SANA TRADING COMPANY,DHULE vs. INCOME TAX OFFICER WARD 1, DHULE

आदेश /ORDER

PER Dr. DIPAK P. RIPOTE, A.M : These are two appeals filed by the Assessee and Revenue against the orders dated 09.10.2025 of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2018-19, emanating from the Assessment Order u/s 147 r.w.s. 144B of the Act, dated 30.03.2023.

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though no audited financials for AY 2018-19 under PAN ADTFS9854L were furnished before the AO. The burden of proof was on the assessee, which the assessee has completely failed to discharge.”

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Despite this, the Assessing Officer reopened the assessment of the firm on old PAN. The AO extracted the relevant data from the Insight Portal, citing cash deposits of ₹6.95 crores (UBI), withdrawals of 5.47 crores (UBI), and 1.46 crores (Moti Bank). 5.2 Submission on Legal grounds:

The reassessment is fundamentally flawed on multiple counts, rendering the notice u/s 148 void ab initio:

(i) Initiation of reassessment on Surrendered PAN: Gross violation of CBDT Notifications dt. 22.08.2002 & 28.06.2024 mandating PAN correction verification. Revenue's duty to probe surrender/new PAN returns unmet.

(ii) Mechanical approval by higher authority: u/s 148A(d) sans application of mind to Appellant's evidence. mechanical s.151 approval.

(iii) Lack of Jurisdiction: Proceedings on non-existent AOP entity by non- Jurisdictional officer.

5.3 The appellant wishes to rely on the following judicial precedents: 5.3.1 Notice issued on surrendered PAN is invalid:

(i) Kai Balkrishna R Gawade Mandai Vyapari Premises Sahakari Sanstha Maryadit [2023] 153 taxmann.com 97 (Bombay)/[2023] 457 ITR 41 (Bombay)[27-06-2023]: wherein it has been held that: "Where assessee-society sought cancellation of old PAN and filed its returns under new PAN, it was duty of revenue to have examined and verified contentions of assessee in respect of cancellation of old PAN and returns filed under new PAN before issuance of impugned notice under section 148 for raising demand" (ii) Panchsheel Mercantile [2025] 179 taxmann.com 676 (Gujarat)/[2025] 307 Taxman 649 (Gujarat)[16-10-2025]: wherein it has been held that: "Where Assessing Officer issued reassessment notice on old PAN which was already surrendered by assessee, impugned order passed under section148A(d) as well as notice issued under section 148 were to be quashed and set aside"

(iii) Paranjape Schemes (Construction) Ltd. [2024] 160 taxmann.com 730 (Bombay)[11- 03-2024]: wherein it has been held that: "Where HUF of assessee was not in existence nor return of income was filed by it either before initiation of reassessment proceeding or subsequent thereto, initiation of reassessment proceeding based on return of income filed by assessee in individual capacity would be bad in law"

5.3.2 Notice issued u/s 148, without considering the submission of the assessee

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CBDT Notification F No. 299/10/2022-Dir(Inv.III)/647 dated 22/08/2002 and F No. 299/10/2022-Dir(Inv.III)/647 dated 28/06/2024- The order passed by the AO is incomplete violation of the CBDT Notification 5.3.3 Notice issued u/s 148, without considering the submission of the assessee in response to notice/letter u/s 148A(b), and only on the reason that the information is flagged on insight portal is invalid (i) Devat and Ram Company (P.) Ltd. [2025] 175 taxmann.com 72 (Delhi) [22-05-2025]: wherein it has been held that: Where assessee's assessment was sought to be reopened on ground that as per information received from GST department assessee had made bogus purchases from dummy company, however, Assessing Officer had completely disregarded explanation and evidence furnished by assessee and rejected same merely on assumption that information available on portal was correct, impugned reopening notice issued against assessee was to be set aside

(ii) Modern Living Solutions P Ltd [2023] 153 taxmann.com 97 (Bombay)/[2023] 457 ITR 41 (Bombay) [27-06-2023]: wherein it has been held that: Where Assessing Officer issued on assessee a notice under section 148 dated 31-3-2021 seeking to reopen assessment framed under section 143(1) and rejected objections raised by assessee stating that in AIR transaction details it was found that assessee had transacted to certain amount to various banks during relevant assessment year since proceedings had been imitated not on account of sufficiency of reason to believe, but merely on account of case being flagged by nan-filer management system, impugned notice and order rejecting objection deserved to be set aside. (iii) Nidhi Bindal [2022] 144 taxmann.com 122 (Delhi)/[2023] 290 Taxman 306 (Delhi) [26-08-2022]: wherein it has been held that: "Where impugned order under section 148A(d) had been passed after receipt of detailed reply by assessee, however, Assessing Officer had not considered reply of assessee, mandate of section 148A(c) had been violated, and therefore, impugned order issued under section 148A(d) and notice issued under section 148 were to be set aside" (iv) Yogendra Singh vs Union of India [2024] 167 taxmann.com 64 (Allahabad) [03-09- 2024]: wherein it has been held that: "Where assessee's reply to reopening notice was not considered at all and there was non-application of mind while giving approval under section 151, impugned order under section 148A(d) and notice issued under section 148 were to be quashed"

(iv) Nikhil Chandrakant Dharia [2024] 168 taxmann.com 40 (Bombay)/[2024] 469 ITR 262 (Bombay) [07-10-2023]: wherein it has been held that: "Where Assessing Officer issued reopening notice within period of three years, however application for approval submitted under section 151 statedthat section 149(1)(b) would be applicable in instant case, since recommendation and grant of

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approval by Principal Commissioner had been made mechanical and without application of mind, impugned reopening notice was to be set aside" (iii) Sushila Sureshbabu Malge [2024] 164 taxmann.com 633 (Bombay)/[2024] 300 Taxman 302 (Bombay)/[2024]468 ITR 624 (Bombay) (02-07-2024]: wherein it has been held that: "Where Assessing Officer reopened assessment on ground that assessee had not offered income on transaction of sale of flats to tax, however, submission made on behalf of assessee before Assessing Officer that said income was not offered to tax as assessee was following project completion method, had not been taken into consideration while issuing said reopening notice and in coming to a conclusion to reopen assessment, impugned reopening notice was invalid" 5.4 Submission on Merit: The assessee has duly maintained and properly audited its books of account in accordance with the applicable provisions of the Income-tax Act, 1961. The return of income for Assessment Year 2018-19 was filed under PAN ADTFS9854L within the prescribed due date, i.e., on 29/10/2018. It is pertinent to note that there has been no change in the nature of business carried on by the firm, nor has there been any alteration in the partnership deed. No new partners have been inducted during the relevant period. Despite these facts, the Learned Assessing Officer proceeded to make additions without identifying any defect in the books of account or pointing out any irregularity in the return of income. The sole basis for such addition appears to be information derived from the Insight Portal, which, without corroborative evidence, carinot constitute valid grounds for assessment. The addition so made is therefore arbitrary, based on mere surmise and conjecture, and reflects a prejudiced approach rather than a reasoned application of law.”

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and Rs.8,86,61,324/- u/s 69 and Rs.1,00,203/-. On perusal of the paper book filed the assessee and the assessment order, it is observed that the assessee had not filed any reply to the show cause notice dated 15.02.2023.

6.1 It is observed that assessee has filed elaborate reply before the Ld. CIT(A) which is at page Nos. 71 to 101 of the paper book. It is observed that the assessee had filed copy of the letters issued by the Union Bank of India and The Moti Urban Co-operative Bank Ltd., dated 25.04.2023 and 20.04.2023 respectively. These letters were not filed by the assessee during the assessment proceedings. Therefore, these letters are additional evidence and as per Rule 46A of the Income Tax Rules, it is mandatory for the Ld. CIT(A) to call for report from the Assessing Officer.

6.2 During the appellate proceedings before the Ld. CIT(A), the assessee had also filed copy of re-casted cash book along with narrations. The relevant paragraphs of the assessee’s submissions which is at page Nos. 95 to 97 of the paper book are reproduced here as under :

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6.3 Thus, it is clear from the submissions of the assessee filed before the Ld. CIT(A) that assessee had filed re-casted cash book along with narrations and summary sheet. These documents were never filed before the Assessing Officer. We have perused the e-acknowledgment filed by the assessee to explain documents filed during the assessment proceedings and observed that no re-casted cash book, summary sheets were filed during assessment proceedings. The Ld. CIT(A) has not recorded the satisfaction before admitting the additional evidence and has also not provided opportunity to the Assessing Officer to rebut the additional evidence filed by the assessee. As per Rule 46A of the Income Tax Rules, it is mandatory for Ld. CIT(A) to record satisfaction while admitting additional evidence and provide opportunity to the Assessing Officer. In

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these facts and circumstances of the case, there is a violation of Rule 46A of the Income Tax Rules by the Ld. CIT(A). Accordingly, ground No. 1 raised by the Revenue is allowed.

6.4 Since, Ld. CIT(A) has violated Rule 46A of the Income Tax Rules, we set aside the order of the Ld. CIT(A) to Ld. CIT(A) for de-novo adjudication. The Ld. CIT(A) shall provide opportunity of hearing to the assessee and the Assessing Officer. The Ld. CIT(A) shall permit assessee to file the necessary documents and raise the additional grounds if any.

6.5 In this case, it is pleaded by the assessee that initially assessee firm had obtained PAN: AATAS4415K. Subsequently, the Ld. Authorized Representative of the assessee realized the mistake that the PAN was in the status of AOP. Therefore, assessee applied for new PAN in the status of firm on 23.10.2018. After that, assessee received new PAN in the status of firm as ADTFS9854L. It has been claimed by the assessee that assessee filed return of income for Ay 2018-19 on 29.10.2018 with new PAN ADTFS9854L. It has been pleaded by the assessee that assessee had filed audit report along with return of income in the new PAN. It has been pleaded by the assessee that the bank transactions mentioned in the assessment order dated 30.03.2023 for AY 2018-19 are already appearing in the return of income filed on 29.10.2018 with new PAN. In this factual background, we direct Ld. CIT(A) to verify the assessee’s claim with the help of Assessing Officer and if the transactions have already been shown in the return of income filed on 29.10.2018 with new PAN then Ld. CIT(A) shall delete the duplicate additions made in the assessment order dated 30.03.2023 with old PAN.

6.6 Since, we have set aside the order of the Ld. CIT(A) to Ld. CIT(A) for de-novo adjudication with specific direction, the ground Nos. 2 to 7 raised by the Revenue becomes academic in nature and accordingly, dismissed as un-adjudicated.

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“GROUND NO. 1 On the facts and circumstances of the case, the CIT(A) erred in upholding reassessment proceedings initiated against a non-existent entity under an incorrect PAN and status ("AOP"), despite due intimation of the corrected PAN and there being no change in constitution, business, or bank accounts, under corrected PAN, rendering the entire proceedings void ab initio and liable to be quashed. Ground No. 2: The CIT(A) erred on the circumstances and facts of the case in upholding the notice issued under section 148, despite the appellant having duly submitted a reply along with supporting documents in response to the notice under section 148A(b). The Assessing Officer and the approving authority failed to apply their mind to the reply and proceeded mechanically, rendering the reassessment proceedings unsustainable in law. GROUND NO. 3: On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the notice u/s 148 dated 31/03/2022 was validly issued by the local jurisdictional officer, when the same was required to be issued through the Faceless Assessment scheme as mandated by Section 151A read with CBDT Notification No. 18/2022 dated 29/03/2022, rendering the notice jurisdictionally invalid and void ab initio. GROUND NO.4: On the facts and in the circumstances of the case, the CIT(A) erred in upholding the order of the Assessing Officer, which imposed an undue burden on the appellant despite the submission of detailed replies and comprehensive documentary evidence explaining each entry. The additions aggregating to 18,81,81,309/- were made arbitrarily, based on suspicion, conjecture, and surmise, without proper application of mind, and therefore deserve to be deleted.

GROUND NO. 5: On the facts and circumstances of the case, the CIT(A) erred in sustaining the addition of *6,95,59,620/- u/s 69A r.w.s. 115BBE, despite the cash deposits being duly recorded, verifiable from audited books maintained under correct PAN, and explained with supporting evidence. The LD. CIT(A) failed to appreciate the fact that additions cannot be made under Section 69A for entries duly accounted for into the books of accounts.

GROUND NO. 6: On the facts and circumstances of the case, the CIT(A) erred in sustaining the addition of 2,98,60,162/- u/s 69A r.w.s. 115BBE, despite the credits being part of 9,94,19,782/- received through verifiable banking channels, duly recorded in audited books with complete documentation. The LD. CIT(A) failed to appreciate the fact that additions cannot be made under Section 69A for entries duly accounted for into the books of accounts.

GROUND NO. 7: On the facts and circumstances of the case, the CIT(A) erred in sustaining the addition of 89,61,324/- u/s 69A r.w.s. 115BBE, despite the credits

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being transfer entries from identifiable sources, duly recorded in audited books with supporting documentation. The LD. CIT(A) failed to appreciate the fact that additions cannot be made under Section 69A for entries duly accounted for into the books of accounts. GROUND NO. 8: On the facts and in the circumstances of the case, the CIT(A) erred in sustaining the additions under section 69A read with section 115BBE without appreciating that the penal rate of tax under section 115BBE is not applicable to income that is duly disclosed and recorded in the books of account. GROUND NO. 9: On the facts and circumstances of the case, the Ld. CIT(A) erred in not providing consequential relief, and the appellant is entitled to deletion of interest charged u/s 234A and 234B, fees charged u/s 234F, and withdrawal of penalty proceedings-initiated u/s 271AAC. GROUND NO. 10: The appellant craves leave to add, amend, modify, alter, revise, substitute or delete any or all grounds of appeal before or at the time of hearing.”

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PAN, but by that time the banking authority had reported all the transactions under old PAN for Financial Year 2017-18. Thus, as per assessee’s own admission, for FY 2017-18, the banks were having old PAN and new PAN was entered in the banking software only after November, 2018 i.e. after the end of FY 2017-18. Thus, as far as banks were concerned, the transactions were undertaken during FY 2017-18 by the entity having PAN No. AATAS4415K (old PAN), accordingly, banks reported the transactions to the Income Tax Department. Based on that information, the Assessing Officer issued notice u/s 148A(b) of the Act. It is the case of the assessee that during proceedings u/s 148A(b) of the Act assessee filed elaborate reply which is at page Nos. 9-10 of the paper book. We have perused the audit report of the Sana Trading Company, PAN: ADTFS9854L and observed that from the audit report it is impossible to understand that the transactions referred by the Assessing Officer in the notice u/s 148A(b) of the Act were reported by the assessee under the new PAN.

11.1 Careful study of the two names mentioned above makes it clear that apparently, the two entities appears to be different. Only in-depth analysis of the accounts can reveal whether the two entities are same or not and in- depth analysis of accounts is not possible under the section 148A of the Act.

11.2 Assessee had also claimed that assessee had informed ITO, Dhule vide letter dated 14.03.2019 regarding new PAN. However, it is clear that the old PAN continued and it was not deactivated. We have already observed that the for FY 2017-18 banks have reported transactions with old PAN as new PAN was obtained in next Financial Year.

11.3 In these facts there was no mistake on the part of the Assessing Officer in issuing notice u/s 148A(b), order u/s 148A(d) and notice u/s

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148 of the Act. During the proceedings u/s 148A(b), the Assessing Officer has to make primary verification. We have already mentioned above that on prima-facie verification, it was not possible for the Assessing Officer to arrive at a conclusion that transactions have been disclosed under the new PAN. Therefore, Assessing Officer was right in issuing notice u/s 148. Accordingly, legal ground Nos. 1 and 2 raised by the assessee are dismissed.

Distinguishing case laws relied by Ld. AR

12.1 The Ld. AR relied on the decision of Hon’ble Bombay High Court in the case of J.P. Morgan Chase Holdings LLC Vs. ACIT, 462 ITR 108 (Bom.). In the said case there is a fact recorded in the order of Hon’ble Bombay High Court that financial results are in public domain and they had sufficient funds to make the investments in the subsidiary. In these facts, the Hon’ble Bombay High Court had set aside the order u/s 148A(d) and remitetd it back to the ACIT to reconsider the matter. Therefore, the case is factually distinguishable. In the case of the assessee, we have also set aside the order to Ld. CIT(A).

12.2 Similarly, other case laws relied on by the Ld. AR are distinguishable on facts.

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opportunity to the assessee and the Assessing Officer. In these facts, we do not intend to comment on the merits of the addition. Accordingly, ground Nos. 4 to 8 are dismissed as un-adjudicated.

Order pronounced in the open Court on 29th June, 2026

Sd/- Sd/- (PAVAN KUMAR GADALE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER

पुणे/Pune; दिन ांक/Dated : 29-06-2026 Ravi Kumar Ravi Kumar Digitally signed by Ravi Kumar Date: 2026.06.29 14:29:14 +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr. CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण,पुणे / ITAT, Pune