THE PR. COMMISSIONER OF INCOME TAX -3 vs. ESCRORTS LTD.

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ITA/644/2019HC DelhiDLHC01029250201927 April 2026Author: HON'BLE MR. JUSTICE VINOD KUMAR,HON'BLE MR. JUSTICE DINESH MEHTA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the CIT(A) was justified in declaring the reassessment proceedings as illegal. The reasoning was that once the Assessing Officer (AO) had applied his mind and made additions, which were subsequently set aside by the CIT(A), the AO could not have invoked Section 148 of the Income Tax Act, 1961, to initiate fresh reassessment proceedings for the same issues. The Court noted that this decision of the CIT(A) had been rightly affirmed by the Tribunal in the impugned order. Furthermore, since the High Court had, by a separate order of even date, rejected the Department's appeal (ITA No. 1427/2006) which examined the merits of the additions, the present appeal, stemming from the reassessment order, was liable to be rejected on the ground of the validity of the proceedings, independent of the merits. The appeal was disposed of accordingly.

What were the facts?

The appellant, Pr. Commissioner of Income Tax-3, filed an appeal against the order dated 27.11.2018 of the Income Tax Appellate Tribunal (ITAT). The ITAT's order upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 30.03.2015, which had quashed a reassessment order passed under Section 148 of the Income Tax Act, 1961, dated 29.12.2006. This reassessment order pertained to Assessment Year (AY) 2001-02. The original assessment order for AY 2001-02 had been annulled by the CIT(A) on 31.01.2006. The revenue initiated reassessment proceedings for the same AY after the assessee's appeal was allowed by the CIT(A), making the same additions to income to overcome the earlier annulment.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the order passed under Section 148/143(3) of the Income Tax Act, dated 29.12.2006, and holding the same as null and void. Assessee's Contention: The respondent (assessee) argued that the reassessment order dated 29.12.2006 for AY 2001-02 was passed for the same assessment year for which an appeal on merit (ITA No. 1427/2006) had already been rejected by the High Court. They further contended that the Assessing Officer (AO) initiated reassessment proceedings for the same AY after the assessee's appeal was allowed by the CIT(A) and made the same additions to income to circumvent the setting aside of the initial assessment order by the CIT(A) on 31.01.2006. The CIT(A) had declared the initiation of reassessment proceedings under Section 148 as illegal and arbitrary, quashing the assessment order, a decision affirmed by the ITAT. Revenue's Contention: The revenue's grounds of appeal before the ITAT focused on the CIT(A) erring in quashing the reassessment order.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Delhi Bench

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27.04.

2026

2.

The questions, which were raised by the Department before the Tribunal are reproduced hereinfra :

“ 1. On the facts and in the circumstances of the case This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/04/2026 at 13:02:05

and in law, Ld. CIT(A) has erred in quashing the order u/s 148/143(3) of the I.T. Act, dated 29.12.2026 and holding the same as null and void.

2.

The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.”

3.

Learned counsel for the respondent at the outset submitted that the relevant reassessment order dated 29.12.2006 under Section 148 of the Act of 1961 was passed by the Assessing Officer (AO) for the same Assessment Year (AY) i.e. 2001-02, qua which the appeal on merit being ITA No. 1427/2006 has been rejected by this Court vide order of even date (i.e. 27.04.2026).

4.

He added that the AO had initiated reassessment proceedings in relation to very same AY 2001-02 after the assessee’s appeal was allowed by the CIT(A) and made the very same addition to the assessee’s income so as to overcome the setting aside of the initial assessment order which was annulled by order dated 31.01.2006 passed by the CIT(A), Delhi.

5.

Learned counsel submitted that the CIT(A) vide his order dated 30.01.2015, declared the initiation of the reassessment proceedings under Section 148 of the Income Tax Act, 1961 to be illegal and arbitrary and has consequently quashed the assessment order and said order of CIT(A) has been affirmed by the Tribunal.

6.

Having heard learned counsel for the parties, we are of the view that the CIT(A) was perfectly justified in declaring the proceedings to be illegal inasmuch as the AO having applied his mind and made the addition, which had been otherwise set aside by the CIT(A), could not have invoked Section 148 of the Act of 1961. Said decision has been rightly affirmed by the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/04/2026 at 13:02:05

Tribunal by the order impugned.

7.

Since we have rejected Department’s appeal i.e. ITA No. 1427/2006 by order of even date, in which the merit of the additions have been examined, the present appeal emanates from order of reassessment is liable to be rejected apart from on the ground of validity of proceedings.

8.

The appeal is disposed of accordingly.

DINESH MEHTA, J

VINOD KUMAR, J APRIL 27, 2026/dd This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/04/2026 at 13:02:05

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