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NISHA MUKESH KUMAR JAIN,BHILWARA vs INCOME TAX OFFICER, WD-1, BEAWER, BEAWER | BharatTax

NISHA MUKESH KUMAR JAIN,BHILWARA vs. INCOME TAX OFFICER, WD-1, BEAWER, BEAWER

ITA 131/JPR/2025Status: DisposedITAT Jaipur06 August 2025AY 2017-18Bench: DR. S. SEETHALAKSHMI (Judicial Member)1 pages

AI SummaryAllowed

Facts

The assessee challenged the assessment order passed under Section 147, which arose from an accommodation entry of Rs. 84,00,000/-. The assessee had allegedly made transactions with Shri Shripal Vora, which were not disclosed in the ITR. The Assessing Officer added this amount as unexplained income.

Held

The Tribunal held that the notice issued under Section 148 was invalid and bad in law because the approval for its issuance was not obtained from the specified authority as required by law. Consequently, the reassessment proceedings and the assessment order were quashed.

Key Issues

Whether the reassessment notice issued under Section 148 was validly issued without obtaining the prior approval from the specified authority, and if not, whether it renders the entire reassessment proceedings void.

Sections Cited

147, 144B, 148, 151, 69A, 115BBE, 148A, 133(6), 143(2), 142(1), 149(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 131/JP/2025

For Appellant: CA (Thr. VH) jktLo dh vksj ls@

Hearing: 16/07/2025Pronounced: 06/08/2025

In the assessment order ld. AO mentioned that the Several Writ Petitions were filed by certain assessee before the Hon'ble Bombay High Court as well as other courts, challenging the validity of the notice u/s148 of the Act. The High Courts, including Hon'ble Bombay high court decided the writ petitions. Thereafter, matter reached before the Hon'ble Supreme Court. The Hon'ble Supreme Court decided the matter vide order dated 04/05/2022 in the case of "Union of India &Ors. Vs Ashish Agarwal" in Civil Appeal No. 3005/2022; as per which notice issued u/s 148 of the Income Tax Act, 1961 between 01.04.2021 to 30.06.2021 shall be deemed to have been issued u/s 148A of the Act as mandated by the Finance Act 2021 and shall be treated as show cause notice as per section148A (b) of the Act.

The Hon'ble Supreme Court also directed to provide to the respective assesses information and material relied upon by the Revenue. In this case, as per The Hon'ble Supreme Court direction the notice u/s 148 of the Act was issued in due course. And the preceding order u/s.148A(d) of the Act, 1961 was pased on 17.07.2022.

Pursuant to that statutory notices and the show cause notices were issued to the assessee. The assessee filed the replies, but the ld. AO found the assessee has acquired the accommodation entry of Rs. 84,00,000/- from Shri Shipal Vora, and thereby the same was added as income of the assessee as per provision of section 69A of the Act.

5.

Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) reads as follows:

6.

The brief facts of the case are that the appellant was flagged by DIT(System) on Insightportal after 04.03.2021. As per the Appraisal Report, during search operation of one Shri Shripal Vora, he had admitted that he was indulged in providing with other associated concerns in layering, which was not carrying out any real business activities. These concerns have acted as conduit to layering of funds and were indulged in non-genuine business transaction. As per this report, the appellant was identified one of such beneficiaries who has made transactions with only Shri Shripal Vora had facilitated accommodation entries in lieu of cash/ cheque to the tune of Rs. 84,00,000/- during the relevant previous year i.e. F.Y. 2016-17. On perusal of the return filed by the appellant, the AO observed that no such transactions were disclosed in the ITR, and the same had not been offered for taxation. In this case as per the Hon'ble Supreme Court's direction, the notices u/s.148, 143(2) and 142(1) were issued to the appellant. Also, Show cause notice dt. 27.04.2023 was issued. In response to the notices and show cause notice issued, the appellant submitted her reply on 04-02-2023 through e-proceedings on ITBA. The reply of the appellant was not acceptable by the AO as she denied having any transaction with Mr. Shripal Vora. However, as per the information available, it was established that the appellant is one of the beneficiaries who had entered into sham transactions with Shri Shripal Vora in the form of accommodation entry amounting to Rs. 84,00,000/- during the year under consideration out of unexplained sources of income. The appellant was asked to show cause to explain the variation for the unexplained transactions of taken accommodation entries in lieu of bogus loans amount of Rs.84,00,000/- from Shri Shipal Vora. In spite of providing ample opportunities, the appellant had not furnished the details/explanation in respect of the received credits, hence, the entire amount remained unexplained/undisclosed bogus accommodation entry of the appellant. The appellant did not submit any reply response to the show cause notice issued. Hence, in absence of any explanation, the nature and source of amount of Rs.84.00.000/- remained unexplained. Accordingly, the Assessing Officer completed the assessment proceedings by adding the amount of Rs.84,00,00/- on account of unexplained credit in the Books as accommodation entries in lieu of factitious unsecured loan u/s 69A of the Act r.w.s 115BBE of the Act for the AY 2017-18 to the total income of the appellant.

The appeal filed by the assessee for the A.Y. 2017-18 against the order u/s 250 of the I.T. Act 1961 of the National Faceless Appeal Centre (NFAC) Delhi vide appeal No. NFAC/2016-17/10256908 DATED 17.01.2025. In this regard, brief facts of the case are as under:- (1) The Assessee filed appeal before the Hon'ble ITAT Jaipur Bench, Jaipur against the appeal order u/s 250 of the Income Tax Act, 1961 of National faceless Nisha Mukesh Kumar Jain vs. ITO Appeal Centre (NFAC), Delhi vide appeal No. NFAC/2016-17/10256908 Dated 17/01/2025. (2) The Assessee has filed her return of income for the A.Y. 2017-18 on 24.03.2018 declaring total income at Rs. 6,86,520/-. Thereafter proceeding u/s 148A(d) in consequence to Hon'ble Supreme Court order dated 04.05.2022, order u/s 148A(d) was passed with the prior approval of the Pr. CIT, Udaipur vide letter No. Pr.CIT/ITO(Tech.)/Udaipur/2022-23/1537 dated 21/07/2022 and notice u/s 148 of Income Tax, 1961 was issued on 30/07/2022. (3) The Assessee filed return of income against notice u/s 148 for the A.Y. 2017- 18 on 29.08.2022 declaring total income at Rs. 6,86,520/-. (4) Thereafter order u/s 147 r.w.s. 144B of I.T. Act. was completed by the National faceless asstt. Centre on 17.05.2023 at the income of Rs. 90,86,520/- after making addition on account of accommodation entry in lieu of fictitious unsecured loan of Rs. 84,00,000/- u/s 69A r.w.s. 115BBE of the Act. (5) The Id.CIT(A), NFAC, vide his order dated 17.01.2025 dismissed the appeal of the assessee. During the appellate proceeding the assessee was non compliance of afforded opportunities provided by Ld. CIT (A). (6) The Notice u/s 148 was issued after approval from Specified authority as per instruction No. 01/2022 dated 11.05.2022 (copy of the same is enclosed herewith) viz. Pr. CIT Udaipur prescribed u/s 151(i) vide order No. Pr.CIT/ITO (Tech.)/Udaipur/2022-23/1537 Dated 21/07/2022.(copy of the same is also enclosed for kind perusal) (7) The proceeding u/s 148A(d) consequence of Hon'ble Supreme Court order dated. 04.05.2022, order u/s 148A(d) & Notice u/s 148 were issued as par law. (8) In this case the Ld.CIT (A) was allowing adequate opportunities to the assessee on various dates. The Ld. CIT(A) fixing the date for filing submissions on 14.08.2024, 27.08.2024, 20.09.2024 and 07.01.2025. All the notices were duly served on the registered E-mail ID of the assessee. The assessee responded for adjournment only but the assessee not submitted any details till the date of appeal order. The assessee's grounds that the Ld CIT (A) erred in passing the order Ex- Party without allowing adequate opportunity is totally wrong and baseless. (9) During the course of assessment proceedings, AO has issued show cause notice to the assessee, but the assessee not filed any reply of the SCN. The AO has made rightly addition on account of accommodation entry in lieu of fictitious unsecured loan of Rs. 84,00,000/- u/s 69A r.w.s, 115BBE of the Act for the A.Y. 2017-18. (10) Further the assessee have not complied the noticed issued during the course of appellate Proceeding. This shows that the assessee is not interesting in pursing his appeal and he has no defence against the addition made by the Α.Ο.

81.

This quote in Ashish Agrawal (supra) directed the Assessing Officers to "pass orders in terms of Section 148-A(d) in respect of each of the assessee concerned. Further, it directed the Assessing Officers to issue a notice u/s. 148 of the new regime "after follouing the procedure as required u/s. 148-A Although this quote waived off the requirement of obtaining prior approval u/s.1484(a) and section 148A(b), it did not waive the requirement for section 148A) and section 148. Therefore, the Assessing Officer was required to obtain prior approval of the specified authenty according to section 151 of the new regime before passing an Nisha Mukesh Kumar Jain vs. ITO order us. 148Aldi or Issuing a notice u/s 148 These notices ought to have been issued following the time limits specified u/s.151 of the new regime r.w. TOLA, where applicable..... 114 ....... TOLA will extend the time limit for the grant of sanction by the authority specified u/s 151. The test to determine whether TOLA will apply to section 151 of the new regime is this: if the time limit of three years from the end of an Assessment Year falls between 20 March 2020 and 31 March 2021, then the specified authority u/s 151() has extended time till 30 June 2021 to grant approval;....” 8.1. From the above, we note that in para 73, in the table last two rows relate to provisions of Section 151(i) (ii) of the new regime prescribing the time limit as well as the specified authority. In para 75, it is very categorically mentioned by the Hon'ble Court that after 01.04.2021, in terms of Ashish Agrawal (supra) the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime. This abundantly brings clarity on the aspect of obtaining approval for issue of notice u/s. 148 which are fall out of the decision in Ashish Agrawal (supra). In para 77, objective of section 3(1) of TOLA is mentioned which is to relax the time limit for compliance with actions that fall for completion from 20.03.2020 to 31.03.2021. Thus, the objective is specific for providing temporal flexibility. In para 78, the same has been explained by an example taking Assessment Year 2017-18 which also in specific terms mentions that the authority specified u/s.151 (i) of the new regime can grant sanction till 30.06.2021. Thus, while concluding in para 81 on the issue obtaining approval, Hon'ble Court has specifically stated that the Assessing Officer is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order u/s.148A(d) or issuing a notice u/s.148. According to the Hon'ble Court, though it had waived off the requirement obtaining prior approval u/s.148A(a) and Section 148Ab, it did not waive the requirement for section 148A(d) and Section 148. 8.2. Taking into consideration the submissions made by the Id. Sr. DR and keeping the same in juxtaposition with the above observations and findings of the Hon'ble Court, we note that the issue we are presently addressing raised before us is not on the aspect of "when" for the procedural compliance for issuance of notice u/s.148 but on the aspect of "by whom" it ought to have been issued. Ld. Sr. DR has contended that there is hierarchical escalation vis-à-vis obtaining approval for issuing notice u/s.

148.

Contention of the Id. Sr. DR that Nisha Mukesh Kumar Jain vs. ITO there is no hierarchical escalation for obtaining prior approval for issuing notice u/s.148 is not in coherence with the guidelines mandated by the Hon'ble Apex Court as enunciated above. Repeatedly, Hon'ble Court has stated including by way of illustration that TOLA extends time line from the old regime which survives making the notice validly issued subject to the approval requirements of Section 151 under the new regime. Accordingly, the prior approval requirement is mandated under the section 151 of new regime. 8.3. In the present case, the relevant Assessment Year is 2017-18 and the time limit of three years lapsed on 31.03.2021 which falls between 20.03.2020 and 31.03.2021 during which provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) would apply. Accordingly, the amended provisions under the Act read with TOLA extended the time limit for granting of approval till 30.06.2021 by the specified authority. Thus, on the above stated facts and law, in the present case, three years had lapsed from the end of the Assessment Year when the order u/s.148A(d) and notice u/s.148 was issued on 30.07.2022. In the present case, since the notice u/s. 148 and order u/s. 148A(b) have been issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the provisions of section 151 (ii) of the amended law whereby the specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, the approval obtained is by Principal Commissioner of Income Tax-17, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s. 148 under the applicable provisions of law, said notice is invalid and bad in law. 8.4. Keeping in juxtaposition the undisputed and the uncontroverted facts as stated above and the judicial precedent of the Hon'ble Supreme Court in the case of Ashish Agarwal and Rajiv Bansal (supra), we hold that sanction by specified authority has not been obtained by the ld. Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s.148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Resultantly, the impugned re-opening proceedings so initiated and the impugned re-assessment order passed thereafter are also quashed.