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Facts
The assessee, dealing in diamond jewellery, filed an original return. Information received by the AO suggested the assessee was a beneficiary of accommodation entries. A notice under Section 148A(b) was issued, followed by a Section 148A(d) order, and then a notice under Section 148 to reopen the assessment for AY 2018-19.
Held
The Tribunal held that the reopening of the assessment was bad in law as the notice under Section 148 was issued beyond three years from the end of AY 2018-19, and the alleged escaped income was below Rs. 50 lakhs, making the notice and consequent assessment order void ab initio.
Key Issues
Whether the reopening of assessment under Section 147/148 was valid when the notice was issued beyond the prescribed time limit, considering the amount of escaped income.
Sections Cited
147, 143(3), 148, 151, 69C, 115BBE, 148A(b), 148A(d), 149, 144B
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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Date of Hearing 10.06.2025 Date of Pronouncement 18.06.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147/143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 31.01.2024 for the Assessment Year [A.Y.] 2018-19. P a g e | 2 A.Y. 2018-19 Shri Amit Jayantilal Doshi 2. The grounds of appeal are as under:- Reopening of assessment is bad in law and liable to be quashed The Ld. NFAC [CIT(A)] has erred in dismissing the grounds relating to reopening of the assessment in para 5.2.1 of the order without appreciating that: a. notice issued u/s 148 of the Act dated 21.04.2022 is beyond 3 years from the relevant AY 2018-19 and the alleged income escaping assessment is less than Rs. 50 lakhs, and hence, the reopening of the assessment is bad in law and liable to be quashed. b. without prejudice to the above, even otherwise, there is NO income that has escaped assessment and hence, the reopening of the assessment is bad in law and liable to be quashed. c. without prejudice to the above, the Ld. NFAC [CIT(A)] failed to appreciate that sanction u/s 151 of the Act was not obtained since copy not furnished and/or even if taken, the same is beyond jurisdiction and/or mechanical approval given without application of mind and hence, the reopening of the assessment is bad in law and liable to be quashed; d. without prejudice to the above, the notice u/s 148 of the Act is issued by jurisdictional AO whereas the notice ought to be issued under faceless regime and not by jurisdictional AO and hence, even on this ground, the reopening of the assessment is bad in law and liable to be quashed.
Without prejudice to above, on merits: B) Addition confirmed of Rs.36,47,793/- 1.69C r.w.s. 115BBE of the Act in unjustified and needs to be deleted: 2. The Ld. NFAC [CIT(A)] erred in confirming the order of the AO and thereby confirming the addition made by the AO of Rs. 36,47,793/- without appreciating that: a. the Appellant has made genuine purchase of rough diamonds from M's. Taman Jewels P. Lad and the same is not bogus, as alleged and the Appellant is not beneficiary of any such alleged bogus purchases. b. complete details and documentary evidences of purchase made from M/s Tanman Jewels P. Ltd. and nexus of sale to various parties were furnished including stock register and P a g e | 3 A.Y. 2018-19 Shri Amit Jayantilal Doshi working of GP earned thereon given and there is no discrepancy found therein and the GP offered to tax in respect of this transaction is duly accepted by the AO and CIT(A); c. Appellant also filed confirmation from party M/s. Tanman Jewels P. Ltd. and address of Mumbai was duly given and during reassessment proceedings, also requested the AO that the party can be produced, if required, however the request was turned down; d. AO made addition applying sec.69C rws 115BBE of the Act and this sec 69C of the Act is not applicable to the facts of the case; and hence, the addition confirmed of Rs.36,47,793/- u/s.69C rws 115BBE of the Act is without any justification and needs to be deleted.
Facts in brief are that the assessee is dealing in diamond jewellery business who disclosed income of Rs 18,88,000/-in the original return filed. Subsequently, information was received by the AO from the Investigation wing of the department that the assessee was a beneficiary of accommodation entry. Accordingly, notice under section 148A(b) of the Act was issued to him on 27.03.2022. Thereafter, order was passed under section 148A(d) of the Act on 21.04.2022. His case was reopened and notice u/s section 148 of the Act was issued on 21.04.2022.Thereafter, assessment order dated 31.01.2024, was passed under Section 147/144B of the Act whereby the AO made aggregate addition of Rs 36,47,793/-/- in the hands of the Assessee under section 69C of the Act by treating purchase from one Tanman P a g e | 4 A.Y. 2018-19 Shri Amit Jayantilal Doshi Jewels P.Ltd as bogus accommodation entry. The said addition has been upheld by the ld.CIT(A) in the subsequent appeal filed by the assessee.
In the ground no.1 above which is purely legal in nature, the assessee has contested the validity of the assessment order on the plea that the notice issued u/.s 148 of the Act was barred by time limitation since it was not issued in accordance with the provisions of the Act. It is stated that notice issued u/s 148 of the Act dated 21.04.2022 is beyond 3 years from the relevant AY 2018-19 and the alleged income escaping assessment is less than Rs. 50 lakhs, and hence, the reopening of the assessment is bad in law and liable to be quashed.
In the course of hearing before us, the ld.AR pleaded that the very foundation of the assessment order is liable to be held as null and void in view of this major infirmity in the reopening proceeding and consequent assessment order. We have carefully perused the facts on record. The ld.DR has not controverted the facts emanating from the ground and the impugned orders of the authorities below. It is noticed that the though this legal ground was raised before the ld.CIT(A) as well, but his did not adjudicate it and upheld the proceedings u/s 148 of the Act on other grounds.
On perusal notice issued under section 148A(b) of the Act, order passed under section 148A(d) of the Act and assessment order passed P a g e | 5 A.Y. 2018-19 Shri Amit Jayantilal Doshi under Section 147 read with Section 144B of the Act, it is evident that in the present case income chargeable to tax which had escaped assessment or which was likely to escaped assessment was less that Rs 50 lakhs. It is admitted position that notice u/s 148A(b) notice was issued on 27.03.2022 alleging escapement of income. Further, order u/s 148A(d) order passed on 21.04.2022 alleging escapement of income of Rs. 36,47,793/- by taking approval of PCIT-19,Mumbai.Notice u/s 148 of the Act issued on 21.4.2022 taking approval of PCIT- 19.Evidently,reopening by issue of notice u/s 148 of the Act is beyond 3 years. from end of AY 2018-19, which lapsed on 31.3.2022. As per provision of section 149 of the Act, no notice u/s 148 of the Act can be issued beyond 3 years from end of the relevant assessment year, if alleged escapement of income is below Rs. 50 lakh. Since in the present case, it is an undisputed facts that the alleged escapement of income is below Rs. 50 lakh and notice u/s 148 of the Act was issued beyond 3 years, the notice as well as the consequent assessment order are held to be ab initio void and is therefore, quashed.
Since we have already quashed the order under section 147 based on the above proposition itself, other grounds relating to merits of the case have become academic and therefore, do not warrant any adjudication.
P a g e | 6 A.Y. 2018-19 Shri Amit Jayantilal Doshi 8. In the result, the appeal is allowed.
Order pronounced in the open court on 18.06.2025. SANDEEP GOSAIN PRABHASH SHANKAR ( (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)