SDM METALLOYS PVT. LTD.,DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE

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ITA 3529/DEL/2026Status: DisposedITAT Delhi03 July 2026AY 2021-226 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 sanction order for reopening the assessment was invalid as it was not signed by the competent authority. Consequently, the entire reassessment proceedings were vitiated and liable to be quashed.

What were the facts?

The assessee's case was reopened based on information of accommodation entries of Rs. 30,00,000/-. The assessment order making an addition of Rs. 30,90,000/- was confirmed by the CIT(A). The assessee challenged the validity of the assessment on the ground that the sanction order for reopening was not signed.

What were the issues?

Whether the reassessment proceedings are valid when the sanction order for reopening under Section 151 is not signed by the competent authority.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151

AI-generated summary — verify with the full judgment below

Before: MSMADHUMITA ROY

आदेश / ORDER The instant appeal filed by the assessee is directed against the order dated 13.01.2026 passed by the Ld. Commissioner of Income-tax (Appeals)-29, New Delhi [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the Assessment Order dated 27.03.2025 passed by the DCIT, Central Circle-27, Order dated 27.03.2025 passed by the DCIT, Central Circle Order dated 27.03.2025 passed by the DCIT, Central Circle

New Delhi (hereinafter referred to as ‘the ld. AO’) under Section New Delhi (hereinafter referred to as ‘the ld. AO’) under Section New Delhi (hereinafter referred to as ‘the ld. AO’) under Section

147/143(3) of the Act for Assessment Year 2021 147/143(3) of the Act for Assessment Year 2021-22.

2.

On the basis of the information received in a search conducted On the basis of the information received in a search conducted On the basis of the information received in a search conducted

under Section 132 of the Act on 17/11/2021 on 132 of the Act on 17/11/2021 on Galaxy Galaxy Group, Sh.

Pradeep Indra Prasad Aggarwal Indra Prasad Aggarwal andentry providers Sh. Deepak

Agarwal and Himanshu Verma, wherein information showing that the Agarwal and Himanshu Verma, wherein information showing that the Agarwal and Himanshu Verma, wherein information showing that the

assessee has obtained accommodation entry to the tune of Rs. essee has obtained accommodation entry to the tune of Rs. essee has obtained accommodation entry to the tune of Rs.

30,00,000/- from the entities controlled by the above entry operators from the entities controlled by the above entry operators, from the entities controlled by the above entry operators

the case of the assesse he case of the assessee was reopenedunder Section 147 of the Act 147 of the Act

upon issuing notice under Section under Section 148 of the Act dated 27/06/ 148 of the Act dated 27/06/2024

which was finalized ultimately by making addition of Rs. 30,90,000/- which was finalized ultimately by making addition of Rs. 30,90,000/ which was finalized ultimately by making addition of Rs. 30,90,000/

in the hands of the assessee in the hands of the assessee,in term confirmed by the First rst Appellate

Authority. Hence, the instant appeal before us. uthority. Hence, the instant appeal before us.

3.

At the very threshold of the matter, the Ld. At the very threshold of the matter, the Ld. Counsel Counsel for the

assessee submitted before us that the assessee submitted before us that the sanction order claimed order claimedto have

been granted by the been granted by the Ld. PCIT under Section 151 of the Act is not 151 of the Act is not

signed by the said PCIT, Delh PCIT, Delh-7 dated 23/03/2024 and, therefore, the 7 dated 23/03/2024 and, therefore, the

entire assessment is vitiated and is vitiated and thus liable to be quashed quashed. In this

regard, he has drawn our attention regard, he has drawn our attention to the Paper Book Page No. Paper Book Page No. 3 and

4 being the sanction order of the Ld. 4 being the sanction order of the Ld. PCIT, Delhi-7. However, no 7. However, no signature of the Ld. PCIT of the Ld. PCIT is reflecting at Page No. 4 of the said so called at Page No. 4 of the said so called

sanction. In this rega In this regard the Ld. Counsel Sh. Satyajeet Goel, Sh. Satyajeet Goel, Adv, has

relied upon very very judgments in support of his argument wherein it relied upon very very judgments in support of his argument wherein it relied upon very very judgments in support of his argument wherein it

has been held that in the absence of signature either in the approval or has been held that in the absence of signature either in the approval or has been held that in the absence of signature either in the approval or

in the sanction granted granted by the concerned authorities by the concerned authorities, the entire

proceeding is vitiated proceeding is vitiated, void ab-initio and therefore, liable to be therefore, liable to be

quashed. Suchcontention made contention made by the Ld. AR was not been been able to be

controverted by the Ld. DR. by the Ld. DR.

4.

Under this fact and circumstances of the ma Under this fact and circumstances of the matter, I have further

considered the judgment sidered the judgment passed by the Co-ordinance Bench in the Bench in the

case of B. R. Agro Milling Pvt. Ltd. Vs. DCIT i gro Milling Pvt. Ltd. Vs. DCIT in ITA No. 3365/ n ITA No. 3365/Del/2023

for A.Y 2012-13 and ors and further 13 and ors and further the order passed in ITA No. order passed in ITA No.

5749/Del/2025 for A.Y 2020 for A.Y 2020-21 in the case of M/s Space Air 21 in the case of M/s Space Air Kraft

Infrastructure (P) Ltd. (P) Ltd. Vs. ITO wherein on the identical facts and ITO wherein on the identical facts and

circumstances of the case matter, the approval having not been signed circumstances of the case matter, the approval having not been signed circumstances of the case matter, the approval having not been signed

by the concerned authority by the concerned authority, the approval held as invalid and and the entire

proceedings was, therefore, found to have was, therefore, found to have been vitiated and vitiated and thus,

quashed. In fact the following observations has been made by the In fact the following observations has been made by the In fact the following observations has been made by the

Bench in the matter of M/s Bench in the matter of M/s Space Krat Infrastructure (P) Ltd. Vs. ITO Space Krat Infrastructure (P) Ltd. Vs. ITO

(supra) and held as under: held as under:-

“3. The assessee’s grievance is on account of legal ground to “3. The assessee’s grievance is on account of legal ground to “3. The assessee’s grievance is on account of legal ground to this effect that the notice under Section 148 of the Act was bad in notice under Section 148 of the Act was bad in notice under Section 148 of the Act was bad in law for the particular fact that the approval under Section 151 of the law for the particular fact that the approval under Section 151 of the law for the particular fact that the approval under Section 151 of the Act, appearing at pages 68 Act, appearing at pages 68-71 of the paper book ought to have been 71 of the paper book ought to have been issued under the signatures of the “PCIT, Delhi issued under the signatures of the “PCIT, Delhi-7” as at the top of 7” as at the top of page 68. However, this approval is not signed by the said authority e 68. However, this approval is not signed by the said authority e 68. However, this approval is not signed by the said authority and in that view of the matter in the absence of any valid approval and in that view of the matter in the absence of any valid approval and in that view of the matter in the absence of any valid approval the entire proceedings are vitiated and thus liable to be quashed. the entire proceedings are vitiated and thus liable to be quashed. the entire proceedings are vitiated and thus liable to be quashed. On this particular ground was raised before the Learned CIT(A), as On this particular ground was raised before the Learned On this particular ground was raised before the Learned mentioned in para 7 page 32 of the CIT(A)’s order, wherein mentioned in para 7 page 32 of the CIT(A)’s order, wherein mentioned in para 7 page 32 of the CIT(A)’s order, wherein assessee also relied on several judgments in support of the case assessee also relied on several judgments in support of the case assessee also relied on several judgments in support of the case made out for invalid approval granted by the PCIT, but without any made out for invalid approval granted by the PCIT, but without any made out for invalid approval granted by the PCIT, but without any result.

4.

Before us, the assessee placed reliance on very many judgments 4. Before us, the assessee placed reliance on very many judgments 4. Before us, the assessee placed reliance on very many judgments including the Order of the ITAT in the case of J Kumar Infraprojects including the Order of the ITAT in the case of J Kumar Infraprojects including the Order of the ITAT in the case of J Kumar Infraprojects Ltd. v. DCIT [ITA No. 4147/Mum/2024 dated 3.7.2025. On the Ltd. v. DCIT [ITA No. 4147/Mum/2024 dated 3.7.2025. On the Ltd. v. DCIT [ITA No. 4147/Mum/2024 dated 3.7.2025. On the identical facts and circumstances of the matter we find that identical facts and circumstances of the matter we find that identical facts and circumstances of the matter we find that considering the approval not being signed by the concerned onsidering the approval not being signed by the concerned onsidering the approval not being signed by the concerned authority particularly the PCIT herein the reassessment order authority particularly the PCIT herein the reassessment order authority particularly the PCIT herein the reassessment order passed under Section 147 of the Act is quashed. We note that the passed under Section 147 of the Act is quashed. We note that the passed under Section 147 of the Act is quashed. We note that the Learned DR has not been able to controvert the facts as raised by Learned DR has not been able to controvert the facts as raised by Learned DR has not been able to controvert the facts as raised by the assessee’s Counsel Shri Lalit Mohan to controvert the finding of ssessee’s Counsel Shri Lalit Mohan to controvert the finding of ssessee’s Counsel Shri Lalit Mohan to controvert the finding of the Learned CIT(A) by relying upon the ratio laid down by very the Learned CIT(A) by relying upon the ratio laid down by very the Learned CIT(A) by relying upon the ratio laid down by very many judgments as relied upon by the learned AR. many judgments as relied upon by the learned AR.

5.

Having heard the Learned Counsels appearing for the parties 5. Having heard the Learned Counsels appearing for the parties 5. Having heard the Learned Counsels appearing for the parties and having regard to the facts and circumstances of the matter and rd to the facts and circumstances of the matter and rd to the facts and circumstances of the matter and particularly keeping in view the approval granted by the PCIT not particularly keeping in view the approval granted by the PCIT not particularly keeping in view the approval granted by the PCIT not being signed the notice issued under Section 148 of the Act being signed the notice issued under Section 148 of the Act being signed the notice issued under Section 148 of the Act initiating reassessment proceedings against the assessee is found initiating reassessment proceedings against the assessee is found initiating reassessment proceedings against the assessee is found be invalid, bad in law, arbitrary and illegal, having no legal bad in law, arbitrary and illegal, having no legal bad in law, arbitrary and illegal, having no legal foundation and thus quashed. Ordered accordingly. foundation and thus quashed. Ordered accordingly.”

6.

In the result, assessee’s appeal is allowed.” 6. In the result, assessee’s appeal is allowed.”

4.

Having heard the Ld. the Ld. Counsels appearing for the parties and appearing for the parties and

having regard to the fact and having regard to the fact and circumstances of the matter in the of the matter in the

absence of signature of the concerned PCIT, Delhi absence of signature of the concerned PCIT, Delhi-7 in the sanction 7 in the sanction

letter dated 23/03/2024 and having regard to the letter dated 23/03/2024 and having regard to the judgments passed judgments passed

on the identical issue in issue in favour of the assessee, the sanction is he sanction is held as

invalid and thus the e the entire proceeding is vitiated and, therefore, vitiated and, therefore,

quashed.

5.

In the result, appeal In the result, appeal filed by the Assessee is allowed.

Order pronounced in the open court on Order pronounced in the open court on 03rd July, 2026. , 2026.

Sd/-

(MADHUMITA ROY MADHUMITA ROY) JUDICIAL MEMBER JUDICIAL MEMBER

Dated: 03rd July, 2026. , 2026.

Reshma Naheed, Sr.P.S

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