DCIT, CENTRAL CIRCLE-7(1), MUMBAI, MUMBAI vs. RAGINI TRADING AND INVESTMENTS LTD, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSIAN, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA Nos.6243, 6244 & 6245/MUM/2025 (AYs: 2008-09, 2009-10 & 2010-11) DCIT, Central Circle-7(1), Room No. vs. Ragini Trading and Investments Ltd., 653, 6th Floor, Aayakar Bhavan, M K Broach Street, Devji Ratansey Marg, Road, MUMBAI-400020. 35, Ashok Chambers, Masjid Bunder, MUMBAI-400009. PAN/GIR No: AAACR1851P (Appellant) (Respondent)

CO Nos.92, 93 & 94/MUM/2025 (AYs: 2008-09, 2009-10 & 2010-11) (Arising out of ITA Nos. 6243, 6244 & 6245/MUM/2025) Lloyds Enterprises Ltd. (Successor of vs. DCIT-, Central Circle -7(1), Room no M/s Ragini Trading & Investments 653, 6th Floor Aayakar Bhavan, Ltd.), A-2, 2nd Floor, Madhu Estate, Mumbai-400020. Pandurang Budhkar Marg, Lower Parel, Mumbai-400013. PAN/GIR No: AAACR1851P (Appellant) (Respondent)

Assessee by Shri Aksay Jain, CA Revenue by Shri Annavaram Kosuri (Sr. DR) Date of Hearing 08.06.2026 Date of Pronouncement 19.06.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

These appeals filed by the revenue and cross objections filed by the assessee emanate from the common order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of Income-tax (Appeals)-49, Mumbai [in short, ‘CIT(A)’], dated 30.07.2025 for the assessment years (AY) 2008-09, 2009-10 and 2010-11. Since the facts and grounds are similar, with the consent of both parties, the appeals were clubbed and heard together

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. and a common order is being passed for the sake of convenience and brevity. ITA No.6243/Mum/2025 and CO No.92/Mum/2025 (AY: 2008-09) is taken as the “lead case.” 2. The grounds of appeal raised by the revenue in ITA No.6243/Mum/2025

(AY 2008-09) are as under:

“. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing directing the Assessing Officer to estimate the income @0.25% only on the turnover of Rs. 16,68,52,213/-, as against the estimation made by the AO @0.25% on the entire turnover of Rs. 272,43,94,883/-.

(AY 2009-10) are as under:

“1. . On facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing directing the Assessing Officer to estimate the income @0.25% only on the turnover of Rs. 55,42,55,520/-, as against the estimation made by the AO @0.25% on the entire turnover of Rs. 334,55,72,516/- 2

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd.

(AY 2010-11) are as under:

“1. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing directing the Assessing Officer to estimate the income @0.25% only on the turnover of Rs. 10,74,71,035/-, as against the estimation made by the AO @0.25% on the entire turnover of Rs. 8,38,63,37,730/-.

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. 3. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that only purchases from two specific parties i) M/s. Prathamesh Impex and ii) M/s. Revika Trade amounting to Rs. 10.72 crores were bogus while treating the remaining vast turnover as genuine despite overwhelming evidence that the modus operandi was consistent throughout the assessee's operations.

No.92/Mum/2025 (AY 2008-09) are as under:

“1. "That on the facts of circumstances of the case and in law, the impugned assessment order is bad in law & liable to be quashed in view of the fact that the Assessing officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, that the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain.

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. 3. The appellant craves leave to add to, alter, to delete from or substantiate the above ground of appeal.”

No.93/Mum/2025 (AY 2009-10) are as under:

“1. "That on the facts of circumstances of the case and in law, the impugned assessment order is bad in law & liable to be quashed in view of the fact that the Assessing officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, that the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain.

No.94/Mum/2025 (AY 2010-11) are as under:

“1. That on the facts of circumstances of the case and in law, the impugned assessment order is bad in law & liable to be quashed in view of the fact that the Assessing officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, that the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain.

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. and the same is a substantive illegality, thus being an invalid notice liable to be quashed and being wholly without jurisdiction.

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. 9. Subsequently, the appellant has filed an application under Rule 27 of the

Income-tax (Appellate Tribunal) Rules, 1963 and raised the following additional

grounds in all AYs (2008-09, 2009-10 and 2010-11) under appeal :

“Ground under Rule 27 -

grounds raised by the appellant. The grounds are legal and jurisdictional in nature.

The Hon’ble Supreme court in case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) has held

that the order of Tribunal u/s 254 is expressed in the widest possible terms. There

is no reason to restrict the power of the Tribunal u/s 254 only to decide the

grounds which arise from the order of the CIT (Appeals). Both the assessee as well

as the Department have a right to file an appeal/cross objection before the

Tribunal. There is no reason why the Tribunal should be prevented from

considering a question of law arising in the assessment proceedings although not

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. raised earlier. Undoubtedly the Tribunal will have the discretion to allow or not to

allow a new ground to be raised. But where the Tribunal is only required to

consider the question of law arising from the facts which are on record in the

assessment proceedings, there is no reason why such a question should not be

allowed to be raised when it is necessary to consider that question in order to

correctly assess the tax liability of the assessee. In the instant case, the additional

grounds emanate from the facts on record and no additional facts are needed to

decide the issue. Hence, following the decision of the Hon’ble Supreme Court in

case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) and the decision of the Hon’ble

Jurisdictional High Court in case of CIT vs. Pruthvi Brokers and Shareholders PVt.

Ltd., 349 ITR 336 (Bom.), the additional grounds are admitted and will be decided

at the relevant place in this order.

20.09.2008 declaring total loss at Rs.54,77,305/-. Subsequently, the assessment

in this case was completed u/s 143(3) of the Act on 29.10.2010 determining the

total loss at Rs.6,06,020/- after making disallowance u/s 14A r.w. Rule 8D

amounting to Rs.48,71,285/-. A survey action u./s 133A of the Act was carried out

at the premises of the assessee on 23.11.2012. Following the survey action, the

case of the appellant was reopened by issue of notice u/s 148 of the Act dated

28.03.2013. The AO also issued similar notices u/s 148 of the Act for AYs 2009-10

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. and 2010-11. The reassessment order u/s 143(3) r.w.s. 147 of the Act by making

addition of Rs.68,10,987/-. Aggrieved by the order of AO, the assessee filed

appeal before the CIT(A), who has passed a common order for all three AYs and

partly allowed the appeal. Further, aggrieved the revenue has filed the present

appeals whereas assessee has filed the cross objections.

and additional grounds, the same are first being taken up for decision. The

grounds in the cross objections and additional grounds under Rule 27 are

identical. In the ground No.1, the appellant has submitted that the AO failed to

furnish the reasons recorded for reopening of the assessment within reasonable

time and even prior to completion of assessments. Such re-assessment order

without supply of reasons recorded for reopening is invalid and bad in law. In this

regard, it is submitted that this failure constitutes a gross violation of the

mandatory procedure laid down by the Hon'ble Supreme Court in GKN

Driveshafts (India) Ltd. v. ITO (2002 (11) TMI 7 SC). The Hon’ble Court clearly held

that upon issuance of a notice u/s 148 of the Act, if the assessee seeks the reasons

recorded, the AO is bound to furnish them within a reasonable time. This principle

was upheld by the Hon'ble Bombay High Court in CIT v. Videsh Sanchar Nigam Ltd

([2012] 21 taxmann.com 53 (Bombay)) and CIT v. M/s Trend Electronics (2015 (9)

TMI 1119 Bombay HC), holding that the failure to furnish recorded reasons before

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. the completion of assessment renders the reassessment order bad in law. In view

of the above, it was submitted that the impugned reassessment order is liable to

be quashed on this ground itself. The Ld. AR also submitted that mere

reproduction of reasons for the first time in the assessment order does not cure

the mandatory defect of not supplying the reasons during the assessment

proceedings. For this, the Ld. AR relied on the following decisions: (i) Johnson &

Johnson Ltd. v. ACIT (2013 (1) TMI 207 ITAT Mumbai), (ii) Kesar Terminals &

Infrastructure Ltd. v. DCIT (2025 (2) TMI 51) (Bom.) and (iii) Fomento Resorts &

Hotels Ltd. v. ACIT (2019 (9) TMI 1284) (Bom.). The ld. AR also submitted that

participation in proceedings does not waive jurisdictional defects. In this regard,

he relied on the decision of the Hon'ble Supreme Court in case of PCIT v. Maruti

Suzuki India Ltd. ([2019] 107 taxmann.com 375 (SC)), which established that

participation in proceedings cannot operate as an estoppel against law or cure a

fundamental jurisdictional defect. The Hon'ble Bombay High Court in CIT (Central)

v. ITSC ([2014] 365 ITR 68) also held that mere participation in proceedings

without jurisdiction will not confer jurisdiction on the authority. Reason to believe

that income chargeable to tax has escaped assessment is a jurisdictional fact and

only on its satisfaction, does the AO acquire jurisdiction to issue notice. Thus, this

lack of satisfaction of jurisdictional fact can never confer jurisdiction and an

objection to it can be raised at any time, even in the appellate proceedings. The

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. same has been reiterated by the Hon'ble Bombay High Court in case of Mavany

Brothers vs. Commissioner of Income-tax, Panjim ([2015] 62 taxmann.com 50

(Bombay)). Hence, the reassessment order is liable to be set aside.

12.1 The Ld. AR also submitted that notice u/s 148 of the Act issued to a non-

existing entity is void ab-initio. He submitted that the notice u/s 148 of the Act

dated 29.03.2013 was issued in the name of Ragini Trading & Investment Ltd. (the

erstwhile company prior to the merger with the appellant i.e., Lloyds Enterprises

Ltd.), which was the non-existing entity on the date of issuance of impugned

notice u/s 148 of the Act. He submitted that Ragini Trading & Investment Ltd. had

merged with the assessee vide Hon'ble Bombay High Court order dated

09.03.2012 with effect from 01.04.2011. Thus, the Ragini Trading & Investment

Ltd. had ceased to exist before the issuance of impugned notices u/s 148 dated

29.03.2013 for the respective AYs. In this regard, the Ld. AR relied on the decision

of the Hon'ble Supreme Court in Maruti Suzuki (2019) 107 taxmann.com 375 (SC)

and the Hon'ble Bombay High Court in Apar Corporation Pvt. Ltd. v. ACIT (2022 (5)

TMI 178 -Bombay HC).

He submitted that the CIT(A) has considered the issue in detail and has considered

it not necessary to adjudicate the technical grounds. The Ld. SR. DR has referred

to para 15.1 of the appellate order, where the CIT(A) decided the issue as under:

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. “15.1…. The AO issued a notice under Section 148 dated 28.03.2013. In response to the same, the appellant had filed the return of income and requested for reasons for reopening. According to the appellant, the AO had not provided the reasons for reopening and therefore, on applying the decision of Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [259 ITR 19 (SC)], the reassessment order is void ab initio. I have considered the submission of the appellant. I find that the assessment order is silent on the request of the appellant for reasons for reopening or whether the reasons were supplied to the appellant. However, it is also seen that the appellant had participated in the assessment proceedings. There is nothing on record to show that the assessee had objected during the assessment proceedings for non-receipt of reasons. The participation in the reassessment without demur implies acquiescence. It is seen that the appellant has presented its case on merits before the AO, which implies that it was aware of the reasons for reopening of the case. Even assuming that the reasons for reopening were not provided, I do not see any prejudice being cause to the appellant as it seemed to be aware of the reasons for reopening of the case. However, in absence of a definite finding on whether the reasons were supplied to the appellant or otherwise, the technical grounds 1 and 2 are not adjudicated.”

have also deliberated on the decisions relied upon by the Ld. AR. We have gone

through the details filed by the Ld. AR and find that the AO issued notice u/s 148

of the Act dated on 28.03.2013. The assessee vide letter dated 22.04.2013 to the

AO has informed that it had filed return of income electronically u/s 148 of the

Act. The assessee also requested the AO to give it reasons for reopening the

assessment. It appears that the same was not given to the assessee. During the

appellate proceedings, the assessee vide letter dated 14.12.2015 had also

challenged the validity of reopening and the passing of the re-assessment order

without complying with various principles laid down by the Hon’ble Supreme

Court. At para 6, 7 and 8 of the said letter (pages 5 and 6 of PB), the assessee

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. submitted before the CIT(A) about its request to the AO to give the reasons

recorded, but the AO had not given the reasons for reopening to it. The appellant

submitted that the reassessment order passed by AO without supplying the

reasons is bad in law. In this regard, the appellant had relied upon the decision in

case of GKN Driveshaft (India) Ltd. (supra). During the proceedings before the

Tribunal also, the revenue could not file evidence that the reasons for reopening

were supplied to the assessee by the AO. Therefore, the contention of the Ld. AR

that there was failure by the AO to furnish the reasons prior to completion of the

assessment remains uncontroverted. The appellate order by the CIT(A) also

makes it clear that reason for reopening was not given to the assessee. In the light

of the above facts, let us discuss the ratio of the decision of the Hon’ble supreme

Court in case of GKN Driveshafts (India) Ltd. (supra). The Hon’ble Court held that

if the assessee seeks reasons for issuing notices, the AO is bound to furnish the

same within reasonable time. The relevant portion of the judgment is reproduced

below for ready reference:

"5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time."

14.1 In case of Videsh Sanchar Nigam Ltd. (supra), the Hon’ble Bombay High

Court has held that failure to furnish recorded reasons before completion of

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. assessment order renders such order bad in law. The relevant portion is

reproduced under for ready reference:

"2. The finding of fact recorded by the Income-tax Appellate Tribunal is that in the present case the reasons recorded for reopening of the assessment though repeatedly asked by the assessee were furnished only after completion of the assessment. The Tribunal following the judgment of this court in the case of CIT v. Fomento Resorts & Hotels Ltd., IT Appeal No. 71 of 2006, dated 27-11-2006, has held that though the reopening of the assessment is within three years from the end of the relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld."

14.2 In the case of Trend Electronics (supra), the Hon’ble High Court took similar

view which is clear from the extract reproduced below:

"6...... The impugned order of the Tribunal records the undisputed fact that the respondent-assessee had sought for reasons for reopening notice dated 26 March 2010 from the Assessing Officer. The reasons were admittedly not furnished to the respondent assesee before the completion of the reassessment proceedings."

"8........It is axiomatic that power to reopen a completed assessment under the Act is an exceptional power and whenever revenue seeks to exercise such power, they must strictly comply with the prerequisite conditions viz Reopening of reasons to indicate that the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment which would warrant the reopening of an assessment. These recorded reasons as laid down by the Apex Court must be furnished to the assessee when sought for so as to enable the assessee to object to the same before the Assessing Officer. Thus in the absence of reasons being furnished, when sought for would make an order passed on reassessment bad in law. The recording of reasons (which has been done in this case) and furnishing of the same has to be strictly complied with as it is a jurisdictional issue.”

14.3 In the instant appeal, we find that the reasons were admittedly not

furnished to the assessee before the completion of re-assessment proceedings,

though the assessee has specifically requested to provide the same. Therefore, 14

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. respectfully following the decisions cited supra, we hold that in absence of the

reasons being furnished, the order passed on re-assessment is bad in law. Hence,

the impugned order u/s 143(3) r.w.s. 147 of the Act is set aside and quashed.

the assessment order does not cure the fundamental defect of failure to supply

reasons for reopening by the AO to the assessee during assessment proceedings.

It was also submitted that participation in the reassessment proceedings does not

waive the jurisdictional defect of non-supply of the reasons for reopening. The Ld.

AR also submitted that the notice u/s 148 of the Act dated 29.03.2013 was issued

to a non-existing entity i.e. Ragini Trading and Investments Ltd. after its merger

with the Lloyds Enterprises Ltd. w.e.f. 01.04.2011. Notice issued to a non-existing

company is a substantive illegality and a jurisdictional defect, which is not curable

u/s 292B of the Act.

15.1 Since we have already set aside and quashed the reassessment order

following the judgments in cases of GKN Driveshafts (India) Ltd. (supra), Videsh

Sanchar Nigam (supra) and Trend Electronics (supra), the other grounds

pertaining to issue of notice to a non-existing entity as well as merits of the case

become academic and do not require adjudication.

the assessee is allowed.

ITA Nos. 6244 & 6245/Mum/2025 and CO Nos. 93 & 94/Mum/2025) (AYs: 2009-10 & 2010-11)

ITA Nos. 6243, 6244 & 6245/MUM/2025 CO Nos.92, 93 & 94/MUM/2025 Ragini Trading and Investments Ltd. 17. As the grounds of appeal as well as the facts and circumstances of the

appeals and cross objections for assessment years 2009-10 and 2010-11 are

similar to the grounds and factual situation of the case for AY 2008-09; therefore,

the findings given in the appeal for AY 2008-09 in ITA No.6243/Mum/2025 (supra)

shall apply mutatis mutandis to the assessment years 2009-10 and 2010-11. The

appeals of revenue are, accordingly, dismissed and the cross objections of the

assessee are allowed.

cross objections of the assessee are allowed.

Order is pronounced on 19.06.2026.

Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 19.06.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order

Assistant Registrar ITAT, MUMBAI