SHIV EXTRUSION,JAMNAGAR vs. INCOME TAX OFFICER, JAMNAGAR

ITA No. 646/Rjt/2025
&
Dr. DINESH MOHAN SINHA, JM
आयकरअपीलसं./ITA No. 646/RJT/2025
Ǔनधा[रणवष[ / Assessment Year: (2016-17)
(Hybrid Hearing)

SHIV EXTRUSION
PLOT NO.3978 PHASE IIIROAD
NO.-R
èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABKFS7199F
(Appellant)

(Respondent)

Appellant by : Shri Ramesh M. Patel, Ld. AR
Respondent by : Shri Abhimanyu Singh Yadav Ld. Sr. DR
Date of Hearing

: 23/12/2025
Date of Pronouncement

: 12/03/2026

आदेश / O R D E R
PER, Dr. DINESH MOHAN SINHA JM;
Captioned appeals filed by the assesse firm, pertaining to Assessment
Year 2016-17, is directed against order passed under section 250 of the Income Tax Act, 1961 by National Faceless Appeal Centre (NFAC),
Delhi/Commissioner of Income Tax (Appeals), dated 30/09/2025, which in turn arises out of an order dated 17/05/2023 passed by the Assessing Officer u/s 147 read with section 144B of the I.T. Act.
2. The Grounds of appeal raised by the assessee are as follows: -
1. 1. Juri ictional Defects (Limitation and Threshold Failure)

-The AD relied on the entire alleged turnover of Rs. 1,17,14,220/- to invoke Section 149(1)(b).

The NFAC itself conceded the settled legal position that only the profit embedded in such sales is taxable, not the entire turnover.

Since the final addition sustained (Rs. 7,94,224/-) is conclusively below the Rs. 50 lakh thereshold required by Section 149(1)(b), the juri iction assumed by the AO ab initio was fundamentally flawed.

Relying on the Supreme Court judgment encompassing Union of India v. Rajeev Bansal, any notice issued invoking the time limit under Section 149(1)(b) must be dropped if the escaped income is less than Rupees fifty lakhs.

The period available to the Revenue between the deemed SCN date
(17.06.2021) and the TOLA expiry (30.06.2021) was 13 days

Since the notice was issued on 29.07.2022, which is beyond the surviving 13 days available after excluding the period allowed to the assessee to file a reply (09.06.2022), the notice is time-barred and liable to be set aside.
Old Regime): The original notice under Section 148 dated 17.06.2021, issued beyond four years from the end of AY 2016-17 (expired
31.03.2020), was invalid as the approval was obtained only from the JCIT, Range-1, Jamnagar.

For cases initiated beyond four years under the old regime, Section 151(1) mandated approval from the Principal/Chief Commissioner.
Approval from the lower authority (ICIT) constitutes an incurable defect that vitiates the entire proceedings.

Section 151(ii) mandates that when more than three years have elapsed
(as relied upon by the AO), approval must be obtained from the Principal Chief Commissioner or Principal Director General or Chief
Commissioner or Director General (the higher authority).

Approval by the PCIT (the authority specified under Section 151(i)) for a Section 149(1)(b) case violates the statutory mandate of Section 151. II. Procedural and Substantive Defects

The issuance of the notice by the Juri ictional AD after 29.03.2022
constitutes an action performed without juri iction,

- The AO's failure to follow this prescribed statutory course renders the assessment null and void

The income, represented as cash proceeds from unaccounted sales, does not constitute an "Asset" as defined by the restrictive Explanation to Section 149(1)(b). The term "asset" includes immovable property, shares, securities, loans, advances, and deposits in a bank account, implying an exhaustive definition that excludes general cash.

The net tax liability assessed (Rs. 3,27,451/-) was fully covered by the available Tax Deducted at Source (TDS) credit allowed (Rs. 3,41,378/-
Hence, the charging of interest under Section 2348 is illegal, notwithstanding its consequential nature.

The case of the assessee was reopened by issue of notice u/s 148 of the IT Act dated 29.07.2022 after following due procedure u/s 148A of the IT Act in compliance with the directions of the Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal & Others vide order dated 04.05.2022 (2022 SCC Online SC 543). In response, the assessee has filed the return of income on 17.08.2022 declaring total income of Rs. 2,65,490/-. Notice u/s 143(2) of the IT Act was issued on 22.11.2022. Upon perusal of the reply of the assessee, the AO has noted that, the grounds of objections raised by the assessee had been considered and found not acceptable at the time of passing order u/s 148A(d). Further, as per order u/s 148A(d) it was very clearly held that the assessee was in practice of out of books transaction with an intention to avoid due taxes/duties etc., The AO has noted that, the assessee generated out of books stock of Rs. 1,17,14,220/- for AU
2016-17. In response, the assessee has filed the reply. On perusal of the reply of the assessee, the AO has noted that, the assessee admitted that Excise department carried out verification of physical inventory and found
Shiv Extrusion vs. ITO there is shortage of 1572.500 kg stock of Brass rods. Assessee explained that shortage is due to sale of brass rods out of books and raised objections with regard to juri iction of the case and demanded to close the proceedings in the case of assessee in the light of decisions of Hon'ble Gujrat High Court and Allahabad High Court. However, the AO has rebutted the objections raised by the assessee with regard to juri iction during the VC. Further, the AO has noted that, the assessee had admitted that total initial Investment for stock was accounted in the books made at the initial stage and then unaccounted sales were done from such stock, thus income escapement is only to the extent of GP embedded in unaccounted sales income. In this regard the AO has held that the escapement will be 7,94,224/- as the same was not declared in ITR Accordingly, the AO has treated this Rs. 7,94,224/- as unexplained money u/s 69A of the Act and added to the total income of the assessee.

The AO completed the assessment u/s 147r.w.s. 144B of the IT Act on 17.05.2023 by assessing the total income at Rs.10,59,714/- after making the above discussed addition. Further, the AO has initiated penalty proceedings u/s 271(1)(c) of the IT Act separately.

(i)
7. We have heard the rival contention of both the parties and perused the material available on record. We note that the carefully considered the assessment order, the grounds of appeal, the written submissions of the appellant, and the material on record. We note that one of the ground was Validity of reassessment:

“In the facts of the case, the to respondent Assessing Officer has provided information pursuant the directions issued by the Hon'ble
Apex Court in case of Ashish Agarwal (supra) on 24.05.2022 and therefore, considering 15 days' time to file reply by the assessee, the due date would be 07.06.2022. The petitioner filed no reply. The order under section 148A(d) of the Act as well as notice under section 148 of the Act was issued on 28.07.2022. considering
However, the period of limitation from the date of issuance of notice under section 148 read with TOLA upto 30.06.2021, the limitation for issuance of notice under section 148 the Act applying the decision of Hon'ble Apex Court in case of Ashish Agarwal (supra) as well as Rajeev Bansal (supra), would be 16.06.2022. of 8. Learned Senior Standing Counsel Mr. Karan Sanghani has verified the above dates and could not controvert the same.

(g) The time during which the show-cause notices were deemed to be stayed is from the date of issuance of the deemed notice between.
April 1, 2021 and June 30, 2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this court in Union of India v.
Ashish Agarwal [(2022) 444 ITR 1 (SC); (2023) 1 SCC 617.] and the period of two weeks allowed to the assessees to respond to the show-cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with the Taxation and other
Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. All notices issued beyond the surviving period are time barred and liable to be set aside."

JUDICAL MEMBER

Rajkot
Ǒदनांक/ Date: 12/03/2026

Copy of the Order forwarded to 1. The Assessee
2. The Respondent
3. The CIT(A)
4. Pr. CIT
5. DR/AR, ITAT, Rajkot
6. Guard File
By Order