment order, written submission of the appellant and the material placed on record. 5.2 The only issue is regarding the validity of reopening and addition of Rs. 3 lakhs for loan received from M/s Anen Fincap Ltd. The similar issue has been dealt while deciding the appeal of the assessee for Assessment Year 2017-18 in detail and the matter has been decided against the appellant. The order was passed vide DIN & Order No.ITBA/NFAC/S/250/2025-26/1082019321(1) dated 27.10.2025. Thus, relying on the same, all the issues and grounds of appeal are being decided against the appellant. 6. In the result, the appeal of the appellant dismissed.”

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and circumstances of the case and in law the reopening of the assessment being bad in law on various counts, the order passed in consequence to such reopening itself is being bad in law the assessment should be annulled.

The Ld. Counsel for the assessee did not argue the technical / legal grounds raised before the Tribunal (Ground No. 1, 2, 3 & 5) and confined his arguments only to the merits of the case relating to addition of Rs. 3,00,000/- made by the Ld. AO and confirmed by the Ld. CIT(A)/ NFAC due to smallness of the amount of addition in dispute. On merits, he reiterated the submissions made for AY 2017-18 stated above. He submitted that the assessee had submitted loan confirmation of M/s. Aneri Fincap Ltd. (pages 156 – 157 of the Paper Book refers) before the lower authorities. He also filed bank statement of HDFC Bank for the period 01.04.2020 to 31-03-2021 and 01.04.2021 to 31.03.2022 (Pages 158-161 of the Paper book refers) in support of its claim.

The Ld. DR on the other hand heavily relied on the orders of the Ld. AO and the Ld. CIT(A) / NFAC.

We have heard the Ld. Representatives of the parties, perused material available on record and the paper book filed by the Ld. AR on behalf of the assessee. The facts of the case are not in dispute. We find that the Ld. AO in the instant case in the order passed u/s 147 r.w.s. 144B of the Act made addition of Rs.3,00,000/- u/s 68 of the Act as unexplained cash credit on account of bogus loan from M/s. Aneri Fincap Ltd. for the reason that the assessee failed to prove the genuineness of the said loan. The Ld. CIT(A) / NFAC confirmed the addition made by the Ld. AO, the reasons of which have already been reproduced in the preceding paragraphs. We find that the Ld. CIT(A)/NFAC relied on his decision for AY 2017-18 where the appeal was dismissed for the reason that the assessee could not discharge its onus regarding the identity, credit-worthiness and genuineness of the transactions by filing the documentary evidence / details either before the AO or before him in support of its claim. From the paper book filed by the Ld. AR, we find that the assessee had filed certain documents such as loan confirmation of M/s. Aneri Fincap Ltd. and now the bank statement for the relevant period is also placed on record. Thus, under these circumstances, we deem it fit, in the interest of justice, to set aside the order of the Ld. CIT(A)/ NFAC and remit the issue back to the file of the Ld. AO to decide the same afresh on merits and as per fact and law after due verification of the assessee’s claim and modify the assessment, if needed, as a result of such verification thereof. Needless to say

In the result, appeal of the assessee is partly allowed for statistical purposes.

To sum up, appeal in ITA No.3143/PUN/2025 for assessment year 2017-18 is partly allowed and appeal in ITA No.3144/PUN/2025 for AY 2019-20 is treated as partly allowed for statistical purposes