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Facts
The assessee challenged the order of the CIT(A) which had upheld the reassessment order passed by the AO under section 147 r.w.s. 144 of the Income Tax Act, 1961. The assessee raised grounds regarding the validity of the notice u/s 148, reassessment proceedings, assessment order, and specific additions made by the AO.
Held
The Tribunal held that the approval granted for issuing the notice u/s 148 was mechanical and without application of mind, rendering the notice invalid and the reassessment proceedings bad in law. Consequently, the assessment order was quashed.
Key Issues
Whether the reassessment proceedings initiated by the issuance of notice u/s 148 were valid, given that the approval for issuing the notice was mechanical and lacked application of mind. Whether the AO had territorial jurisdiction to issue the notice and complete the assessment.
Sections Cited
147, 144, 148, 151, 69, 115BBE, 56(2)(vii)(b), 69A, 54B, 124(3), 127
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. 18/JP/2025
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 18/JP/2025 fu/kZkj.k o"kZ@Assessment Year : 2016-17 cuke Jaiprakash Yadav ITO, Vs. NH 8 Near Maharaja Hotel Ward, Behror Dughera, Dooghera, Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ANQPY8792C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Pranav Yadav, Adv. (Thr.VC) jktLo dh vksj ls@ Revenue by : Shri Gaurav Awasthi, JCIT, Sr. DR lquokbZ dh rkjh[k@ Date of Hearing : 09/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 15/07/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM
By way of present appeal the above named assessee challenges the order of the National Faceless Appeal Centre, Delhi [ for short CIT(A) ] dated 20/12/2023 for assessment year 2016-17. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 21.03.2022 passed under section 147 r.w.s. 144 of the Income Tax Act, 1961 [ for short “Act”] by Income Tax Officer, Behror [ for short AO].
“1. On the facts and circumstances of the case and in law, the notice u/s 148 issued in this case is bad-in-law, illegal, without jurisdiction and barred by limitation and, therefore, the said notice u/s 148 along with assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so
2. On the facts and circumstances of the case and in law, the reassessment proceedings initiated is bad in law, without jurisdiction and contrary to the provisions of law including the specific provisions of section 147 to section 151 Act and therefore, the reassessment proceeding initiated along with assessment order passed are liable to be quashed and CIT(A) erred in not holding so..
3. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in-law, without jurisdiction and barred by limitation.
4. On the facts and circumstances of the case and in law, the Id CIT(A) erred in confirming the addition made by the assessing officer of Rs. 44,73,700/- on the account of income from long term capital gain.
5. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in confirming the addition made by the assessing officer of Rs. 12,50,760/-on account of unexplained investment u/s 69 r.w.s 115BBE of the Act.
6. On the facts and circumstances of the case and in law, the ld CIT(A) erred in confirming the addition made by the assessing officer of Rs 3,44,632/- u/s 56(2)(vii)(b) of the Act
7. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in confirming the addition made by the assessing officer of Rs. 7,00,000/- unexplained money u/s 69A r. w.s 115BBE of the Act.
On the facts and circumstances of the case and in law, the CIT 8 (A) erred in passing order without providing proper opportunity of being heard.
9. On the facts and circumstances of the case and in law, the CIT (A) Erred in not adjudicating the grounds of appeal on merit
10. On the facts and circumstances of the case and in law, the CIT 10 (A) erred in passing ex-parte order.
314 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an application for condonation of delay with following prayers:
“Subject: Application for condonation of delay in filing of Appeal in case of Jaiprakash Yadav for A.Y. 2016- PAN: ANQPY8792C The impugned CIT(A) order is dated 20/12/2023. The said order came to the notice of the appellant on 22/11/2024. The order of CIT(A) was not received by the appellant by post. It is most humbly submitted that the assessee was not aware of hearing of the appeal as no notice of hearing was received by/served upon us. Accordingly, there is no delay in filing of appeal when the due date of filing of appeal is reckoned from the date of receipt of the order. Without prejudice to the above, if the due date of filing of appeal is considered from the date of the order, it is prayed to your honour to condone the delay in filing of appeal. The said delay is due to the fact that the appellant was not aware of the passing of such an order. The assessee is farmerwith limited knowledge of tax laws and other legal formalities. The assessee was dependant on others for documentation and compliance. He was unaware of the necessity to file an appeal within the stipulated period. Upon realization, the appellant immediately sought legal assistance to file this appeal, but the delay was unintentional and beyond my control. The CIT(A) order has passed an exparte order confirming the additions made by the assessing officer. Therefore, in the interest of justice, the delay in filing of appeal may please be condoned.
4. During the course of hearing, the ld. DR did not controvert the contention raised in the petition for condonation of day and submitted that the bench may decide the petition as it deem fit. materials available on record. Having gone through the contention raised in the prayer for condonation of delay and as it was not controverted by the ld. DR, we hold that the assessee was prevented by sufficient cause and thereby we condone the delay of 314 days in view of the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst.
Katiji and Others, 167 ITR 471 (SC).
6. Succinctly, the fact as culled out from the records is that the assessee, along with one other person sold and purchased immovable property in cash for the year under consideration. It was also available that the assessee deposited cash into the bank account for an amount of Rs. 7 lac. Since the assessee has not filed the ITR, the reasons were recorded thereby stating the reasons and the necessary approval for re-opening the case was done by the ITO, Ward 1(1), Alwar.
Since the case of the assessee as per territorial jurisdiction pertains to ITO, Ward Behror the case was transferred to him and upon receipt of the transfer of the case from ITO Alwar he proceeded to make the assessment as provision of section 144 of the Act because the notice issued by the ITO, Ward Behror were remained non-compliant and thereby at Rs. 67,69,092/- making the following different addition:
Sr.no. Particulars Amount Rs.
1. Income from Long term capital gain 44,73,700
2. Unexplained investment for purchase of 12,50,760
immovable property u/s 69
3. DLC and face value difference on 3,44,632
purchase of immovable property u/s 56(2)(vii)(b)
4. Unexplained money u/s 69A rws 115BBE 7,00,000
Total 67,69,092
Aggrieved from the order of the 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)/NFAC is reiterated here in below:
The conduct of the Appellant, as inferred from the last column of the aforesaid table/evidences that the Appellant is not interested in pursuing the Appeal: the law aids those who are vigilant, not those who sleep upon their rights. This principle is embodied in the well-known latin dictum, "VIGILANTIBUS ET NON DORMIENTIBUS JURA SUB VENIUNT". The conduct of the Appellant, as inferred from the aforesaid table, evidences that the Appellant fails on this principle of equity. Even the Hon'ble Courts, in various pronouncements, have frowned upon the Appellants who file appeals but thereafter do not take any further interest in prosecuting those appeals.
Jaiprakash Yadav vs. ITO 1. The Hon'ble Income Tax Appellate Tribunal - Kolkata in the case of Pradeep Kumar Jhawar, Kolkata vs. D.C..T., C.C.-XX) (15 March, 2016) (ITA Nos. 450/Kol/2013 for Asst. Year: 2006-07) dismissed the appeal of the Appellant for non-prosecution.
2. The Hon be Madhya Pradesh High Court in the case of Estate of Late TukojiraoHolkar vs. CWT (223 IR 480) held as under:
"If the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference."
1. Similarly, the Hon'ble Punjab & Haryana High Court in the case of New Diwan Oil Mills vs. CIT (2008) 296 IT 495) returned the reference unanswered since the assessee remained absent and there was no assistance from the assessee.
2. Their Lordships of Hon'ble Supreme Court in the case of CIT vs. B.Bhattacharjee& Another (118 IT 461 at page 477-478) held that appeal does not mean, mere filing of the memo of appeal but effectively pursuing the same.
In the judgment, their Lordships averred as follows:
...... This turns on the meaning of the words "preferred an appeal". "Preferred" is a word of dual import. Its semantics depend on the scheme and the context; its import must help, not hamper, the object of the enactment even if liberty with language may be necessary. There is good ground to think that an appeal means an effective appeal, An appeal withdrawn is an appeal non est as judicial thinking suggests.
Black's Law Dictionary gives the following meaning: "PREFER: To bring before, to prosecute; to try to proceed with'. Thus, preferring an Indictment signifies prosecuting or trying an indictment. It means to give advantage, priority, or privilege; to select for/first payment, as to prefer one creditor over others. Thus, it may mean prosecute or effectively pursue a proceeding or merely institute it. Purposefully interpreted. preferring an appeal means more than formally filing it but effectively pursuing it....."
In view of the above, it is clear that the Appellant is not aggrieved with the reassessment order impugned herein and is not interested in pursuing the same.
8. Feeling dissatisfied with the above order of the ld. CIT(A). The assessee has preferred the present appeal challenging the finding of the ld. CIT(A) before this tribunal on the grounds as stated here in above. To support the various grounds raised by the assessee, ld. AR of the assessee, has filed the written submissions which reads as under :
1. The approval u/s 151 is mechanical. The JCIT has granted approval by stating as under: - "Yes, on the reasons recorded by the AO, I am satisfied that it is a fit case for issue of notice u/s 148 of the IT Act and approval is hereby accorded to the AO to issue Notice u/s 148 of the IT Act."
From the aforesaid approval given by PCIT it is clear that the same is mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, it is not coming out as to which material; information; documents and which other aspects have been gone through and examined by the JCIT for reaching to the satisfaction for granting approval. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act. IT has been held that the JCIT is required to apply his mind to the proposal put up to him for approval in the light to eh material relied upon by the AO. The said power cannot be exercised casually and in a routine manner.
1.1. Reliance in this regard is placed on decision of Hon'ble ITAT Delhi in the case of Dharmender Kumar c/o Raj Kumar & Associates v. ITO, Ward 65(5), New Delhi 2019 (10) TMI 736-ITAT Delhi where in it was held as under: -
5. I have heard both the parties and carefully considered the case laws and the relevant documents available on record especially the assessment order, impugned order, reasons/satisfaction/approval recorded for issue of notice u/s. 148 of the Act as well as the Paper Book filed by the Assessee containing pages 1-41 of the Paper Book in which he has attached the copy of AIR information; copy of reasons recorded; copy of approval performa u/s. 151; letter dated 26.2.2015 isued by AGO, letter dated 12.3.2015 issued by AO; cash flow statement; confirmation from Rama Devi; bank statement of Ram Devi, copy of PAN card of Rama Devi; confirmation from Shyam Sunder, bank statement of Shyam Sunder; copy of PAN card of Shyam Sunder, confirmation from Virender Kumar, confirmation from Eshwar Dutt; Confirmation from Dayanand Sharma; jewellery sale bill to assessee, jewellery sale bill to Rohtash (2 in no's); jewellery sale bill to Kumud; sub.
To CIT dated 18.8.17; RR dated 27.10.17; Sub. To CIT(A) dated 7.12.17 (Rejoinder to RR) and Sub. To CIT(A) dated 15.2.2018 and especially the page no. 2-3 of the Paper Book which is a copy of performa for recording the reasons for initiating proceedings u/s. 148 and for obtaining approval of Addl. CIT, Range-65, New Delhi in which Addl. CIT, Range-65, New Delhi has granted the approval in a mechanical manner for issuing notice u/s. 148 of the Income Tax Act, 1961. It is noted that approval u/s. 151 of the Act was granted by the Addl. CIT, Range-65, New Delhi vide Column No. 11 by mentioning as under:-
"Yes, I am satisfied on the reasons recorded by AO that it is a fit case for issue of notice u/s. 148 of the I.T. Act, 1961."
5.1 After perusing the aforesaid remarks of the Addl. CIT, Range-65, New Delhi, I find that the approval granted by the Addl. CIT, Range-65, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, because from the aforesaid remarks, it is not coming out as to which material; information; documents and which other aspects have been gone through and examined by the Addl. CIT, Range-65, New Delhi for reaching to the satisfaction for granting approval. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act. Keeping in view of the facts and circumstances of the present case and the case laws applicable in the case of the assessee, I am of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. My aforesaid view is fortified by the following decisions:-
A) United Electrical Company (P) Ltd. Vs. CIT & Ors. 258 ITR 317 (Del.) In this case, approval by the Addl. CIT w/s. 151 was given in the following terms:-
"Yes, 1 am satisfied that it is a fit case for issue of notice u/s. 148 of the Income Tax Act."
Analyzing, the above satisfaction/approval, it has been held that the CIT is required to apply his mind to the proposal put up to him for approval in the light to eh material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. CIT before granting the approval. (Para 19).
(B) Hon'ble Supreme Court of India in the case of CIT vs. S. Goyanka Lime & Chemical Ltd. reported in (2015) 64 taxmann.com 313 (SC) arising out of order of Hon'ble High Court of Madhya Pradesh in CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 56 taxmann.com 390 (MP).
"Section 151, read with section 148 of Income Tax Act, 1961 Income escaping assessment-Sanction for issue of notice (Recording of satisfaction)
High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid Whether Special Leave Petition filed against impugned order was to be dismissed-Held, Yes (in favour of the Assessee)."
5.2 In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, I am of the considered view that approval granted by the Addl. CIT,Range-65, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 of the LT. Act, 1961 and is not in accordance with section 151 of the I.T. Act, 1961, thus, the notice issued u/s. 148 of the Act is invalid and accordingly the reopening in this is bad in law and therefore, the same is hereby quashed. Accordingly, the ground no. 2 raised by the assessee is allowed. Since the other grounds were not raised by the Assessee, the same are dismissed as such.
Accordingly, the assessee's appeal is partly allowed.
In the result, the Appeal filed by the Assessee stands partly allowed.
1.2. Reliance in this regard is placed on decision of Hon'ble ITAT Delhi in the case of APC Air Systems P. Ltd. Versus ITO, Ward-3 (1), New Delhi2020 (1) TMI 88-ITAT Delhiwhere in it was held as under: -
4. I have heard both the parties and carefully considered the case laws and the relevant documents available on record especially the assessment order, impugned order, reasons/satisfaction/approval recorded for issue of notice u/s. 148 of the Act placed at page no. 48-53 of the Paper Book, which is a copy of performa for recording the reasons for initiating proceedings u/s. 148 for obtaining approval of Addl. CIT, Range-3, New Delhi who has granted the approval in a mechanical manner for issuing notice u/s. 148 of the Income Tax Act, 1961 by mentioning as under:-
"Yes, I am satisfied on the reasons recorded by the AO that it is a fit case for issue of notice u/s. 148 of the 1.T. Act."
4.1 After perusing the aforesaid remarks of the Addl. CIT, Range-3, New Delhi, I find that the approval granted by the Addl. CIT, Range-3, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, because from the aforesaid remarks, it is not coming out as to which material; information; documents and which other aspects have been gone through and examined by the Addl. CIT, Range-3, New Delhi for reaching to the satisfaction for granting approval. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act. The judicial decisions relied upon by the Ld. Sr. DR, have been duly considered. In my considered view, I do not find any parity in the facts of the decisions relied upon with the peculiar facts of the case in hand. Keeping in view of the facts and circumstances of the present case and the case laws applicable in the case of the assessee, I am of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. I find considerable cogency in the contention of the Ld. Counsel for the assessee that the issue no. 2 raised in this appeal is squarely covered by the decision of the ITAT, SMC, Bench, New Delhi dated 01.03.2018 in the case of Tara Alloys Ltd. vs. ITO Ward 25(1), New Delhi decided in relevant to assessment year 2005-06 wherein the Tribunal has quashed the assessment. My aforesaid view is also fortified by the following decisions :-
A) United Electrical Company (P) Ltd. Vs. CIT & Ors. 258 ITR 317 (Del.) In this case, approval by the Addl. CIT u/s. 151 was given in the following terms:-
"Yes, I am satisfied that it is a fit case for issue of notice u/s. 148 of the Income Tax Act."
Analyzing, the above satisfaction/approval, it has been held that the CIT is required to apply his mind to the proposal put up to him for approval in the light to eh material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. CIT before granting the approval. (Para 19).
(B) Hon'ble Supreme Court of India in the case of CIT vs. S. Goyanka Lime & Chemical Ltd. reported in (2015) 64 taxmann.com 313 (SC) arising out of order of Hon'ble High Court of Madhya Pradesh in CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 56 taxmann.com 390 (MP). "Section 151, read with section 148 of Income Tax Act, 1961- Income escaping assessment-Sanction for issue of notice (Recording of satisfaction)
High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid Whether Special Leave Petition filed against impugned order was to be dismissed-Held. Yes (in favour of the Assessee)."
4.2 In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, I am of the considered view that approval granted by the Addl. CIT, Range-3, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 of the LT. Act, 1961 and is not in accordance with section 151 of the L.T. Act, 1961, thus, the notice issued u/s. 148 of the Act is invalid and accordingly the reopening in this is bad in law Jaiprakash Yadav vs. ITO and therefore, the same is hereby quashed. Accordingly, the legal ground no. 2 raised by the assessee is allowed. Since the other grounds were not raised by the Assessee, the same are dismissed as such.
Accordingly, the assessee's appeal is partly allowed.
In the result, the Appeal filed by the Assessee stands partly allowed
1.3. In the following case laws, where similar language was used, it was held that such approval cannot be held to be valid approval: -
1. United Electrical Co. P. LTD. V. CIT. 2002 (10) TM1 86 - Delhi High Court 2. M/S. Bull Riders Financial Services (P) Ltd. V. ITO. - 2020 (2) TMI 459- ITAT Delhi 3. Rishendra Pal Singh V. ITO. - 2020 (5) TMI 507-ITAT Delhi 4. Silkina Commodeal Pvt. Ltd. V. ITO. 2024 (3) TMI 610 - ITAT Kolkata 5. DCIT V. Ram Kumar Shokeen and (VICE-VERSA). 2024 (6) TMI 657-ITAT Delhi 6. Heat Flown Electricals Pvt. Ltd. V. ITO. - 2019 (12) TMI 910-ITAT Delhi 7. Agroha Fincap Ltd., Raj Kumar & Associates, V. ITO. 2019 (10) TMI 857- ITAT Delhi 8. M/S Tara Alloys Ltd. V. ITO. - 2018 (6) TMI 145-ITAT New Delhi
The notice u/s 148 has to stand or fall based on the reasons recorded. The assessing officer, while issuing notice u/s 148 has not applied his own mind. The notice u/s 148 has been issued in mechanical manner. Without examining the so called information and without bringing on records the evidence/rationale from the information, the A.O. could not have formed any "reason to believe" about any alleged escapement of income. Similarly the question is whether the A.O. had in his possession any other documentary evidence to make the allegation as stated in the "reasons to believe"? The A.O. has not brought on record any documentary evidence to justify his allegation. Thus, it is clearly established that reasons have been recorded without any application of mind.
2.1. Your honour's kind attention is further invited to the decision of the jurisdictional High Court in the case of CIT vs. Vineeta Jain and CIT vs. Atul Jain: 299 ITR 383, wherein the Court held that mere statement containing unproved / unverified facts cannot be a substitute for reasons required to berecorded under section 148 of the Act.
Applying the aforesaid decisions to the facts of the present case, it will kindly be appreciated that in the present case, too, the assessing officer has merely
2.2. In CIT vs SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del), reassessment proceedings were initiated on the basis of information received from investigation wing regarding alleged accommodation entries. It has been held by jurisdictional Delhi High Court that mere information received from DDIT(Inv) cannot constitute valid reasons for initiating reassessment proceedings in the absence of anything to show that A.O. had independently applied his mind to arrive at a belief that the income had escaped assessment.
2.3. In the case of Signature Hotels Pvt. Ltd. Vs ITO 338 ITR 51 (Del) notice u/s 148 issued based upon the report from investigation wing has been held to be invalid where the notice was issued by the A.O. without examining evidence. The head note of the judgement read as under :-
Reassessment Condition Precedent Reason to believe that income had escaped assessment - Notice based on report from Director of Income-tax that credit entry in accounts of assessee was an accommodation entry Assessing Officer not examining evidence Notice Not valid - Income-Tax Act, 1961, ss. 147, 148.
2.4. Reliance is also placed on the subsequent judgment of Hon'ble Delhi High Court in the case of CIT vs Kamdhenu Steels and Allovs Ltd (2012) [19 Taxman.com 26(Del) in which also notice u/s 148 issued has been held to invalid which was issued on the basis of certain information received from investigation wing. It is pertinent to point out that the revenue's special leave petition filed in the case of Kamdhenu Steels (Supra) has been dismissed by Apex Court vide its order dated 17.09.2012.
2.5. The jurisdictional Delhi Bench of ITAT in the case of ITO v Indian Business Network Ltd. (ITA No. 341/Del/2012) quashed the reassessment proceedings holding as under:-
As per record the AO has not made any enquiry before initiating of the assessment proceeding to arrive at his own independent satisfaction regarding the escapement of income. He was guided by report of DIT(Inv.) suggesting/directing action u/s 147 of the 1.T. Act in the case of assessee. As per record the reasons recorded indicate that reopening has been done without any material on record which is not permissible under the law as well as various decisions rendered by the Hon'ble Jurisdictional High Court which includes the Signature Hotels Pvt. Ltd. vs. ITO (2011) 338 ITR 51(Del.) and Commissioner of Income Tax vs. SFIL Stock Broking Ltd., 325 ITR 285 (Del.).
The aforesaid order of ITAT was taken upon in appeal by the revenue before the Hon'ble Delhi High Court. The Hon'ble High Court vide its order dated 17.08.2015 (Pr.CIT v India Business Network Ltd.) confirmed the order of ITAT quashing the proceedings u/s 147/148.
2.6. In the case of Pr. CIT v Meenakshi Overseas Pvt. Ltd. (2017) (5) TMI 1428, Delhi, reopening u/s 148 was made on the basis of information received form investigation wing. The Hon'ble High Court held that such reopening which was based merely on the information received from Investigation. Wing without independent application of mind by A.O. amounted to "borrowed satisfaction" and such reopening was liable to be quashed.
2.7. The head note in the case of Pr. CIT v RMG Polyvinyl (1) Ltd. (2017) 83 taxmann.com 348 Delhi is as under :-
Section 68, read with section 147, of the Income-tax Act, 1961 - Cash credit (Accommodation entry) Assessment vear 2008-09 Information was received from investigation wing that assessee-company was a beneficiary of accommodation entries received from certain established entry operators During investigation, it was found that entry operators were engaged in money laundering business for beneficiaries - According to Assessing Officer, sources of transactions were not explained Notice was issued by Assessing Officer to reopen assessment on aforesaid basis that income chargeable to tax to extent of accommodation entry had escaped assessment Whether information received from investigation wing could not be said to be tangible material per se without a further inquiry being undertaken by Assessing Officer to establish link between 'tangible material' and formation of reason to believe that income had escaped assessment and consequently, reassessment was unjustified-Held, ves Para 13 In favour of assessee
3. Addition of Rs. 44,73,700/- on account of alleged long term capital gain
This ground relate to addition of 44,73,700/- made on account of LTCG. As it is evident from the assessment order, the appellant during the course of assessment proceedings has duly furnished before the assessing officer the copy of sale deed of agricultural land, it was also furnished that the appellant along with his brother (i.c., Rajkumar Yadav) had sold agricultural land. The same assessing officer has made the same addition in the case of his brother also.
Jaiprakash Yadav vs. ITO From the bare perusal of both the deeds it could have ascertained and seen the said land sold and purchased were both Krishi Bhumi (कृ�षभू�म) which in English translates to Agricultural Land. The said agriculture land was not a capital asset, so there can be question of any long-term capital gain upon it. The assessee along with his brother had sold agricultural land during the year under consideration.
The assessing officer in para 3 of assessment order has made self contrary remarks, on one hand the assessing officer has stated the assessee has furnish/reproduced the copy of sale registry of agricultural land, bank statement and purchase registry of agricultural land on the other hand has stated the assessee did not come forward to produce any documentary evidence. Your honour will appreciate that the assessing officer has himself admitted that the assessee has submitted copy of sale deed and purchase of "agricultural land", there remained no basis for drawing any adverse inference. The assessee being a farmer with limited knowledge was under the belief that sale purchase of agricultural land was not subject to tax and provided the AO with the all relevant information he could have furnished on his own.
The reason given by the assessing officer for making addition in the case of the assessee's brother and for not treating the land as agricultural land was that the said piece of land was within 1 km from NH-8 and was sold to Ritz Infracon India LLP and hence the same was deemed that was not meant to be used as agricultural land. The assessing officer in the assessment order of his brother (Rajkumar Yadav) has relied upon decision of Smt Sarifabibi Mohammed Ibrahim v. CIT(A) (1193) 204 ITR 631 (SC). In this regard it is submitted that case law relied upon the AO is not at all applicable to the case of assessee or his brother, as in the case relied upon by the AO the land in question was situated within the municipal limits i.e., within distance of one kilometre from the Surat railway station, and same was not an agricultural land only at the time of sale and hence income arising from its sale was not exempt from LTCG.
In regard to the adverse inference drawn by the assessing officer that the land in question was at a distance of 1km from NH-8 and hence was not an agricultural land. This inference drawn by the AO is erroneous, becuase mere situation of a land nearby a highway and appreciation in price would not alter character of land leading to conclusion that land was not an agricultural land. Reliance in this regard is placed upon the case of Income Tax Officer, Ward-2(3) Kozhikode v. Kalathingal Faizal Rahiman [2016] 68 taxmann.com 331 (Cochin - Trib.).
Jaiprakash Yadav vs. ITO The assessing officer has merely relied upon the information received from the investigation wing and no independent inquiry was ever conducted by the assessing officer. The assessing officer only based upon the borrowed information received from investigation wing made the addition.
The assessing officer has grossly erred in not referring the case for valuation u/s 50C (2) of the Income Tax Act for determiningthe market value of alleged property. No independent inquiry was ever made by the assessing officer to determine the nature of the said land. It was also duly submitted before the assessing officer the only source of income of the assessee was agricultural income only.
Since the above property sold is agricultural land, there is any no tax chargeable and hence no question of any LTCG. The fact that land sold is agricultural land is evident from the purchase and sale deed, Further the appellant is also enclosing certificate of Tehsildar herewith to the effect that land sold is an agricultural land and hence no tax was chargeable.
In view of the above, addition of Rs. 44,73,700/- made by the assessing officer is liable to be deleted.
4. Addition of Rs. 12,50,760/- on account of unexplained investment u/s 69 r.w.s 115BBE of the Act.
This ground of appeal relates to addition of Rs. 12,50,760/- made on account of alleged unexplained investment u/s 69 of the Act. The assessing officer had doubted the source of investment made for purchase of landsalong with his brother for Rs. 20,93,300/- being 1/2 share in property of each. The land purchased by the assessee along with his brother are also agricultural lands. In respect of the addition made it would be pertinent to submit that assessee during the year under consideration had sold agricultural land and reinvestment the same amount into purchase of agricultural land bearing khasra number 301, 304, 307/823. Without prejudice to above, the assessing officerhad also not allowed deduction u/s 54B for Rs 20,93,000/- against the purchase of agricultural land. Hence, no addition of Rs, 12,50,760/- could have made by the AO and confirmed by the CIT(A).
To support the contention so raised in the written submission reliance was placed on the following decisions:
Jaiprakash Yadav vs. ITO Sl. No Particulars Page No.
United Electrical Co. P. LTD. V. CIT. - 2002 (10) TMI 86 - 1 —6 Delhi High Court 2. 7 — 15 M/S. Bull Riders Financial Services (P) Ltd. V. ITO. - 2020 (2) TMI 459 - ITAT Delhi 3. Rishendra Pal Singh V. ITO. - 2020 (5) TMI 507 - ITAT Delhi 16 — 19 4. 20 — 28 Silkina Commodeal Pvt. Ltd. V. ITO. - 2024 (3) TMI 610 - ITAT Kolkata 5. DCIT V. Ram Kumar Shokeen and (VICE-VERSA). - 2024 (6) 29 — 35 TMI 657 - ITAT Delhi 6. 36 — 42 Heat Flown Electricals Pvt. Ltd. V. ITO. - 2019 (12) TMI 910 - ITAT Delhi 7. Agroha Fincap Ltd., Raj Kumar & Associates, V. ITO. - 2019 43 — 48 (10) TMI 857 - ITAT Delhi 8. M/S Tara Alloys Ltd. V. ITO. - 2018 (6) TMI 145 - ITAT New 49 — 64 Delhi 9. Dharmender Kumar c/o Raj Kumar & Associates v. ITO, New 65 — 72 Delhi, 2019 (10) TMI 736 — ITAT Delhi 10. 73 — 79 APC AIR Systems P. LTD. V. ITO, NEW DELHI, 2020 (1) TMI 88 - ITAT Delhi
The ld. AR of the assessee in addition to the written submission filed vehemently argued that ld. AO has re-opened the case of the assessee on borrowed satisfaction as is evident from the reasons recorded. The ld. AR of the assessee also argued that in the case of the assessee, it is very much clear from the record that notice u/s 148 of the Act was not issued by AO without any order u/s 127 of the Act since there is no notice issued by Jurisdictional Assessing Officer, the assessment order passed, based on satisfaction of non-Jurisdictional Assessing Officer, therefore, the order passed by the ld. AO is bad in law and required to be quashed.
The ld. AR of the assessee also submitted that even on merits the land in question is agricultural land and the income thereof is exempt from tax. To drive home to this contention, he relied upon the written submissions and decisions of ITAT Delhi Bench placed on record. The fact that the land was agricultural land is already on record.
The ld. DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He also argued that the reasons were properly recorded and higher officers has also recorded approval as per section 148 of the Act. Therefore, contentions raised by the AR of the assessee is incorrect, he also submitted that as regards the issue of jurisdictional Assessing Officer has in detailed filed the correct position which may be considered. The comments of the ld. AO reads as under:-
Sub: In the appeal matter pending before the Hon'ble ITAT, Jaipur Bench, Jaipur in the case of Jai Prakash Yadav (PAN - ANQPY8792C) - reg - Jaiprakash Yadav vs. ITO 2. Kindly refer to letter No. Jt.CIT (Sr.DR-II)/ITAT/JPR/2025-26/299 dated 03.06.2025 of the Jt. CIT(Sr. DR)-II, ITAT, Jaipur addressed to your office and copy endorsed to this office, to furnish reply in respect of certain queries.
Point-wise reply of the queries are as under: a) In this case, a notice u/s 148 of the Income Tax Act, bearing DIN & Notice No. ITBA/AST/S/148/2020-21/1032050524(1), was issued by the ITO, Ward-1(1), Alwar on 31.03.2021 through the ITBA portal. At the time of Issuance of notice, the PAN of the assessee was lying with ITO, Ward-1(1), Alwar, and has remained there since its allotment. (ITBA screenshot Indicating PAN history is enclosed herewith). Thus, the ITO, Ward-1(1), Alwar has validly exercised the concurrent jurisdiction lying with him.enclosed herewith). Thus, the ITO, Ward-1(1), Alwar has validly exercised the concurrent Jurisdiction lying with him. b) As per records, the ITO, Ward-1(1), Alwar, vide letter No. 1157 dated 09.02.2022, requested the Addi.CIT, Range-1, Alwar, for transfer of the assessee's PAN, as the territorial Jurisdiction lies with ITO, Ward Behror (copy enclosed). In response, the ITO, Ward Behror, vide letter No. 1363 dated 15.02.2022, issued a NOC for the said transfer (copy enclosed). Consequently, the PAN was transferred by the Addl. CIT, Range-1, Alwar to ITO, Ward Behror. No details regarding the issuance of any order u/s 127 of the Income Tax Act are available on record. c) The Income Tax Officer, Ward-1(1), Alwar, vide Transfer Memo No. 1183 dated 23.02.2022, transferred the assessment records of the assessee to the ITO, Ward Behror. Subsequently, a notice under section 144 of the Income Tax Act, 1961 was issued to the assessee on 25.02.2022, requiring him to show cause on or before 04.03.2022 as to why the assessment should not be completed to the best of judgment of the AO. In response, the assessee submitted certain details (copy of sale registry & bank statement), however, he failed to file the ITR for the year under consideration. It is also imperative to mention here that the assessee has never challenged the jurisdiction of the Assessing Officer during the assessment proceedings. The issue of entitlement to challenge the jurisdiction of the Assessing Officer is governed by the provisions of Section 124(3) of the Income Tax Act, 1961, which reads as under: (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub- section (2) of section 115WE or sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub-section (1) of section 142 or Jaiprakash Yadav vs. ITO under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; In the present case, the assessee has not filed his return of income within the time allowed in the notice u/s 148 or notice u/s 144 of the Act. Consequently, in terms of section 124(3)(b) of the Act, the assessee is barred from challenging the Jurisdiction of the Assessing Officer after the expiry of the time specified in the said notice. Therefore, the jurisdiction assumed by the ITO, Ward Behror Is valid and lawful, and the assessee has no right to object to the same at this stage. d) No details are available on the ITBA module to indicate that the notice was duly served upon the assessee. Moreover, no postal receipt or acknowledgment is available on record to confirm that the sald notice was duly served upon the assessee. However, it is submitted that during the course of the assessment proceedings, in response to the notice issued under Section 144 of the Income-tax Act, the assessee filed an online reply on 04.03.2022, along with a copy of the sale deed and bank account statement. Section 292BB of the IT Act deals with validity of notice in certain circumstances, which reads as under: Notice deemed to be valid in certain circumstances. 292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in an proceeding or inquiry under this Act that the notice was a. not served upon him: or b. not served upon him in time or c. served upon him in an improper manner Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the present case, the assessee submitted some details in compliance with the notice issued under Section 144 of the Act. Accordingly, by virtue of Section 292BB, it is deemed that the notice under Section 148 of the Act was duly served upon him within the prescribed time. Furthermore, the assessee has not raised any objection regarding the service of notice at any stage prior to the completion of the assessment.
revenue and prayed that the appeal of the assessee is to be dismissed.
We have heard the rival contentions and perused the material placed on record. Vide ground no. 1 to 3 the assessee challenges the very jurisdiction of the assessing officer making the reassessment in the case of the assessee as per provision of section 148 of the Act and while issuing the notice and thereby recording the satisfaction.
Record reveals that the territorial jurisdiction of the assessee lies with the ITO, Ward Behror having known to this fact the ITO, Ward-1(1), Alwar has recorded the reason and after obtaining the approval re-opened the case of the assessee. Be that it may so when the ITO, Ward-1(1), Alwar having no territorial jurisdiction should have passed the information to the concerned Jurisdictional Assessing Officer and the correct way to re-open the case lies with the assessing officer who has the territorial jurisdiction.
The contention of the AO in the status report taken a ground that since the assessee obtain the Permanent Accountant Number lies with him and thereby having known to the fact that he has no territorial jurisdiction should have stopped there and should have passed information rather than issue notice u/s 148 of the Act which is lacks its jurisdiction and therefore, the assessment order loose its legal sanctity and thereby the same is quashed.
Having held so the merits of the issue that the land under question being agricultural land not chargeable to tax and thereby the cash deposit and subsequent investment sourced from that sale proceeds being the grounds of the merits raised by the assessee become academic at this stage the appeal of the assessee considered on the technical ground.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15/07/2025.
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 15/07/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Jaiprakash Yadav, Alwar 2. izR;FkhZ@ The Respondent- ITO, Ward-Behror 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No. 18/JP/2025) vkns'kkuqlkj@ By order,
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