PEAKWOOD REALITY PVT LTD,GURGAON vs. ACIT, CENTRAL CIRCLE- 2, FARIDABAD

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ITA 7833/DEL/2025Status: DisposedITAT Delhi25 May 2026AY 2015-1619 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 quashed the reopening of assessment initiated under section 147 read with section 148 of the Income-tax Act, 1961. The Tribunal noted that the AO's reasons for reopening were based on a search action on M/s M3M Group of cases and statements from directors of certain companies. However, the Tribunal found that the AO had not conducted any independent enquiry or investigation before forming the belief that income had escaped assessment. The Tribunal relied on a co-ordinate bench's order for the preceding assessment year (2014-15) in the assessee's own case (ITA No. 2304/Del/2025), which had quashed identical reopening on the grounds of borrowed satisfaction. The Tribunal also referred to various High Court and ITAT judgments emphasizing the need for independent application of mind by the AO. Consequently, all grounds of appeal concerning merits were rendered academic. The Tribunal allowed the appeal of the assessee.

What were the facts?

The assessee, M/s Peakwood Reality Pvt. Ltd., is in appeal against the order of the CIT(A)-3, Gurgaon, dated 17.09.2025, concerning assessment year 2015-16. The assessment was reopened under section 147 read with section 143(3) of the Income-tax Act, 1961. The Assessing Officer (AO) initiated reopening based on a search action on M/s M3M Group of cases on 21.07.2016. The AO noted that the assessee received substantial amounts totaling Rs. 44,70,61,964/- from M/s Focus Realcon (P) Ltd., M/s Starlite Builders (P) Ltd., and M/s Sunrise Propbuild Put Ltd. The directors of these companies allegedly accepted that they were engaged in providing accommodation entries. The AO's reasons for reopening stated that these companies were used as conduit companies for fund transfers within the M3M group, and the assessee's income had escaped assessment.

What were the issues?

1. Whether the reopening of assessment under section 147 read with section 148 of the Income-tax Act, 1961, is valid, considering it was based on borrowed satisfaction from an investigation report without independent enquiry by the AO? Assessee's Contention: The assessee argued that the reopening was based solely on information from the Investigation Wing regarding a search in M3M Group cases. The directors of the lending companies allegedly admitted to providing accommodation entries. The AO recorded satisfaction without independent enquiry and failed to provide the material relied upon. The assessee relied on the co-ordinate bench's order in ITA No. 2304/Del/2025 for AY 2014-15, which quashed identical reopening, and cited judgments from the Delhi High Court and ITAT. Revenue's Contention: The Revenue, through the CIT DR, supported the lower authorities' orders, stating that the Investigation Wing report clearly indicated fund circulation by M3M Group and that M/s Focus Realcon Pvt. Ltd. and M/s Starlite Builders Pvt. Ltd. were conduit companies. The directors' admissions of providing accommodation entries were highlighted, justifying the AO's actions.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148,Section 68

AI-generated summary — verify with the full judgment below

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

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

For Appellant: CA Sh. Harsh Raghav, Adv
For Respondent: Ms. Amisha S. Gupt, CIT DR
Hearing: 21.05.2026Pronounced: 21.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 7833/Del/2025 Assessment Year: 2015-16 Vs. Assistant M/s Peakwood Reality Pvt. Commissioner of Ltd. Income Tax Shop No. 6, Jagdamba Central Circle-II Palace, Near Gurgaon New CGO Compled, NH- IV, Dreamz Mall, Old Railway NIT Faridabad- 121001 Road, Gurugram- 122001 PAN: AACCE1245J (Appellant) (Respondent) Assessee by Sh. S.S. Nager, CA Sh. Harsh Raghav, Adv. Department by Ms. Amisha S. Gupt, CIT DR

Date of hearing 21.05.2026 Date of pronouncement 21.05.2026 ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2015-16, arises against the Commissioner of Income Tax (Appeals)-3 [in short, the “CIT(A)”], Gurgaon’s DIN and order no. 10669/CIT(A)/GGN- 3/2019-20, dated 17.09.2025 involving proceedings under section 147 r.w.s. 143(3) of the Income-tax Act, 1961; hereinafter referred to as ‘the Act’.

ITA No.7833/Del/2025

Heard both the parties. Case file perused.

2.

Coming to the first and foremost issue of validity of the impugned reopening itself between the parties, we notice at the outset that the learned Assessing Officer had recorded the following reasons for the purpose of setting into motion section 148/147 mechanism; reading as under: “Search action w/s 132(1) (A) of the I.T. Act was conducted on 21.07.2016 on M/s M3M Group of cases. Return declaring Loss of Rs. 1,276/- was filed on 28.09.2015 for the A.Y. 2015-16. The assessee has received during the year under consideration amounts from the following companies:-

S. Name of the Amount No. company 1. M/s Focus Rs. Realcon(P) Ltd. 1,03,93,2014/- 2. M/s Starlite Rs. Builders(P) Ltd. 15,48,53,490/- 3. M/s Sunrise Rs. Propbuild Pvt Ltd. 28,18,15,270/- TOTAL Rs. 44,70,61,964/-

The directors of the above mentioned companies have on statement accepted that these companies have no real business but are engaged in providing accommodation entries in lieu of Commission. Further this company does not have fixed assets und employee strength. This company being entry operator was also

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ITA No.7833/Del/2025 established ws 147 r.w.s. 143(3) for the Assessment Year 2011-12. Income tax return of the assessee for the year under consideration was examined. It is noted that the above mentioned liability is shown under the head loans or share premium and is mentioned under other long term liabilities. The DDIT Unit-I (Inv.) Gurgaon has in the appraisal report proposal for M3M group of cases (D.O.S.- 21.07.2016) mentioned that these companies have been used as conduit companies for transfer of funds amongst M3M group companies. In view of the above, I have reasons to believe that the income of the assessee has escaped assessment for the assessment year 2015-16 to the tune of Rs.44,70,61,964/-. I, therefore, propose to assess such escaped income and also any other income chargeable to tax which has escaped assessment within the meaning of section 147 read with section 148 of the Income Tax Act, 1961."

3.

Mr. Nagar next invites our attention to the learned co- ordinate bench’s latest order passed very recently on 18.05.2026 in the assessee’s case itself in ITA No. 2304/Del/2025 involving the preceding assessment year 2014-15 quashing identical reopening initiated in its case; as follows:

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4.

This clinching legal and factual position has gone unrebutted from the Revenue’s side during the course of hearing. Mr. Nagar further takes us to the learned Assessing Officer’s identical reopening reasons in A.Y. 2015-16 to the very effect as well. We thus adopt judicial consistency in this backdrop to quash the impugned reopening initiated in the assessee’s case in very terms.

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ITA No.7833/Del/2025

All other remaining pleadings on merits between the parties stand rendered academic.

5.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 21. 05. 2026 .

Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.05.2026 Pooja Mittal/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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