UNITED INFRA MINERALS PRIVATE LIMITED,HYDERABAD vs. DCIT., CENTRAL CIRCLE 1(1), HYDERABAD

प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.

The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax
(Appeals)-12, Hyderabad, dated 21.03.2025, which in turn arises

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United Infra Minerals Private Limited from the order passed by the Assessing Officer (for short, “A.O.”) u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short “Act”) dated 31.03.2022. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1. The orders of lower authorities are bad in law and liable to be quashed for:

a) non-consideration of material on record and submissions of the appellant b) want of application of principles of natural justice. (Tax Effect of above ground 4,40,967/-)

Without prejudice:

2 The learned Commissioner of Income Tax (Appeals) has erred in confirming the order passed by Assessing Officer. The order passed by learned assessing officer being bad in law and void-ab-inito was required to be quashed instead of being confirmed. (Tax Effect of above ground: 4,49,967/-)

(Tax Effect of above ground: 4,49,967/-)

4 In any case, the assessment order passed in a haste and all proceedings conducted at the fag end of the time barring period without providing the appellant a. copy of the material/sworn statements relied upon by the Assessing
Officer while passing the order,

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United Infra Minerals Private Limited b. opportunity of rebutting the allegations of the assessing officer and presenting the appellant's case is in gross violation of the principles of natural justice and fair play which makes the order totally bad in law and liable to be cancelled. The learned CIT(A) has erred in not annulling the assessment and instead confirming the same.
(Tax Effect of above ground: 4,49,967)

Without prejudice

(Cumulative tax effect of all the grounds above: 4,49,967/-)”

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United Infra Minerals Private Limited r.w.s. 147 of the Act, dated 31.03.2022, primarily on two-fold grounds, viz. (i). that as the A.O. had before issuing notice u/s 148
of the Act failed to follow the mandatory procedure contemplated under Section 148A of the Act, therefore, both the reopening and the framing of the assessment by him, vide his order under Section 143(3) r.w.s. 147 of the Act, dated 31.03.2022, was rendered as invalid and bad in law; and (ii). that as the reassessment proceedings in the case of the assessee company were initiated based on incriminating documents, viz. (Pages 9–11 of the folder marked as A/UGCL/01) which, inter alia, revealed incurring of unexplained expenditure during the subject year of Rs.
14,99,840/-, therefore, the A.O. in absence of being in possession of books of accounts and other documents or evidence which revealed that the income of the assessee chargeable to tax, represented in the form of asset, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more for that year, had clearly traversed beyond the scope of the juri iction that was vested with him to initiate the impugned proceedings, after the lapse of a period of three years from the end of the relevant assessment year, as contemplated under Section 149(1) of 6
United Infra Minerals Private Limited the Act (as was made available on the statute, vide the Finance Act,
2021, w.e.f 01.04.2021, and was applicable during the relevant period). Apart from that, the assessee company had assailed the validity of the addition of Rs. 14,99,840/- made by the A.O. under Section 69C of the Act on merits. However, we find that the CIT(A) did not find favour with the multi-facet contentions advanced by the assessee company and dismissed the appeal, observing as under:

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United Infra Minerals Private Limited pronouncements that have been pressed into service by them to drive home their respective contentions.
8. Shri
Deepak
Chopra,
C.A., learned
Authorized
Representative (for short “Ld. AR”) for the assessee company, at the threshold of hearing of the appeal, submitted that both the lower authorities have grossly erred in law and on facts of the case in not quashing the assessment framed by the A.O. vide his order passed under Section 143(3) r.w.s. 147 of the Act, dated
31.03.2022. Elaborating on his contention, the Ld. AR submitted that, as the A.O. had issued notice under Section 148 of the Act, dated 23.06.2021, therefore, he was statutorily obligated to have adhered to the procedure laid down under Section 148A of the Act, which, however, was not done by him. The Ld. AR submitted that the assessee company, vide its letter dated 21.07.2021, had objected to the issuance of notice under Section 148 of the Act without following the due procedure contemplated under Section 148A of the Act. The Ld. AR submitted that non-adherence of the procedure under Section 148A by the A.O. before issuing notice under Section 148 of the Act, dated 23.06.2021, was clearly in 15
United Infra Minerals Private Limited violation of the judgment of the Hon’ble Supreme Court in the case of Union of India Vs. Ashish Agarwal (2022) 442 ITR 1 (SC).
Carrying his contention further, the Ld. AR submitted that the Hon’ble Supreme Court, in the case of Ashish Agarwal (supra), had categorically held that the reassessment proceedings on or after 01.04.2021 have to follow the new reassessment provisions as were made available on the statute by the Finance Act, 2021. The Ld. AR submitted that the Hon’ble Supreme Court, vide its aforesaid order passed in the case of Ashish Agarwal (supra), had, as a one-time relief to the Department, held that the notices issued under Section 148 of the Act, between 01.04.2021 and 30.06.2021, shall be deemed to have been issued under Section 148A, as substituted by the Finance Act, 2021, and were to be treated to be Show-Cause Notices in terms of Section 148A(b) of the Act. The Ld. AR submitted that the Hon’ble Supreme Court, in unequivocal terms, had directed that the respective A.Os. shall, within 30 days from the date of its order, i.e., 04.05.2022, provide to the assessee the information and the material that was relied upon by the Revenue so that the assessee can reply to the notices within two weeks thereafter. The Ld. AR submitted that the A.O. in 16
United Infra Minerals Private Limited the present case had, however, proceeded with and issued the notice under Section 148 of the Act, dated 23.06.2021, without following the procedure contemplated under Section 148A of the Act, and in complete disregard of the judgment of the Hon’ble
Supreme Court in the case of Ashish Agarwal (supra).
9. Apart from that, the Ld. AR submitted that as the proceedings in the case of the assessee were initiated based on the contents of the impugned incriminating document impounded in the course of the survey proceedings, (Pages 9–11 of the folder marked as A/UGCL/01) which, inter alia, revealed incurring of an unexplained expenditure of Rs. 14,99,840/- by the assessee company during the year under consideration, i.e., A.Y. 2015-16, therefore, the A.O. in the absence of any material which revealed that the income chargeable to tax, represented in the form of asset which had escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for the year under consideration, was, as per the mandate of Section 149(1), as was applicable during the year under consideration, divested of his juri iction to have initiated the impugned proceedings and issued notice under 17
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Section 148 of the Act in the case of the assessee company, beyond the period of three years from the end of the relevant assessment year, i.e. A.Y. 2015-16. 10. Per contra, Shri Posu Babu Alli, the learned Senior
Departmental Representative (for short, “Ld. DR”), relied upon the orders of lower authorities.
11. We have given our thoughtful consideration to the contentions advanced by the learned Authorized Representatives of both parties in the backdrop of the orders of the lower authorities.
12. Admittedly, as per the substituted provisions of the Act, as had been made available on the statute by the Finance Act, 2021, no notice under Section 148 can be issued without following the procedure prescribed under Section 148A of the Act. As per
Section 148A of the Act, the procedure has now been streamlined and simplified. It provides that before issuing notice u/s 148 of the Act, the A.O. shall (i). conduct any inquiry, if required with the approval of the specified authority with respect to the information,

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United Infra Minerals Private Limited which suggested that the income chargeable to tax has escaped assessment; (ii). provide an opportunity of being heard to the assessee with the prior approval of the specified authority; (iii).
consider the reply of the assessee, furnished, if any, in response to the Show-Cause Notice referred to in Section 148A(b); and (iv).
decide on the basis of material available on record, including the reply of the assessee, as to whether or not it is a fit case under Section 148 of the Act. However, the Hon’ble Apex Court in the case of Ashish Agarwal (supra), taking cognizance of the fact that the Revenue may not be rendered remediless, as the A.Os had issued the impugned notices under Section 148 after the amendment was enforced w.e.f. 01.04.2021 under the unamended
Section 148 of the Act, therefore, considering the bonafide mistake on their part, had held that instead of quashing the assessment and setting aside the reassessment notices issued under the unamended provisions of the Act, the notices so issued shall be deemed to have been issued under Section 148A as per the new provisions of Section 148A, and the Revenue be permitted to proceed further with the reassessment proceedings as per the substituted provisions of Sections 147 to 151 of the Act, as had 19
United Infra Minerals Private Limited been made available by the statute, vide the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences which may be available to the assessee under the substituted provisions of Sections 147 to 151, and which may be available under the Finance Act, 2021 and in law. Accordingly, the Hon’ble Apex Court, vide its aforesaid order in the case of Ashish
Agarwal (supra), had held that the impugned notices issued under Section 148 to the respective assessees shall be deemed to have been issued under Section 148A as substituted by the Finance
Act, 2021, and treated as Show-Cause Notices in terms of Section 148A(b) of the Act. The Hon’ble Apex Court had further observed that the A.O. shall, within 30 days from the date of its order, i.e.,
04.05.2022, provide to the assessee the information and the material relied upon by the Revenue so that he can reply to the notice within two weeks thereafter. Although the conducting of enquiry with the prior approval of the specified authority, as contemplated under Section 148A(a) was dispensed with as a one- time waiver vis-à-vis those notices which had been issued under Section 148 of the unamended Act from 01.04.2021 till
04.05.2022 (the date of the order of the Hon’ble Apex Court), but 20
United Infra Minerals Private Limited the A.Os. were obligated to follow and comply with the procedure provided in clauses (b), (c), and (d) of Section 148A of the Act.
13. We find substance in the contention of the Ld. AR that as in the case of the present assessee company, the A.O. had issued notice under Section 148 of the Act, dated 23.06.2021, without following the due procedure contemplated under Section 148A of the Act, as was statutorily required, therefore, the same being in contradiction of the directions of the Hon’ble Apex Court in the case of Ashish Agarwal (supra) cannot be sustained, and the same, along with the consequential order thereafter passed by him under Section 143(3) r.w.s. 147, dated 31.03.2022, is liable to be quashed.
14. At this stage, we may herein observe that the CIT(A), while rejecting the claim of the assessee company that the A.O. had failed to comply with the procedure contemplated under Section 148A, had relied upon the judgment of the Hon’ble High Court of Delhi in the case of Satish Chand Jain Vs. ACIT (2024) 166
taxman.com 447 (Del). It was observed by him that the Hon’ble
High Court in the case before them had held that in a case where

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United Infra Minerals Private Limited the assessment had been completed before the judgment of the Hon’ble Apex Court in the case of Ashish Agarwal (supra) was received, then there was no justification for the A.O. to issue notices seeking to reopen the proceedings which had been concluded before the said judgment of the Hon’ble Apex Court.
The CIT(A), based on his aforesaid observations, had concluded that, as in the case of the present assessee company before him, the assessment was framed by the A.O. vide his order under Section 143(3) r.w.s. 147 of the Act, dated 31.03.2022, i.e., before the judgment of the Hon’ble Apex Court in the case of Ashish
Agarwal (supra) that was delivered on 04.05.2022, therefore, the A.O. was not obligated to issue notice again seeking to reopen the proceedings that had concluded prior to the said judgment.
15. We have thoughtfully considered the aforesaid observations of the CIT(A) and are unable to persuade ourselves to concur with the same. We say so, for the reason that the facts involved in the case before the Hon’ble High Court of Delhi in the case of Satish
30.03.2022. The assessee assailed the order of reassessment dated 30.03.2022 before the CIT(Appeals). Thereafter, the A.O., during the pendency of the assessee’s appeal against the reassessment order dated 30.03.2022 before the CIT(Appeals), had, based on the same set of reasons, issued Notice u/s 148A(b) of the Act, dated 02.06.2022. Although the assessee vide his reply dated 16.06.2022, had raised various objections including that of limitation and asserting that the notice was void ab initio as the previous notice dated 31.03.2021 was served on 01.04.2021
which was not challenged before any court, but the said objections came to be negated by the A.O, who issued Notice u/s 148A(d), dated 19.07.2022 and Notice u/s 148, dated 19.07.2022. Thereafter, the assessee had assailed the order u/s 148A(d) and 23
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Notice u/s 148 of the Act dated 19.07.2022 by filing a Writ
Petition before the Hon’ble High Court. The Hon’ble High Court, observed that as the reassessment proceedings that were earlier initiated, vide Notice u/s 148 of the Act, dated 31.03.2021 i.e as per the pre-amended provisions had already culminated into an order of reassessment dated 30.03.2022, therefore, there was no justification for the A.O to have re-initiated the reassessment action on the same set of reasons and issued “Show Cause” notice u/s 148A(b) of the Act, dated 02.06.2022, which thereafter had resulted to passing of an order u/s 148A(d) and issuance of Notice u/s 148 of the Act, dated 19.07.2022. Accordingly, it was in the backdrop of the aforesaid facts that were involved in the abovementioned case that the Hon’ble High Court had quashed the order u/s 148A(d) and Notice u/s 148 of the Act, both dated
19.07.2022. 16. Now, in the case of the present assessee company before us, unlike the issue involved in the case before the Hon’ble High Court in the case of Satish Chand Jain Vs. ACIT (supra), the case of the present assessee company was reopened by the A.O vide Notice

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United Infra Minerals Private Limited u/s 148 of the Act, dated 23.06.2021, i.e., without following the mandatory provisions contemplated in Section 148A of the Act as per the post-amended provisions that were made available on the statute vide the Finance Act, 2021 w.e.f 01.04.2021 read along with the concession provided by the Hon’ble Supreme Court in the case of Union of India Vs. Ashish Agarwal (2022) 442 ITR 1 (SC), which, thus, rendered the very assumption of juri iction for issuing the Notice u/s 148 of the Act, dated 23.06.2021, and the consequential assessment framed by him vide his order passed u/s 143(3) r.w.s 147 of the Act, dated 31.03.2022, as invalid. As the issue involved in the present appeal before us, i.e., the validity of the juri iction assumed by the A.O. for framing the reassessment based on a Notice issued u/s 148 of the Act on or after 01.04.2021 without following the mandatory provisions of Section 148A of the Act, as had been made available on the statute read in the backdrop of the judgment of the Hon’ble
(supra) was not the issue before the Hon’ble High Court in the case of Satish Chand Jain Vs. ACIT (supra), therefore, we are of 25
United Infra Minerals Private Limited the view that the CIT(A) had mi irected himself and wrongly drawn support from the said judgment.
17. We thus, in terms of our aforesaid deliberations, are of the considered view that, as the A.O. in the case of the present assessee company before us had, before issuing the notice under Section 148, dated 23.06.2021 failed to follow the procedure contemplated under Section 148A of the Act, therefore, both the initiation of the impugned proceedings vide Notice u/s 148 of the Act, dated 23.06.2021, and the consequential order passed by him under Section 143(3) r.w.s. 147 of the Act, dated 31.03.2022, cannot be sustained and are herein quashed.
18. Although we have, in terms of our aforesaid observations, quashed the assessment for want of a valid assumption of juri iction on the part of the A.O., but for the sake of completeness, we shall deal with the Ld. AR’s claim that, as the A.O. was not in the possession of books of accounts and other documents or evidence, which revealed that the income of the assessee chargeable to tax, represented in the form of asset, which has escaped assessment, amounts to or is likely to amount to fifty

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United Infra Minerals Private Limited lakh rupees or more for that year, therefore, he had clearly traversed beyond the scope of his juri iction and initiated the impugned reassessment proceedings in the case of the assessee company for the subject year i.e. A.Y. 2015-16, beyond the period of three years from the end of the relevant assessment year i.e. in contradiction of the clear mandate of Section 149(1) of the Act, as was available on the statute at the relevant point of time.
19. Admittedly, it is a matter of fact discernible from the record that the A.O. had initiated the impugned proceedings based on the contents of the incriminating documents that were impounded in the course of survey proceedings conducted on the assessee company u/s 133A of the Act on 29.06.2017 (Pages 9–11 of the folder marked as A/UGCL/01). Ostensibly, the A.O., in the assessment order, had observed that a perusal of Pages 9–11 of the folder marked as A/UGCL/01, revealed that the assessee company was found to have incurred unexplained expenditure (in cash) of Rs. 14,99,840/- up to March 2015, i.e., during the subject year. We are of the considered view that as the A.O. had initiated the impugned proceedings based on the aforesaid

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United Infra Minerals Private Limited document/evidence which revealed that the income of the assessee company chargeable to tax, represented in the form of expenditure in respect of a transaction amounting to Rs.14,99,840/- had escaped assessment, therefore, as per the clear mandate of Section 149(1) of the Act, he could not have issued notice under Section 148 of the Act, dated 23.06.2021, i.e., beyond a period of three years from the end of the relevant assessment year under consideration. We thus, in terms of our aforesaid deliberations, are of the firm conviction that the A.O.
had exceeded his juri iction in issuing notice under Section 148, dated 23.06.2021. Accordingly, the assessment order passed by the A.O. under Section 143(3) r.w.s. 147 of the Act, dated
31.03.2022, also on this count, cannot be sustained and is liable to be quashed.
20. We thus, in terms of our aforesaid observations, quash the assessment order passed by the A.O. under Section 143(3) r.w.s.
147 of the Act, dated 31.03.2022, for want of a valid assumption of juri iction on his part.

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आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-

आदेशधिुसधर / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad