M/S SOUTH WEST PINNACLE EXPLORATION LIMITED,GURGAON vs. DCIT, CENTRAL CIRCLE-06, NEW DELHI, NEW DELHI

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ITA 1578/DEL/2026Status: DisposedITAT Delhi03 July 2026AY 2010-116 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 reopening beyond four years was vitiated as the AO failed to demonstrate a failure on the part of the assessee to disclose material facts. The approval under Section 151 was also found to be mechanical and invalid.

What were the facts?

The assessee's case was reopened under Section 147 based on information from the Investigation Wing regarding alleged accommodating entries. The original assessment under Section 143(3) had accepted unsecured loans after issuing notices and receiving responses.

What were the issues?

Whether the reopening of assessment beyond four years was valid and whether the approval for reopening was obtained with due application of mind.

Which sections of the Income-tax Act were involved?

Section 147,Section 151,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, DELHI

Before: SHRI ANUBHAV SHARMA&

For Appellant: Adv. Sh. Vivek Bansal, Adv
Hearing: 22.06.2026Pronounced: 03.07.2026

P a g e | 1 ITA No.1578/Del/2026 M/s South West Pinnacle Exploration Limited (AY: 2010-11) IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, DELHI

BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No.1578/Del/2026 (Assessment Year: 2010-11)

M/s South West Pinnacle Vs. DCIT, Central Circle-06 Exploration Limited Jhandewalan Extension, Ground Floor, Plot No. 15, New Delhi – 110055 Sector-44, Gurgaon, Haryana – 122003 स्थायीलेखासं./जीआइआरसं./PAN/GIR No: AAKCS3608R Appellant .. Respondent Appellant by : Sh. IP Bansal, Adv. Sh. Vivek Bansal, Adv. Sh. Divyanshu Bansal, Adv. Respondent by : Sh. Bal Krishan Gopal, Sr. DR Date of Hearing 22.06.2026 Date of Pronouncement 03.07.2026

O R D E R PER ANUBHAV SHARMA, JM:

This appeal preferred by the assessee against the order dated 10.02.2026 of Ld. Commissioner of Income Tax (Appeals)-24 Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’

P a g e | 2 ITA No.1578/Del/2026 M/s South West Pinnacle Exploration Limited (AY: 2010-11) for short) in DIN & Order No: ITBA/APL/M/250/2025- 26/1085814299(1)arising out of the assessment order dated 18.06.2024 u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by DCIT, CC-6, New Delhi,for AY: 2010-11.

2.

Heard and perused the records. At the time of hearing ld. Counsel has stressed on the grounds by which assessee has challenged the impugned assessment order on the basis that reopening is vitiated and against the provision of law. Ld. DR has however, relied the impugned orders.

3.

Now in the case before us, the original return of income was filed on 22.09.2010 declaring a loss of Rs.87,09,315 and scrutiny assessment under Section 143(3) was completed on 29.03.2013, assessing the loss at Rs.57,62,682. Subsequently on the basis of Investigation wing information of assessee being beneficiary of accommodating entry received from S.K Jain Group of Rs. 40 lac and entry operator Sh., Akash Bubna and Sh., Rajendra Bubna the case was reopened and impugned additions were made which are sustained by the ld. CIT(A).

4.

A notice under Section 148 was issued on 27.03.2017 (PB Pages 74- 75, well beyond the four-year limitation, based on Investigation Wing

P a g e | 3 ITA No.1578/Del/2026 M/s South West Pinnacle Exploration Limited (AY: 2010-11) reports. The reasons for reopening were recorded on 17.04.2017 available at PB Pages 127-135. We find that from the copy of assessment order available at PB Pages 68-73, during the initial assessment proceedings the AO issued notices under Section 133(6) to 32 parties to verify unsecured loans, including M/s Sunny Cast & Forge Pvt. Ltd and M/s Gokul Leasing & Finance Pvt. Ltd. Both entities responded, and the AO explicitly accepted these unsecured loans as genuine. We further observe that the assessee filed detailed objections on 25.04.2017 (PB Pages 77-86), which the AO rejected on 14.07.2017 (PB Pages 87-95). A Writ Petition was filed before the Hon’ble Delhi High Court which was later withdrawn on 03.03.2025 with the Hon’ble High Court explicitly directing that all contentions of the assessee are kept open.

5.

Now, since the original assessment was framed under Section 143(3), on 29.03.2013, reopening beyond four years required, the ld. AO was definitively to have allege and demonstrate on facts a failure by the assessee to fully and truly disclose all material facts. The reasons recorded for reopening (PB Pages 127-135) when examined show that in para 15 ld. AO has merely alleged of a failure by the assessee to fully and truly disclose all material facts however, since assessment of completed u/s 143(3) of the Act, by examining the issue of receipt of unsecured loan of

P a g e | 4 ITA No.1578/Del/2026 M/s South West Pinnacle Exploration Limited (AY: 2010-11) Rs. 10,44,84,266 and issuing notices to lenders then without demonstrating how on the part of assessee there was any overt act or omission to allege a failure by the assessee to fully and truly disclose all material facts just reproducing the statutory words of First provisio to section 147 of the Act, does not fall in line with the intention of law, that beyond four years, the reopening should be an exception. At the same time ld. AR has demonstrated that all primary facts, including audited accounts and Form 3CD were fully disclosed and verified during the original assessment.

6.

Connected to aforesaid is that assertion of assessee that invalid and mechanical approval under Section 151 of the Act. The proforma utilized for obtaining approval under Section 151 available at PB Pages 136-137 reflects that the AO incorrectly marked Entry 8 as a "first time assessment" and marked Entry 9 (which pertains to reopening completed assessments) as "Not Applicable". The ld. Principal Commissioner, accepted the incorrect assertion of ld. AO and granted approval mechanically without any application of mind to the records.

7.

Then we find that ld. AO has examined the issue of same parties in initial assessment and formed a concrete opinion on the basis of responses under Section 133(6) of the Act. The reopening thus based on external

P a g e | 5 ITA No.1578/Del/2026 M/s South West Pinnacle Exploration Limited (AY: 2010-11) Investigation Wing reports, to examine the issue afresh on the basis of subsequent event, constitutes an impermissible "change of opinion" and "borrowed satisfaction".

8.

Thus we are of considered view that the initiation of re-assessment and assumption of jurisdictions on the basis of impugned reasons recorded for reopening is not in accordance with settle principles of law. The corresponding ground no. 1 to 3 are sustained. The remaining grounds are rendered academic. In aforesaid terms the appeal is allowed. Impugned assessment order is quashed.

Order pronounced in the open court on 03.07.2026

Sd/- Sd/- (Amitabh Shukla) (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 03.07.2026 Rohit, Sr. PS

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