SANGEETHA ENTERPRISES,COIMBATORE vs. CHE-W-(62)(91), CHENNAI

आयकरअपीलीयअधिकरण,‘बी ’न्यायपीठ,चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI श्रीमनुकुमारगिरर, न्याययकसदस्यएवंश्रीएस.आर.रघुनाथा, लेखासदस्यकेसमक्ष BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.1767/Chny/2026 ननिाारणवर्ा / Assessment Year: 2014-15 Sangeetha Enterprises The Income Tax Officer 7, Teachers Colony vs. Ward 62(91) MAK India Mills Road Coimbatore. Kalapatty Road, Gold Wins Coimbatore – 641 014.. (प्रत्यथी/Respondent) [PAN:ABXFS9545E] (अपीलाथी/Appellant) अपीलाथीकीओरसे/Appellant by : Shri. Y.Sridhar, F.C.A. प्रत्यथीकीओरसे/Respondent by : Shri E.Elango, JCIT (Virtual) सुनवाईकीतारीख/Date of Hearing : 17.08.2026 घोर्णाकीतारीख/Date of Pronouncement : 13.10.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter “the Ld. CIT(A)”] dated 21.01.2026 passed u/s.250 of the Income-tax Act, 1961 [hereinafter “the Act”], which in turn arises out of the reassessment order dated 30.05.2023 passed u/s.147 read with section

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144B of the Act by the Assessment Unit, Income Tax Department, for the assessment year 2014-15. 2. The assessee has raised the following grounds of appeal: i. The learned CIT(A)-NFAC has erred in confirming the addition u/s 69C r.w.s 115BBE of the Income-tax Act, 1961 amounting to Rs. 1,72,33,564/- without considering the facts and circumstances of the case and settled position of law. ii. The learned CIT(A)-NFAC has erred in confirming additions u/s 69C r.w.s 115BBE of the Income-tax Act, of commission amounting to Rs. 4,30,839/- without considering the facts and circumstances of the case and settled position of law. iii. The appellant craves leave to add, amend, alter or delete the said grounds of appeal.

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iv. For that the AO did not incorporate any DIN in the body of the second notice u/s 148 of the Act dated 29.07.2022 and no DIN relating to the second notice u/s 148 finds reference in the impugned assessment order. v. For that the notice u/s 148 dated 29.07.2022 was issued without accompaniment of the sanction of the ‘prescribed authority’. vi. The Ld. AO ought to have appreciated that, by virtue of the first proviso to section 149(1), the validity of the notice under section 148 was required to be tested with reference to the limitation provisions as they stood prior to the Finance Act, 2021, and could not be determined by applying the subsequently amended provisions. vii. The Ld. AO further erred in treating a mere credit/entry in the books of account as sufficient for invoking the extended period of limitation, whereas, under the erstwhile provisions, the income alleged to have escaped assessment was required to be represented in the form of an underlying asset exceeding ₹50 lakh, A. In the present case, there is no such underlying asset satisfying the said statutory requirement viii. The appellant craves leave to add, amend, alter or withdraw any or all of the above grounds of appeal.

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Food Products Pvt. Ltd. (BAFPL). During the survey, statements of Shri A.K. Singh and Shri Ganesh Gopi were recorded u/s.131(1A) of the Act, and loose sheets serially numbered 99 to 116, stated to be ledger copies of the assessee in the books of BAFPL, were impounded. Statements of Shri Manoj Kumar Sharma, a partner of the assessee firm, were recorded u/s.132(4) of the Act on 10.02.2021, 12.02.2021 and 16.03.2021. In reply to Question No.11, Shri Ganesh Gopi stated that there were no actual sales by BAFPL to the assessee and that sales of Rs.1,81,00,000/- shown during F.Y.2013-14 were bogus. Shri Manoj Kumar Sharma, when confronted in Question No.15A, is stated to have confirmed the modus operandi. The said statements were subsequently retracted by Shri Manoj Kumar Sharma by an affidavit dated 25.05.2021 and clarified by Shri A.K. Singh and Shri Ganesh Gopi. 8. On the basis of information that the assessee had obtained bogus purchase entries of Rs.1,81,00,000/- from BAFPL, the Income Tax Officer, Non- Corporate Ward 3(1), Coimbatore issued a notice u/s.148 of the Act dated 09.04.2021 under the erstwhile reassessment regime, which was in force up to 31.03.2021. The notice was generated on the ITBA system and digitally signed, and it states that it was issued “after obtaining the necessary satisfaction of the PCIT, Coimbatore-1”. In issuing it, the Revenue relied on the extension of time granted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) read with Notification S.O.1432(E) dated 31.03.2021 and Notification S.O.1703(E) dated 27.04.2021. Pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64 (SC), that notice was treated as a show-cause notice u/s.148A(b) of the Act. The information relied upon was furnished to the assessee vide letter dated 25.05.2022 (the reassessment order refers to the communication as dated 02.06.2022), granting two weeks to respond. Thereafter, with the prior approval of the Pr. CCIT (TN & P), Chennai accorded on 28.07.2022 vide No. CHE/COORD/148A/2022-23/546, an order u/s.148A(d) of the Act was passed on 29.07.2022 (DIN: ITBA/COM/F/17/2022-

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23/1044262600(1)), and a fresh notice u/s.148 of the Act dated 29.07.2022 was issued. This fresh notice is a manually prepared, physically signed notice, and the column captioned “DIN & Notice No.” in it has been left blank. 9. In response, the assessee filed its return on 03.08.2022 declaring the same income of Rs.1,89,160/-. Notices u/s.143(2) and 142(1) of the Act and a show-cause notice dated 20.04.2023 were issued, to which the assessee responded, furnishing purchase invoices, confirmation of accounts, bank statements, VAT returns and the retraction affidavit. The AO rejected the explanation holding that BAFPL, the counter-party, had itself disowned the transactions; that the assessee had not proved physical delivery of goods; and that the statement of Shri Ganesh Gopi had not been retracted. The AO accordingly added Rs.1,81,00,000/- as unexplained expenditure u/s.69C r.w.s 115BBE of the Act and a further sum of Rs.4,52,500/- (2.5% of Rs.1,81,00,000/- ) as commission paid for obtaining accommodation entries. While computing the income, the AO erroneously adopted the returned income at Rs.5,70,99,380/- instead of Rs.1,89,160/- and determined the total income at Rs.7,56,51,880/-. 10. On appeal, the Ld. CIT(A) (i) directed the Assessing Officer to adopt the correct returned income of Rs.1,89,160/-; (ii) restricted the addition u/s.69C of the Act to Rs.1,72,33,564/-, being the purchases as per the ledger account of BAFPL furnished by the assessee, thereby granting relief of Rs.8,66,436/-; and (iii) restricted the commission addition proportionately to Rs.4,30,839/-. The appeal was thus partly allowed. Aggrieved, the assessee is in appeal before us. 11. The Ld. AR, in support of the additional grounds, made oral submissions and also filed a written note, the substance of which is as follows: (a) Non-supply of material: The letter dated 25.05.2022 furnished only the “information” and not the material relied upon by the AO, such as the statements recorded and the impounded documents. This violated paras 7 and 7.1 of CBDT Instruction

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No.1/2022 dated 11.05.2022 and the directions in Ashish Agarwal (supra) and Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). (b) Absence of DIN: No DIN was generated or quoted on the notice u/s.148 of the Act dated 29.07.2022. The notice neither records any exceptional circumstance for issuing a communication without DIN nor refers to any approval for doing so, as required by para 3 of CBDT Circular No.19/2019 dated 14.08.2019. Under para 4 of that Circular, such a communication is invalid and deemed never to have been issued. Reliance was also placed on CBDT Circular No.4/2026 dated 31.03.2026, stated to have been issued pursuant to the introduction of section 292BA of the Act. (c) Non-supply of section 151 approval: The notice u/s.148 of the Act was not accompanied by the approval of the specified authority u/s.151 of the Act. Reliance was placed on Tia Enterprises Pvt. Ltd. v. ITO [2023] 158 taxmann.com 63 (Delhi), against which the Revenue’s SLP was dismissed by the Hon’ble Supreme Court reported in [2024] 167 taxmann.com 56 (SC). (d) Limitation: The notice dated 29.07.2022 for assessment year 2014-15 was issued beyond six years from the end of the assessment year and is hit by the first proviso to section 149(1) of the Act, read with section 149 as it stood prior to 01.04.2021. The third proviso (subsequently the fifth proviso) to section 149 cannot save the notice, since a proviso qualifies only the main provision and not another proviso.

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of Shri Manoj Kumar Sharma related only to KP Nut and not to tapioca waste of Rs.30,84,900/-; and that section 69C has no application where the expenditure is recorded in the books and its source stands explained. 13. The Ld. DR strongly supported the orders of the lower authorities. Opposing the additional grounds, the Ld.DR contended that the notice u/s.148 of the Act dated 29.07.2022 was within the time available to the AO in view of the “surviving time” principle laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra), and that the reopening was valid. On merits, the Ld.DR submitted that the counter-party had admitted that there were no actual sales to the assessee, that the statement of Shri Ganesh Gopi was never retracted, and that the assessee failed to prove physical delivery of the goods. 14. In rejoinder, the Ld. AR submitted that the concept of surviving time was not the subject matter of the additional grounds and had no relevance to the facts of the present case. 15. We have heard the rival submissions perused the material on record and gone through the orders of the authorities, including the paper book filed by the assessee. Since the additional grounds go to the root of the jurisdiction of the AO, we take them up first. 16. Section 149(1) of the Act, as substituted by the Finance Act, 2021, carries a first proviso which states that no notice u/s.148 shall be issued at any time, for a relevant assessment year beginning on or before 01.04.2021, if such notice could not have been issued at that time on account of being beyond the time limit specified in clause (b) of section 149(1) as it stood immediately before the commencement of the Finance Act, 2021. For assessment year 2014-15, the time limit of six years from the end of the assessment year expired on 31.03.2021. Even as per the extension granted by TOLA and the notifications issued thereunder and even as per the Supreme Court’s decision in the case of In re:Cognizance for Extension of Limitation [2022] (134 taxmann.com 307), the notice u/s.148 of the Act could not have been issued beyond 29.05.2022. The

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notice u/s.148 on which the present reassessment rests on notice dated 29.07.2022. On the face of it, therefore, the notice is hit by the first proviso to section 149(1) of the Act. 17. The Revenue seeks to save the notice by invoking the relaxation under TOLA and the principle of “surviving time” laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra). In that judgment, the Hon’ble Court held that the period from the date of issue of the original notice (deemed to be a show- cause notice u/s.148A(b) by virtue of Ashish Agarwal (supra)) until the supply of information and material to the assessee, together with the two weeks allowed to the assessee to reply, stands excluded under the third proviso to section 149. After such exclusion, the AO has only the remaining period of limitation, being the period that was unexpired on the date of the original notice, within which to pass the order u/s.148A(d) and issue the notice u/s.148 of the Act. The judgment operates only where the notice is not hit by the time limit under the first proviso to section 149 of the Act. In the present case, the notice u/s.148 of the Act which is the foundation for the impugned reassessment order has been issued only on 29.07.2022 and hence, such a notice is barred by limitation and is to be quashed. Resultantly, the reassessment order also falls. ‘Sublato fundamento cadit opus’ – when the foundation falls, the superstructure must necessarily fall. Thus, the notice u/s.148 of the Act being barred by limitation, the consequential reassessment order dated 30.05.2023 is without jurisdiction and void ab initio. Additional Ground No.6 is allowed. 18. Independently of our finding on limitation, we also examine the validity of the notice from the standpoint of DIN. CBDT Circular No.19/2019 dated 14.08.2019, issued u/s.119 of the Act, mandates in para 2 that no communication shall be issued by any income-tax authority relating to, inter alia, assessment, enquiry, investigation, verification of information, orders, approval, etc., to the assessee or any other person on or after 01.10.2019, unless a computer-generated DIN has been allotted and is duly quoted in the body of

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such communication. Para 3 carves out limited exceptional circumstances in which a communication may be issued manually without DIN, but only after recording reasons in writing in the file and with the prior written approval of the Chief Commissioner / Director General of Income Tax. In such cases the communication must state that it is issued without DIN and must mention the date and number of the approval, and it must be regularised within 15 working days of its issuance by uploading it on the System and generating a DIN. Para 4 of the Circular declares that any communication not in conformity with paras 2 and 3 “shall be treated as invalid and shall be deemed to have never been issued”. Further, the Circulars issued by the Board u/s.119 of the Act are binding on the income-tax authorities: UCO Bank v. CIT (1999) 237 ITR 889 (SC). 19. Coming to the facts, we have perused the notice u/s.148 of the Act dated 29.07.2022 and find that it is a manually prepared notice bearing the physical signature of the Income Tax Officer, Non-Corporate Ward 3(1), Coimbatore. The column captioned “DIN & Notice No.” is left blank, and no DIN is quoted anywhere in the body of the notice. The notice does not state that it is being issued without DIN in exceptional circumstances, nor does it refer to any approval of the Chief Commissioner / Director General for issuing it without DIN. The Revenue has not placed on record any material to show that a DIN was generated for this notice or that it was regularised by uploading it on the System within the time stipulated in para 3 of the Circular. A DIN has been generated only in respect of the order u/s.148A(d) of the Act, viz., ITBA/COM/F/17/2022- 23/1044262600(1). Order u/s.148A(d) of the Act and the notice u/s.148 are distinct communications with different legal consequences: it is the notice u/s.148 of the Act that sets the reassessment in motion and requires the assessee to file a return. Para 2 of the Circular requires the DIN to be quoted in the body of “such communication”, that is, the communication being issued. Citing the DIN of another document does not meet that requirement. The record also shows that the original notice dated 09.04.2021 and the order u/s.148A(d) dated 29.07.2022 were both generated on the system with DIN. The system

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was therefore available, and no exceptional circumstance for issuing the notice of 29.07.2022 manually without DIN is borne out. The notice u/s.148 of the Act is the very foundation of the reassessment proceedings. A notice which, by operation of para 4 of Circular No.19/2019, is deemed never to have been issued cannot confer jurisdiction on the AO to make a reassessment u/s.147 of the Act. In response to the ld.DR’s argument that the DIN has been generated for manual notice issued u/s.148 of the Act, the ld.AR drew our attention and shown us that the DIN has been generated by quoting the A.Y.2013-14 against the notice u/s.148 of the Act issued for the A.Y.2014-15.

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Order pronounced in the open court on 13th October, 2026 at Chennai.

Sd/- Sd/- (मनु कुमार गिरर) (एस. आर. रघुनाथा) (MANU KUMAR GIRI) (S. R. RAGHUNATHA) न्याययक सदस्य/Judicial Member लेखासदस्य/Accountant Member चेन्नई/Chennai, दिन ांक/Dated, the 13th October, 2026 Devadas आदेश की प्रतिलिपि अग्रेपिि/Copy to: DEVADAS Digitally signed by DEVADAS 1. अपीलाथी/Appellant GOPALANACH GOPALANACHARY Date: 2026.10.16 ARY 2. प्रत्यथी/Respondent 14:54:26 +05'30' 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. ववभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF