M/S. HARDEV CONSTRUCTION PVT. LTD., ,KOLKATA vs. DCIT, CIRCLE 11(1), , KOLKATA

This is an appeal filed by the assessee against the order dated 11.07.2024, passed by the ld. CIT(A), National Faceless Appeal Centre, Delhi, for the assessment year 2016-2017.

The appeal of the assessee is barred by 148 days. In this regard, the assessee has filed an application for condonation of delay supported with an affidavit stating therein sufficient reasons for delay, which are plausible and bonafide. Ld. Sr. DR also did not raise any objection to condone the delay. Accordingly, delay of 148 days in filing the present appeal by the assessee is condoned and the appeal is admitted for hearing.

The only issue pressed at the time of hearing by the ld. Counsel of the assessee is against the invalid approval accorded for issuing notice u/s.148 of the Act by the ld.Pr.CIT instead of ld. Pr.CCIT and, therefore, the entire proceedings are invalid and nullity in the eyes of law.

Facts in brief are that the case of the assessee was reopened on 28.06.2021 under the old regime and after the decision of the Hon’ble Supreme Court in the case of Ashish Agarwal, reported in [2022] SCC Online SC 543, the Assessing Officer issued notice u/s.148A(b) of the Act on 29.05.2022 and finally the assessment was reopened on 25.07.2022 vide notice issued u/s.148 of the Act. A copy of which is available at pages 1 to 3 of the paper book, which was issued beyond a period of three years from the end of the assessment year. The assessment was completed u/s.147 r.w.s.144 of the Act, wherein the Assessing Officer had added back Rs.79,75,000/- as unexplained cash credit u/s.68 of the Act. The said order was also confirmed by the ld. CIT(A) when the assessee did not make any representation before the appellate authority.

Ld.Counsel of the assessee submitted that the ground has not been raised before the Assessing Officer and the ld. CIT(A), however, this being legal issue which does not require any verification of facts on any account whatsoever and, therefore, the assessee is within his legitimate and lawful rights to raise this issue before the Tribunal. In this regard, ld. counsel relied on the decision of the Hon’ble Supreme Court in the case of NTPC, reported in 229 ITR 383, wherein it has been held that legal argument can be raised at any stage of the proceedings. The ld. Counsel relied on the decision of the Hon’ble Bombay High Court in the case of Kansai Nerolac Paints, reported in 364 ITR 632 (Bombay High Court), Tribunal should decide the legal issue instead of remanding the matter to the Assessing Officer. Ld. counsel therefore submitted that the grounds may be admitted and adjudicated.

After hearing the rival contentions and perusing the material available on record, we find that the issue raised by the assessee is purely a legal issue which goes to the root of the matter and the assessee is also within its legitimate rights to challenge such issue by raising the same before us which is in consonance of the ratio laid down by the Hon’ble Apex Court in the case of NTPC (supra). Moreover, the case of the assessee finds supports from the decision of the Hon’ble Bombay High Court in the case of Kansai Nerolac Paints (supra), wherein it has been held that the legal issue raised by the assessee for the first time should not be remanded to the file of Assessing Officer and it should be decided by the Tribunal. Accordingly, we decide the legal issue raised for the first time before us.

Admittedly, the case of the assessee has been reopened after a period of three years from the end of the assessment year and, therefore, the sanction of ld. Pr.CCIT was to be obtained for issuing notice u/s.148 of the Act and not the ld. Pr.CIT whose approval had been obtained for issuance of notice. Therefore, the reopening of the assessment on the basis of the said notice is not sustainable in the eyes of law. The issue is no more res integra, as the Hon’ble Supreme Court in the case of Rajeev Bansal, reported in 469 ITR 46 (SC) has held vide para 114(d)k that it is the Pr.CCIT who should grant sanction u/s.151 of the Act since the