INCOME TAX OFFICER, WARD 2(1)(2), AGRA, AGRA vs. SILVER HERITAGE NIVAS PRIVATE LIMITED, FIROZABAD

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA(DB) BENCH, AGRA BEFORE: SHRI M BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIALMEMBER ITA No. 83/Agr/2026 Assessment Year: 2011-12 ITO, Ward 2(1)(2), Agra- Vs. Silver Heritage Nivas Pvt Ltd 282005 Gata No. 345, Hardayal Campus, Etah Road, Shikhobad, Firozabad- 283135 PAN :AANCS2391A (Appellant) (Respondent) C.O. No 2/Agr/2026(in ITA No 83/Agr/2026) (A.Y. 2011-12) Silver Heritage Nivas Pvt Ltd Vs. ITO, Ward 2(1)(2), Agra-282005 Gata No. 345, Hardayal Campus, Etah Road, Shikhobad, Firozabad-283135 PAN :AANCS2391A (Appellant) (Respondent) Assessee by Shri Sahib P. Satsangi, CA. Department by Shri Shailendra Srivastava, Sr DR Date of hearing 19.03.2026 Date of pronouncement 19.05.2026 ORDER PER: SUNIL KUMAR SINGH, JM. The facts and issues involved in both these matters are identical and hence for the sake of convenience and brevity, both these matters are being decided by this common order. The facts of ITA No 83/Agr/2026 are only being narrated as under: ITA 83/Agr/2026 2. Revenue has preferred this appeal against the impugned order dated 25.11.2025 passed in appeal No. CIT(A), Kolkata-3/10399/2018-19 by the ld Commissioner of Income Tax/ National Faceless Appeal Centre (NFAC),

ITA No. 83/Agr/2026 & CO 02/Agr/2026

Delhi [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act), for the A.Y. 2011-12, wherein ld CIT(A) has partly allowed assessee’s first appeal by deleting the addition of Rs. 51,00,000/- made vide assessment order dated 26.12.2018 passed u/s. 143(3)/ 147 of the Act. 3. The brief facts state that the respondent assessee filed return of income for A.Y. 2011-12 on 04.04.2012, declaring income of Rs. 1,520/-. The return was processed u/s. 143(1) on 15.05.2022. On the basis of information received from Office of Dy. Director Income Tax (Investigation), Unit-4(3) Kolkata, vide letter dated 26.02.2018, that the assessee is a beneficiary company through transaction of share capital/share premium, loans, pre arranged LTCG/STCL etc. and received Rs. 51,00,000/- during the F.Y. 2010-11 relevant to A.Y. 2011-12. Assessing officer formed reasons to believe that assessee’s income had escaped assessment, he reopened the assessment by issuance of notice u/s. 148 of the Act dated 23.03.2018. Statutory notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee seeking to produce complete bank statements and bank reconciliation statements of all the bank accounts maintained by the assessee, further sought copy of income tax return for A.Y. 2011-12, P&L Account, balance sheet, complete bank statement etc. Assessee denied the allegations, stating that there is no escapement of

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alleged income of Rs. 51,00,000/- as no such sum was ever credited to assessee’s bank account. Ld assessing officer observed that the verification could not be done due to non-furnishing of the bank accounts statements and completed the assessment and made addition of Rs. 51,00,000/- on the basis of information of Investigation Wing (Kolkata). 4. Aggrieved, assessee preferred an appeal before ld CIT(A), who took note of the fact that the said addition of Rs. 51,00,000/- was made solely on the basis of the information received from the Investigation Wing without any corroborative inquiry by the assessing officer. Further, observing that the assessing officer failed to provide the copy of Investigation Wing Report and related statements to the assessee so as to afford an opportunity to revert and cross-examine the material used against the assessee and deleted the said addition. However with regard to the reopening, ld CIT(A) held that the reopening was initiated on the basis of specific information from DDIT(Investigation), identifying the assessee as a beneficiary of accommodation entries of Rs. 51,00,000/-. The A.O. was required to demonstrate prime facie satisfaction, thus the reopening was validly initiated. Ld CIT(A) further rendered the reassessment order as not sustainable as assessee’s objections against reopening were not disposed of by the assessing officer. 5. Appellant revenue has raised following grounds under appeal:

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“1. That on the facts and in law, the learned CIT(A) has erred in deleting the addition of Rs 51,00,000/-, which was rightly made by the Assessing Officer on the basis of credible and specific information received from the Investigation Wing identifying the assessee as a beneficiary of accommodation entries. 2. The Ld. CIT(A) erred in law by deleting the addition of 51,00,000/- without appreciating the facts that the AO rightly added the amount as the assessee has not fulfilled the basic conditions of section 68 of the 1.T. Act, 1961, Le. Identity of the creditor/investor, capacity of the creditor/investor and genuineness of the transaction, as held by various courts. 3. The Ld. CIT(A) erred in law by deleting the addition of 51,00,000/- without appreciating the facts that the AO rightly added the amount as the assessee has failed to discharge onus by cogent evidences either of creditworthiness of so- called investor-companies, or genuineness of transaction. In this regard reliance is placed on Hon'ble Supreme Court judgment in the case of Principal Commissioner of Income-tax (Central)-1 v. NRA Iron & Steel (P) Ltd. (412 ITR 161. 4. That the learned CIT(A) failed to appreciate that the primary onus to explain the nature and source of the amount rested upon the assessee, which the assessee failed to discharge by not furnishing books of account, confirmations, or complete details during assessment proceedings. 5. That the learned CIT(A) erred in law in deleting the addition on the ground of non-supply of Investigation Wing report and cross-examination, whereas such procedural aspects do not invalidate the addition when the assessee itself failed to cooperate and discharge its initial burden. 6. That the order of the learned CIT(A) is perverse, contrary to facts on record and settled legal principles, and deserves to be set aside with restoration of the assessment order. 7. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise.”

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the fact that the assessee could not prove the genuineness and failed to explain the nature and source of the amounts. Further, ignoring the fact that the non supply of Investigation Wing Report and opportunity of cross- examination do not invalidate the addition? 8. Ld Sr DR for the appellant revenue has submitted that assessee failed to furnish reply during the assessment proceedings in respect of the receipts of Rs. 51,00,000/-. Ld Sr DR further submits that the assessing officer has rightly made such addition on the basis of Investigation Wing Report as accommodation entries. Ld Sr DR supported the assessment order and prayed to allow revenue’s appeal. 9. Ld representative for the respondent assessee has submitted that ld CIT(A) has rightly deleted the addition of Rs. 51,00,000/-, which was never received by the assessee. Ld AR, supported the impugned order to the extent of deletion only. 10. It transpires from the perusal of record that ld assessing officer has made addition of Rs. 51,00,000/- in the income of the assessee merely on the basis of the information received from the Investigation Wing that the assessee was a beneficiary through transaction on share capital/ share premium, loans, pre arranged LTCG/ STCL etc. and received Rs. 51,00,000/- during the year under consideration. However, the assessment order does not speak of any credit entry in assessee’s any bank account.

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The assessing officer also could not establish the receipt of the above sum in the hands of the assessee in any other form. It is also undisputed that the assessing officer did not provide the copy of Investigation Wing Report or any statement to the assessee before completing the assessment. This act of A.O. is in gross violation of the principles of natural justice. Assessing officer did not conduct any independent inquiry so as to establish the receipt of above sum in the hands of the assessee. Ld CIT(A) has rightly observed that the suspicion cannot substitute evidence and has rightly deleted the addition of Rs. 51,00,000/-. Aforesaid point is accordingly determined in negative against the revenue and in favour of the respondent assessee. The revenue’s appeal is liable to be dismissed. Cross Objection (CO) 02/Agr/2026 (ITA No 83/Agr/2026) 11. Assessee has filed this cross objection in pursuant to revenue’s appeal (ITA No 83/Agr/2026) on the following grounds: “1. Because on the facts and circumstances of the case, the Ld. CIT(A) erred in law and on facts in upholding the validity of the reassessment proceedings initiated under Sections 147/148 of the Income-tax Act, 1961, ignoring that the Assessing Officer issued the notice without any independent application of mind and merely acted on borrowed satisfaction based on information received from the Investigation Wing. 2. Because the Ld. CIT(A) failed to appreciate that the reasons recorded for reopening were based solely on vague and generalized information received from the Investigation Wing, without any tangible material establishing a live nexus between the assessee and the alleged accommodation entry or the alleged escapement of income. 3. Because the reassessment proceedings are bad in law as the reasons recorded do not disclose specific details such as the identity of the alleged entry provider, the bank account involved, or the mode of transaction, thereby 6 | P a g e

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demonstrating lack of independent verification by the Assessing Officer before assuming jurisdiction under Sections 147/148 of the Act, particularly when the cross objector/assessee had never received any such amount either in his books of account or bank accounts. 4. That the Cross Objector/assessee craves leave to add, amend, alter or withdraw any of the grounds at the time of hearing.” 12. The main point for determination under cross objections on the basis of the aforesaid grounds is as to whether the initiation of reassessment proceedings is bad in law, being based solely on vague and generalized information received from the investigation wing without any tangible material establishing a live nexus between the assessee and the alleged accommodation entry? 13. The perusal of assessment order shows that the reassessment proceedings were initiated merely on the basis of the information received from the Investigation Wing that assessee is a beneficiary of Rs. 51,00,000/-. However, the receipt of payment by assessee is not established so as to infer that in what manner the assessee was the beneficiary. Hon’ble Delhi High Court in Principal Commissioner of Income Tax–4 v. G&G Pharma India Ltd, vide order dated 08.10.2015, passed in ITA 545/2015, has held as under: “9. The Court at the outset proposes to recapitulate the jurisdictional requirement for reopening of the assessment under Section 147/148 of the Act by referring to two decisions of the Supreme Court. In Chhugamal Rajpal v. SP Chaliha (1971) 79 ITR 603. the Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were "name-lenders and the transactions are bogus." The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The 7 | P a g e

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Supreme Court disagreed and observed that the AO "had not even come to a prima facie conclusion that the transactions to which he referred were not genuine transactions. He appeared to have had only a vague felling that they may be "bogus transactions'." It was further explained by the Supreme Court that: "Before issuing a notice under S. 148, the ITO must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under S. 139 for any assessment year to the ITO or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of cl. (a) or cl. (b) of S. 147 are satisfied, the ITO has no jurisdiction to issue a notice under S. 148." The Supreme Court concluded that it was not satisfied that the ITO had any material before him which could satisfy the requirements under Section 147 and therefore could not have issued notice under Section 148. 10. In ACIT v. Dhariya Construction Co. (2010)328 ITR 515 the Supreme Court in a short order held as under: "Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the DVO. Opinion of the DVO per se is not an information for the purposes of reopening assessment under s. 147 of the IT Act, 1961. The AO has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment." 11. The above basic requirement of Sections 147/148 has been reiterated in numerous decisions of the Supreme Court and this Court. Recently, this Court rendered a decision dated 22nd September 2015 in ITA No. 356 of 2013 (Commissioner of Income Tax II v. Multiplex Trading and Industrial Co. Ltd.) where the assessment was sought to be reopened beyond the period of four years. This Court considered the decision of the Supreme Court in Phool Chand Bajrang Lal v. Income-tax Officer (supra) as well as the decision of this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. v. CIT 308 ITR 38 (Del). The Court noted that a material change had been brought about to Section 147 of the Act with effect from 1st April 1989 and observed: "29. It is at once seen that the Amendment in Section 147 of the Act brought about a material change in law w.e.f. 1st April, 1989. Section 147(a) as it stood prior to 1st April 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment 8 | P a g e

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and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all material facts necessary for his assessment for that year. After the Amendment, only one singular requirement is to be fulfilled under Section 147(a) and that is, that the AO has reason to believe that income of an Assessee has escaped assessment. However, the proviso to Section 147 of the Act provides a complete bar for reopening an assessment, which has been made under Section 143(3) of the Act, after the expiry of four years. However, this proscription is not applicable where the income of an Assessee has escaped assessment on account of failure on the part of the Assessee to make a return or to disclose fully and truly all material facts necessary for his assessment. Thus, in order to reopen an assessment which is beyond the period of four years from the end of the relevant assessment year. the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded with certain level of certainty. It is in the aforesaid context that this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. (supra) explained that the ratio of the decision in Phool Chand Bajrang Lal (supra) may not be entirely applicable since the same was in respect of Section 147(a) as it existed prior to the amendment." 12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e.10th February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: "I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries." The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT 9 | P a g e

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may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity.” 14. In view of the aforesaid decision of Hon’ble Delhi High Court, we hold that in the instant case, apart from making a running reference of the Investigation Report received from the Investigation Wing, the assessing officer has mechanically issued notice u/s. 148 of the Act, ignoring assessee’s contention that neither the said sum of Rs. 51,00,000/- was received in its books of accounts nor was there any corresponding credit entry in its bank account. There is no independent examination of material before forming a belief of escapement of income. We, accordingly hold that the reopening is bad, which invalidate the reassessment proceedings. The aforesaid point is determined in positive in favour of the assessee and against the revenue. The cross objection is liable to be allowed. 15. In the result, the revenue’s appeal (ITA No. 83/Agr/2026) is dismissed. The assessee’s cross objection No. 02/Agr/2026 is allowed. Order pronounced on 19.05.2026 Sd/- Sd/- (M BALAGANESH) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

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Dated: 19.05.2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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