M D OVERSEAS PRIVATE LIMITED, NEW DELHI vs. DCIT CENTRAL CIRCLE 14 , DELHI

ITA 1354/DEL/2026Status: DisposedITAT Delhi29 September 2026AY 2013-147 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under section 148 were bad in law and vitiated the entire reassessment process. The Tribunal noted that the case was re-opened after a period of three years from the end of the relevant assessment year. While the satisfaction recorded in the order passed under section 148A(d) was for an escapement of income of INR 12,10,77,622/-, the addition made in the final assessment order under section 148 was INR 24,21,552/-, which was arrived at by applying a 2% commission rate. This addition was less than the threshold limit of INR 50.00 Lakhs prescribed under section 149(1)(b) of the Act for reopening beyond three years. The Tribunal, respectfully following the judgment of the Hon'ble Bombay High Court in Rohan Shelters Pvt. Ltd. Vs. ITO, held that once the condition stipulated in section 149(1)(b) is not fulfilled, the proceedings cannot be completed under section 147. Therefore, Ground of appeal No. 7 raised by the assessee was allowed. Since the legal grounds were allowed and the reassessment order quashed, the remaining grounds of appeal were rendered academic and not adjudicated. The appeal of the assessee was allowed.

What were the facts?

The assessee, M D Overseas Pvt. Ltd., is challenging an order dated 12.01.2026 by the Ld. Commissioner of Income Tax (A), which upheld the reassessment order dated 28.03.2025 passed by the DCIT under sections 147 read with 143(3) for Assessment Year 2013-14. The original return declared an income of INR 14,56,00,230/-. Proceedings were initially initiated under section 148 based on information about accommodation entries from M/s. Faith Jewellers. These proceedings were quashed by the High Court. Subsequently, based on information from a search in the Alankit Group case, satisfaction was recorded, and proceedings under section 153C were initiated. These were also quashed by the High Court. Following the Supreme Court's decision in Union of India vs. Ashish Agarwal, the section 148 notice dated 15.04.2021 was treated as a 'deemed notice' under section 148A(b). After a reply from the assessee, an order under section 148A(d) was passed on 26.07.2022, followed by a section 148 notice on 29.07.2022. The reassessment order was passed on 28.03.2025, making an addition of INR 24,21,552/-. The satisfaction recorded in the 148A(d) order noted escapement of income of INR 12,10,76,622/-.

What were the issues?

1. Whether the reassessment proceedings initiated under section 148 are valid, considering the assessment year was re-opened beyond three years from the end of the relevant assessment year and the addition made in the reassessment order is less than INR 50.00 Lakhs, which is the threshold for reopening beyond three years under section 149(1)(b) of the Act? Assessee's contentions: The assessee argued that the reassessment was initiated beyond three years, and while the satisfaction recorded in the section 148A(d) order was for INR 12,10,77,622/-, the actual addition made in the reassessment order was INR 24,21,552/-, which is less than the INR 50.00 Lakhs threshold stipulated in section 149(1)(b). The assessee further contended that the amount added, being commission paid for alleged accommodation entries, cannot be treated as income represented in the form of assets as per section 149(1)(b). Therefore, the approval granted under section 151 was incorrect, and the reassessment proceedings should be quashed. Reliance was placed on Bhagirathi Krishnan, Ms. Sonali Dharmendra Mhatre, and Sonansh Creations Pvt. Ltd. Revenue's contentions: The revenue supported the orders of the lower authorities, arguing that the case was rightly re-opened in terms of the Supreme Court's order in Pr. CIT v. Abhisar Buildwell (P.) Ltd. The revenue contended that the satisfaction recorded was for INR 12,10,77,622/-, which is more than the threshold limit of INR 50.00 Lakhs represented in the form of assets.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148,Section 148A(b),Section 148A(d),Section 149(1)(b),Section 151,Section 153C,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “G” BENCH: NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL

For Appellant: Shri Ved Jain, Adv, Shri Nischay Kantoor, Adv. &, Ms. Kanishka Garg, CA
For Respondent: Shri Virender Singh, CIT DR
Hearing: 23.07.2026Pronounced: 29.09.2026

PER MANISH AGARWAL, AM : The present appeal is filed by assessee against the order dated 12.01.2026 by Ld. Commissioner of Income Tax (A), Delhi-26 [“Ld.CIT(A)”] in Appeal No. CIT(A), Delhi-26/10168/2012-13 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 28.03.2025 passed u/s 147 r.w.s. 143(3) of the Act pertaining to Assessment Year 2013-14. 2. Brief facts of the case are that assessee is a company, filed its return of income on 29.11.2013, declaring total income of INR 14,56,00,230/-. A search and seizure action u/s 132 was carried out in the case of M/s Faith Jewellers, Prop. Shri Naval Kishor Goyal on 20.12.20

The order continues below.

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