INCOME TAX OFFICER, NEW DELHI vs. AARTI FLOUR MILLS PRIVATE LIMITED, DELHI

ITA 7908/DEL/2025Status: DisposedITAT Delhi15 July 2026AY 2013-146 pages
AI SummaryDismissed

What were the facts?

The Revenue has appealed against the orders of the CIT(A) for Assessment Years 2013-14 and 2014-15, which annulled reassessment orders passed under Section 147 read with Section 144B of the Income-tax Act, 1961. The original assessment for AY 2013-14 accepted the returned income. Subsequently, a notice under the unamended Section 148 was issued on 23.06.2021 with the approval of the Principal Commissioner of Income Tax (PCIT). Following the Supreme Court's decision in Ashish Agarwal, the AO issued a notice under Section 148A(b) on 27.05.2022, passed an order under Section 148A(d) on 22.07.2022, and issued a fresh notice under Section 148 on 22.07.2022. The reassessment was completed on 23.05.2023, making additions for alleged bogus purchases. The assessee contended before the CIT(A) that the reassessment proceedings were invalid due to lack of proper sanction, as the approval for the initial Section 148 notice was obtained from the PCIT, not the Principal Chief Commissioner of Income Tax (PCCIT) or Chief Commissioner of Income Tax (CCIT), as required under Section 151(ii) when more than three years had elapsed.

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were invalid. The Tribunal noted that the Finance Act, 2021 substituted Sections 147 to 151 of the Act, effective from 01.04.2021. The Supreme Court in Union of India v. Ashish Agarwal directed that notices issued under the unamended Section 148 on or after 01.04.2021 should be treated as show-cause notices under Section 148A(b) of the substituted regime. However, the requirement of sanction under Section 151 of the substituted regime is crucial. Clause (ii) of Section 151 mandates approval from the PCCIT or CCIT when more than three years have elapsed from the end of the relevant assessment year. In this case, the initial notice under Section 148 was issued with the approval of the PCIT, not the PCCIT or CCIT. The Tribunal followed the jurisdictional Delhi High Court's decision in H and M Hennes and Mauritz Retail Private Limited v. ACIT, which quashed reassessment proceedings on materially identical facts. The Tribunal clarified that Section 292BC, inserted retrospectively by the Finance Act, 2026, addresses defects in the form or authentication of an approval but cannot supply the sanction of the competent authority where it was entirely absent. Therefore, the CIT(A) was justified in annulling the assessment order. The grounds of appeal raised by the Revenue were dismissed.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Act, based on a notice under the unamended Section 148 issued on 23.06.2021 with the approval of the PCIT, are valid when more than three years have elapsed from the end of the relevant assessment year, and Section 151(ii) of the substituted regime requires approval from the PCCIT or CCIT? Assessee's contentions: - The reassessment proceedings are bad in law and barred by limitation. - The initial notice under Section 148 dated 23.06.2021 was issued with the approval of the PCIT, not the PCCIT or CCIT, who are the specified authorities under Section 151(ii) when more than three years have elapsed from the end of the relevant assessment year. This vitiates the entire reassessment proceedings. - Relied on the judgment of the Hon'ble jurisdictional Delhi High Court in H and M Hennes and Mauritz Retail Private Limited v. ACIT. Revenue's contentions: - The reassessment proceedings had been initiated in accordance with the procedure laid down by the Hon'ble Supreme Court in Union of India v. Ashish Agarwal.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 139(1),Section 143(3),Section 148,Section 148A,Section 151,Section 292BC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri Tarun Sharda, Senior DR
Hearing: 09.07.2026Pronounced: 09.07.2026

PER MAHAVIR SINGH, VP:

1.

These appeals by the Revenue are arising out of the order of learned CIT(A), Delhi-31 in appeal No.NFAC/2012-13/10279682 dated 23 September, 2025 and in appeal No.NFAC/2013- 14/10279688 dated 23 September, 2025 for the assessment year 2013-14 and 2014-15 respectively. Assessment was framed

by the Assessment Unit, Income Tax Department for the assessment year 2013-14 and 2014-15 under Section 147 read with Section 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 23 May, 2023 and 26" May, 2023 respectively.

2.

The brief facts

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 147

All 48,773 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →