J KISHORE EXPORTS vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 46 (1) DELHI

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W.P.(C)/1669/2023HC DelhiDLHC01003999202327 February 2025Author: HON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR,HON'BLE MR. JUSTICE YASHWANT VARMA4 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court disposed of the writ petition on terms identical to its judgment in Kanwaljeet Kaur vs. Commissioner of Income Tax. The Court directed the concerned Assessing Officers (AOs) to evaluate the reassessment notices, bearing in mind specific judgments. For the issue of surviving period, the AOs are to consider the Supreme Court's decision in Union of India v. Rajeev Bansal and the High Court's decision in Ram Balram Buildhome Pvt. Ltd. v. Income Tax Officer & Anr. The AOs must pass a reasoned and speaking order addressing the impact of these judgments on the impugned reassessment notices, determining whether they survive or are liable to be recalled. This exercise will involve examining the validity of the sanction under Section 151 and the authority of the AO to commence reassessment. The petitioner will have the liberty to assail any adverse orders in accordance with law. The Court expressly left undecided the specific findings on the merits of the reassessment, remitting the matter for proper adjudication by the AO.

What were the facts?

The petitioner, J Kishore Exports, filed a writ petition challenging the reassessment action initiated by the Assistant Commissioner of Income Tax, Circle 46(1), Delhi, for Assessment Year 2014-15. The primary issue remaining for consideration was the 'surviving period' of the reassessment proceedings. The petitioner provided a chart detailing the timeline of notices and orders, including the original assessment under Section 143(3) on 21.12.2016, the initial notice under Section 148 on 07.04.2021, a Section 148A(b) notice on 26.05.2022, the petitioner's reply on 31.05.2022, and the Section 148A(d) order on 29.07.2022. The petitioner argued that the reassessment was time-barred under the proviso to Section 147 of the Income Tax Act, 1961, as it was initiated after the expiry of four assessment years from the end of the relevant assessment year, and there was no valid finding of deficiency in disclosure during the original assessment.

What were the issues?

1. Whether the reassessment proceedings initiated for AY 2014-15 are time-barred under the proviso to Section 147 of the Income Tax Act, 1961, given that a regular assessment under Section 143(3) was completed on 21.12.2016 and the reopening was initiated after the expiry of four assessment years without a requisite finding of deficiency in disclosure? 2. Whether the reassessment proceedings are vitiated due to a lack of clarity regarding the nature of the alleged transaction/accommodation entry, indicating a borrowed satisfaction without independent application of mind by the Assessing Officer? 3. Whether the reassessment proceedings are invalid due to the non-consideration of the petitioner's reply under Section 148A(c) in the order under Section 148A(d)? 4. Whether the sanction granted under Section 151 for reassessment is deficient and lacks application of mind? Assessee's Contentions: - The reassessment is time-barred under the first proviso to Section 147 (unamended law) as it was initiated after four assessment years from the completion of the regular assessment under Section 143(3) on 21.12.2016, and there was no valid finding of deficiency in disclosure. - The formulation of belief for reassessment was based on borrowed satisfaction due to a lack of clarity regarding the nature of the alleged transaction. - The impugned proceedings are invalid as the order under Section 148A(d) did not consider the petitioner's reply under Section 148A(c) in an itemized manner. - The sanction under Section 151 dated 31.03.2021 by PCIT 10 was mechanical and lacked application of mind. - No back material was confronted to the petitioner. Revenue's Contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 151,Section 143(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~34 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 1669/2023 J KISHORE EXPORTS .....Petitioner Through: Dr. Kapil Goel and Mr. Sandeep Goel, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 46 (1) DELHI .....Respondent Through: Mr. Abhishek Maratha, SSC, Mr. Apoorv Agarwal, Mr. Parth Samwal, JSCs, Ms. Nupur Sharma, Mr. Gaurav Singh, Mr. Bhanukaran Singh Jodha, Ms. Divya Verma and Mr. Himanshu Gaur, Advs. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR % 27.02.2025

O R D E R

1.

The instant writ petition had been preferred assailing the reassessment action initiated by the respondent pertaining to Assessment Year [‘AY’] 2014-15. We take note of the principal challenge which now remains and pertains to the issue of surviving period.

2.

The petitioner, in order to buttress its claim of the proceedings being time barred, has placed for our consideration the following chart:

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 01/07/2025 at 20:56:34

WP (C) NO 1669//2023 (item 34) NAME OF CASE J KISHORE EXPORTS ASST YEAR 2014-2015 (REGULAR ASST FRAMED U/S 143(3) ON 21.12.2016: INSTANT REOPENING IS HIT BY PROVISO TO SEC 147 refer annexure P-2 pages 103 to 111) OLD LAW /INITIAL NOTICE U/S 148 07.04.2021 Refer annexure P-3 pages 112 to 122

148A(B)NOTICE 26.05.2022 Refer annexure P-4 pages 123 to 128 REPLY 148A(C) 31.05.2022 Refer annexure P-5 pages 129 to 165 148 NEW LAW NOTICE AND 148A(D) ORDER 29.07.2022 Refer annexure P-6 pages 166 to 178 & 179-180 STATUS Covered by this hon’ble court decision in case of Kanwaljeet Kaur v. Assistant Commissioner Of Income Tax Circle (34) 1 Delhi & Ors2025:DHC:656-DB (para 27 to para 29) & OTHER ISSUES TO BE EXAMIED AS RAISED IN WRIT PETITION (HIGHLIGHTED) Nature of transaction not clear: There is no clarity whatso ever as to basic nature of alleged transaction /so called alleged accommodation entry and their basic components/ingredients which vitiates the formulation of belief being based on borrowed satisfaction , without independent application of mind as reasons recorded have to stand/fall on its own footing Instant reopening is time barred/marred by/ vide first proviso to sec. 147 (unamended law): That impugned proceedings u/s 148 /148A are time barred vide first proviso to unamended sec 147 as in instant case admittedly already regular asst is completed u/s 143(3) vide order dated 21.12.2016 and instant reopening is made after end of four assessment years as in foundational reasons there is no valid /requisite finding /averment on jurisdictional aspect of the positive deficiency of disclosure by assessee in previous scrutiny asst u/s 143(3). Even approval/sanction u/s 151 dated 31.03.2021 by PCIT 10 is equally deficient and lacking on legality being without application of mind NO BACK MATERIAL CONFRONTED No back material/annexure as purportedly referred in so called statement of MrAshok Kr Gupta and foundational reasons etc , is ever purveyed /shared with petitioner herein which 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 01/07/2025 at 20:56:34

also vitiates the impugned reopening. NO CONISDERATION OF REPLY OF PETITIONER U/S 148A(c) That impugned proceedings u/s148 and 148A are ex facie invalid as in impugned order u/s 148A(d) there is no itemised consideration as explained by petitioner in its reply u/s 148A(c) MECHANICAL SANCTION : even approval/sanction u/s 151 dated 31.03.2021 by PCIT 10 is equally deficient and lacking on legality being without application of mind

3.

The said question would have to be necessarily examined by the Jurisdictional Assessing Officer bearing in mind the judgment of the Supreme Court in Union of India v. Rajeev Bansal [2024 SCC OnLine SC 2693] as well as of this Court in Ram Balram Buildhome Pvt. Ltd. v. Income Tax Officer & Anr. [2025 SCC OnLine Del 481].

4.

Dealing with identical issues, we had disposed of a batch of writ petitions by our judgment rendered in Kanwaljeet Kaur vs. Commissioner of Income Tax [2025 SCC OnLine Del 605] in the following terms:

“27. We accordingly dispose of this batch of writ petitions by directing the concerned AOs to evaluate the individual SCNs' under Section 148 of the Act bearing in mind our judgments in T.K.S. Builders, Abhinav Jindal and Naveen Kumar Gupta. These decisions have conclusively settled issues pertaining to the accordal of sanction under Section 151 as well as the authority of the jurisdictional AO to commence and undertake reassessment. Those decisions also lay at rest the challenge which the writ petitioners had raised that an AO is bound to adhere to the procedure prescribed by Section 153C in cases emanating from a search.

28.

A similar exercise would have to be undertaken to examine the issue of surviving period in respect of each individual noticee under Section 148 and which would necessarily be guided by the judgments of Rajeev Bansal and Ram Balram.

29.

The concerned AOs shall consequently pass a reasoned and speaking order dealing with the impact of the judgments referred to above upon the impugned reassessment notices and in the manner indicated in paras 27 and 28 of this order. That decision shall thus 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 01/07/2025 at 20:56:34

render a finding on whether the impugned reassessment notices would survive or be liable to be recalled. It shall be open to the writ petitioners to assail any adverse orders that may come to be passed pursuant to the above in accordance with law.”

5.

Consequently, and in light of the above, we dispose of the writ petition on terms identical to those provided in paragraphs 27 to 29 of Kanwaljeet Kaur.

YASHWANT VARMA, J.

HARISH VAIDYANATHAN SHANKAR, J. FEBRUARY 27, 2025/RW 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 01/07/2025 at 20:56:34

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