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Facts
The assessee filed an appeal against the order of the NFAC upholding an addition of Rs. 22,37,61,000/- under Section 68 of the Income-tax Act, 1961. The assessee raised grounds challenging the addition and also filed additional grounds challenging the validity of the reassessment proceedings.
Held
The Tribunal held that the notice u/s 148 dated 31.03.2018 was issued before obtaining the necessary approval from the PCIT, making the notice invalid. Furthermore, the sanction granted by the PCIT was deemed mechanical and without application of mind. Consequently, the reassessment proceedings were held to be void ab initio.
Key Issues
Whether the reassessment proceedings initiated under Section 147/148 of the Act were valid, considering the timing of the approval from the PCIT and the application of mind by the sanctioning authority.
Sections Cited
68, 143(3), 147, 148, 151, 271(1)(c), 234
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Income Tax Appellate Tribunal, DELHI BENCH‘C’: NEW DELHI
ORDER
PER CHALLA NAGENDRA PRASAD, JM:
This appeal is filed by the assessee against the order of NFAC, Delhi dated 20.02.2025 for the Assessment Year 2011-12.
2. The assessee vide letter dated 02.12.2025 filed the following concise grounds of appeal:-
Dhansamridhi Finance Pvt. Ltd. vs. ACIT “1. That the Ld. Commissioner of Income Tax (Appeals) ("CIT(A)") has erred in law and on facts vide impugned appellate order dated 20.02.2025 by upholding the impugned addition of Rs. 22,37,61,000/- under Section 68 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") vide impugned assessment order dated 11.12.2018 passed under Section 143(3)/147 of said Act.
That the impugned appellate order and perverse findings therein qua impugned addition are legally unsustainable for being contrary to applicable (case) law and uncontroverted (additional) evidence filed by appellant in discharge of primary burden under Section 68 of the Act and establishing the identity, genuineness and creditworthiness of M/s. K.S. Nutrition & Foods Pvt Ltd, M/s. Zoom Developers SEZ (Indore) Pvt. Ltd, and M/s. Dreamlife Care Marketing Pvt. Ltd. and M/s. K.S. Developers Pvt. Ltd (hereinafter referred to as "the creditor parties").
3. That the impugned appellate order is legally unsustainable for perversely confirming the impugned assessment order suffering from the following ex facie jurisdictional errors: (1) The impugned notice dated 31.03.2018 purportedly issued under Section 148 of the Act was by non-jurisdictional Assessing Officer, (ii) Mandatory sanction of Ld. Pr. CIT vide Section 151(1) of the Act was obtained only after issue of the impugned notice u/s. 148 of the Act; (iii) The mandatory sanction/approval of the Ld. Pr. CIT to the purported reasons to believe dated 29.03.2018 was recorded in an ex facie mechanical manner and without application mind.
4. That the impugned appellate order and impugned addition is legally unsustainable for the Respondent's inaction/failure to discharge the statutory onus under Section 68 of the Act subsequent to the Appellant's primary discharge of the same by furnishing uncontroverted documentary (additional) evidence, including confirmations, ITR acknowledgements, bank statements et al. qua creditor parties.
That the impugned addition is further untenable as mere non- compliance of summons by certain creditors does not ipso facto render
6. That the impugned penalty proceedings under Section 271(1)(c) of the Act is legally unsustainable on account of Respondent's failure to establish any concealment of alleged income by the Appellant vide Anantharam Veerasinghaiah & Co. v. CIT (1980) 123 ITR 457 (SC).
That the impugned penalty proceedings under Section 271(1)(c) of the Act and interest u/s. 234 of the Act is ex facie unsustainable in law as the very foundation of such proceedings namely, the impugned assessment order and impugned addition therein are without jurisdiction and contrary to law, facts and evidence filed in support thereof by the Appellant.
8. That the Appellant craves leave to add, delete, modify, or vary the aforementioned Grounds of Appeal at any time during the pendency of appeal or at the time of hearing.”
3. Apart from the above concise grounds of appeal
, the assessee also filed an application dated 23.11.2025 for admission of additional grounds of appeal which are as under:
1. That on facts and in law, the sanction dated 30.09.2018 passed under Section 151 of the Income-tax Act, 1961 ("the Act") by the Ld. PCIT- 3 is mechanical, unreasoned, and without application of mind, rendering the impugned reassessment proceedings void and liable to be quashed vide Hon'ble Supreme Court in CIT Vs. S. Goyanka Lime and Chemical Pvt. Ltd. (2015) 64 taxmann.com 313 and this Hon'ble Tribunal in Tribhawan v. ITO., dated 19.11.2025
2. That the impugned (re)assessment order dated 11.12.2018 passed under Section 143(3) r.w.s 147 of the Act by the Ld. ACIT, Circle 7(2), Delhi is void ab initio as it is based on a notice under Section 148 issued on 31.03.2018 by a non-jurisdictional officer, i.e., ITO Ward-26(3), Delhi vide this Hon'ble Tribunal in Saroj Sangwan v. ITO, 2024 SCC OnLine ITAT 443"
That the impugned (re)assessment order dated 11.12.2018 passed by the Respondent is void ab initio as the mandatory approval/sanction was granted on 30.09.2018 under Section 151 of the Act, i.e. subsequent to the issuance of notice under Section 148 of the Act thereby being ex facie contrary to mandate of section 151 of the Act."
Ld. Counsel for the assessee at the outset referring to the additional grounds of appeal, submits that the additional grounds raised are in respect of very jurisdiction of the Assessing Officer in passing the assessment order and since the additional grounds raised are purely legal grounds and go to the very root of the matter, the same may be admitted for adjudication. Reliance was placed on the decisions of the Hon’ble Supreme Court in the case of National Thermal Power Ltd. vs. CIT (229 ITR 383).
5. Heard rival submissions. On perusal of the additional grounds we of the view that they are purely legal grounds, go to the root of the matter and the very jurisdiction of the Assessing Officer in making assessment u/s 143(3) r.w.s 147 of the Act and, therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of NTPC Ltd. vs. PCIT (supra), above additional grounds are admitted for adjudication.
Coming to the merits of the additional ground, the Ld. Counsel for the assessee specifically referring to ground No.3 of the additional grounds of appeal
submitted that the impugned assessment order dated Dhansamridhi Finance Pvt. Ltd. vs. ACIT 11.12.2018 passed u/s 143(3) r.w. sec. 147 of the Act by the Assessing Officer is void ab initio for the reason that the mandatory approval/sanction u/s 151 of the Act was obtained on 30.09.2018 which date is subsequent to the issue of notice dated 31.03.2018 u/s 148 of the Act. Ld. Counsel for the assessee referring to page 70 of PB which a copy of notice issued u/s 148 of the Act submitted that this notice is dated 31.03.2018 issued for the Assessment Year 2011-12. Ld. Counsel for the assessee referring to page 673 of PB which is the letter written by AO to the Principal CIT seeking approval u/s 151 of the Act for initiation of proceedings u/s 148 in the case of the assessee, submitted that the proposal was sent on 29.03.2018. Ld. Counsel further referring to pages 674 and 675 of the paper book which is the proforma for seeking approval of the Principal CIT/ Additional CIT for initiating proceedings u/s 148 of the Act, submitted that the approval u/s 151 for issue of notice u/s 148 was granted/approved by the Principal CIT-3, Delhi on 30.09.2018. Therefore, the Ld. Counsel for the assessee submitted that the Assessing Officer obtained approval on 30.09.2018 u/s 151 of the Act from the Principal CIT post the issue of notice u/s 148 of the Act dated 31.03.2018. Ld. Counsel for the assessee placed reliance on the decisions of the Hon’ble Bombay High Court in the case of River Valley Meadows and Township (P.) Ltd. vs. DCIT [2022] 134 taxmann.com
20. (Bombay) and Svitzer Hazira (P.) Ltd. vs. ACIT (441 ITR 19) and also the decision of Kolkata Bench of Tribunal in the case of Paras Plaza Pvt. Ltd. vs. ITO in dated 03.11.2025 for the proposition that if notice u/s 148 was issued without Page |
5. Dhansamridhi Finance Pvt. Ltd. vs. ACIT prior sanction/ approval u/s 151 of the Act, the impugned notice u/s 148 is bad in law and consequently the assessment framed pursuant to such notice is void ab initio.
7. On the other hand, the Ld. DR strongly supported the orders of the lower authorities.
Heard rival submissions. Perused the orders of the authorities below, the material placed before us and the case laws.
In so far as additional grounds No.3 is concerned we observed that notice u/s 148 which is placed at page 70 of the PB suggests that the same was issued on 31.03.2018. On perusal of page No.673 of the PB which is the letter seeking approval u/s 151 of the Act which suggests that Assessing Officer sought approval from Ld. PCIT u/s 151 of the Act on 29.03.2018 and whereas Ld. PCIT had granted approval on 30.09.2018 which is placed at pages 674-675 which is as under:
Perusal of the approval granted by the Ld. PCIT shows that it was granted on 30.09.2018 which is post issue of notice u/s 148 dated 31.03.2018. Similar issue came up for consideration before the Hon’ble Bombay High Court in the case of River Valley Meadows and Township (P.) Ltd. vs. DCIT (supra) wherein it was held that the notice dated 25.06.2019 issued u/s 148 of the Act was illegal since, there was no prior approval as required u/s 151(2) of the Act has been obtained by Dhansamridhi Finance Pvt. Ltd. vs. ACIT the Assessing Officer as approval was obtained on 26.06.2019. Similarly the Hon’ble Bombay High Court in the case of Svitzer Hazira (P.) ltd. vs. ACIT (supra) held that the issue of notice u/s 148 dated 31.03.2019 online on 31.03.2019 at 2.40 P. M. by the Assessing Officer was post the approval granted u/s 151 by the competent authority u/s 151 at 2.55 P.M. on 31.03.2019 and therefore, the notice u/s 148 was issued without prior approval of the competent authority u/s 151 of the Act and the same was held to be invalid. Similar view has been taken by the Ld. Co-ordinate Bench of the Kolkata in the case of Paras Plaza Pvt. Ltd. vs. ITO (supra) in dated 03.11.2025.
Thus, the ratio of the above decisions squarely applying to the facts of the assessee’s case. Respectfully following the above decisions, we hold that since the notice u/s 148 dated 31.03.2018 was issued before obtaining the approval from the PCIT -3, New Delhi u/s 151 of the Act, the notice issued u/s 148 is invalid, bad in law. Consequently, the assessment framed u/s 143(3) r.w.s 147 of the Act bad is bad in law and void ab initio. Hence, the same is hereby quashed. Accordingly, additional ground No.3 is allowed.
Ld. Counsel for the assessee further referring to ground No.1 of additional grounds, submitted that sanction/approval granted by the Principal CIT-3, New Delhi dated 30.09.2018 u/s 151 of the Act is mechanical, unreasoned and without application of mind rendering the Dhansamridhi Finance Pvt. Ltd. vs. ACIT impugned reassessment proceeding void and liable to be quashed. The Ld. Counsel for the assessee submits that while granting approval the Ld. PCIT without giving any reason for his satisfaction and approval, simply stated “Yes, Approved” which is nothing but mechanical approval and non-application of mind. Reliance was placed on the decisions of the Hon’ble Delhi High Court in the case of PCIT vs. Pioneer Town Planners (P.) Ltd. [2024] 160 taxmann.com 652 and in the case of Capital Broadway Pvt. Ltd. vs. ITO W.P.(C) 4303/2017 dated 03.10.2024. The Ld. Counsel for the assessee also placed reliance on the decision of the Hon’ble Madhya Pradesh High Court in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. [2015] 56 taxmann.com 390. Ld. Counsel for the assessee submits that SLP filed by the Revenue against this judgment was also dismissed by the Hon’ble Supreme Court which is reported as CIT vs. S. Goyanka Lime & Chemicals Ltd in [2015] 64 taxmann.com 313 (SC).
On the other hand the ld DR supported the order of the ld AO.
Heard rival submissions, perused the orders of the authorities below and the materials placed before us we are of the view that the re- assessment framed u/s 143(3) r.w.s 147 of the Act is liable to be quashed even on the ground that sanction/approval dated 30.09.2018 issued u/s 151 of the Act by the PCIT, Delhi-3 is in mechanical manner and without application of mind, for the reason that the Ld. PCIT had simply granted approval stating that “Yes, Approved” and this amounts Page | 10 Dhansamridhi Finance Pvt. Ltd. vs. ACIT to non-application of mind and such an approval is not a valid approval as held by the Hon’ble Jurisdictional High Court in the case of Capital Broadways (P) Ltd Vs. ITO (surpa) and also in the case of PCIT vs. Pioneer Town Planners (P) Ltd (supra). For this reason also, we hold that the reassessment framed u/s 143(3) r.w.s 147 of the Act is invalid, void ab initio and liable to be quashed. Additional ground No.1 is allowed.
Since, we have quashed the reassessment by allowing additional ground No.1 and 3 of the assessee, the additional ground No.2 and all other grounds raised by the assessee on merits need not be adjudicated as they become only academic in nature at this stage and thus, the same are left open.
In the result, the appeal of the assessee is partly allowed as indicated above.
Order pronounced in the open Court on 06.02.2026.