EXEL RUBBER PRIVATE LIMITED,HYDERABAD vs. ACIT.,CENTRAL CIRCLE-1(2), HYDERABAD

ITA 1233/HYD/2025Status: DisposedITAT Hyderabad24 September 2025AY 2019-2066 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 of the Income Tax Act, 1961, for AY 2019-20 was invalid and liable to be quashed. This was because a fresh notice dated November 14, 2024, was issued after an earlier notice dated March 18, 2023, was dropped by the AO. The Tribunal found that the AO could not initiate fresh proceedings under Section 147/148 based on the same material and facts after the earlier proceedings were dropped, especially when the reasons for dropping were not beyond the AO's control. The Tribunal noted that the AO had dropped the earlier proceedings by accepting the assessee's return of income without scrutiny, as indicated by the non-issuance of a notice under Section 143(2). In the absence of fresh material or a change in facts, reinitiating proceedings via a second notice under Section 148 was not permissible. Consequently, the notice dated November 14, 2024, was held invalid on this ground alone. The Tribunal ordered accordingly. The judgment implies that similar issues concerning the validity of Section 148 notices were considered for other AYs, leading to the allowance of all appeals.

What were the facts?

The assessee, M/s Exel Rubber (P) Ltd, is in appeal before the Income Tax Appellate Tribunal (ITAT) against orders of the CIT(A) for Assessment Years (AYs) 2015-16 to 2019-20. These appeals arise from assessment orders passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, following search and seizure operations conducted on January 4, 2023. The search covered the assessee and other group companies. The ITAT clubbed these five appeals for common adjudication, taking ITA No. 1106/Hyd/2025 for AY 2015-16 as the lead case. The assessee's primary challenge revolves around the validity of the notice issued under Section 148 of the Act.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, by the Assessing Officer (AO) is without jurisdiction and bad in law, considering the conditions laid down under Section 148 and Section 149(1)(b) of the Act were not fulfilled. 2. Whether the assessment order passed under Section 143(3) read with Section 148 is vitiated due to mechanical approval under Section 148B and mechanical sanction under Section 151 of the Act, without proper satisfaction. 3. Whether the Learned CIT(A) erred in dismissing the assessee's legal grounds challenging the validity of the notice and consequent assessment. Assessee's Contentions: The assessee argued that the notice issued under Section 148 was invalid due to lack of jurisdiction, non-fulfillment of conditions under Section 148 and Section 149(1)(b), and invalid sanction under Section 151. The assessee also contended that the approval under Section 148B was mechanical. The assessee relied on various legal grounds to challenge the reopening and the assessment. The assessee also raised an additional ground for AY 2019-20 regarding the invalidity of a fresh notice issued after dropping earlier proceedings. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions. However, it details the reasons recorded by the AO for reopening the assessment, which formed the basis of the revenue's action.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 148A,Section 148B,Section 149,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ DB-B‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-

For Appellant: Shri M.V. Prasad, CA
Hearing: 03/09/2025

Per Bench:

These five appeals by the assessee are directed against the separate dated 20/06/2025, 21/06/2025, 23/06/2025, 25/06/2025 and 15/07/2025 respectively of the learned CIT (A)-11, Hyderabad for the A.Ys.2015-16 to 2019-20

orders

arising from the assessment order passed u/s 143(3) r.w.s. 147 of the Act, pursuant to the search & seizure operations dated 04/01/2023 in case of Exel Group of Companies including the assessee for the A.Ys 2014-15 to 2019-20 respectively. Since

common issued are raised in these group of five appeals

The order continues below.

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