INCOME TAX OFFICER-3(1), RAIPUR, RAIPUR vs. VIGHNESHWAR ISPAT PVT LTD, RAIPUR

4. "Whether on the facts and in the circumstances of the case, the Id. CIT(A) was justified in deleting the addition of Rs.2,19,11,713 u/s 68 of the Act which was added by the AO?"

5. "Whether on the facts and in the circumstances of the case, the Id. CIT(A) was justified in deleting the addition of Rs.2,19,11,713 u/s 68 of the Act by ignoring the findings of the AO?"

6. The order of the CIT(A) is erroneous both in law and on facts. 7. Any other ground which may be adduced at the time of hearing.”

“Decision: I have gone through the above submissions of the appellant and have considered the facts and evidence on record. The appellant, Vigneshwar Ispat Pvt. Ltd. had e-filed original return of income on 23/09/2014 disclosing total income at Nil and taxes were paid under MAT. Subsequently, assessment proceedings for the A/Y 2014-15 was re-opened u/s 147 of the Income Tax Act, 1961. Later, the AO completed the assessment u/s 147 r.w.s 144 r.w.s. 144B of the Income Tax Act, 1961 by assessing total income of the appellant at Rs.2,19,11,723/-. Being aggrieved by the above mentioned order passed by the AO, the appellant filed the instant appeal.

The present appeal arises from the. reopening of the assessment for the Assessment Year 2014-15 under Section 148 of the Income Tax Act, 1961 (IT Act), wherein the appellant challenges the legality and validity of the reopening proceedings initiated through the notices issued under Section 148 on 30.06.2021 based on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the judgment of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2022) 444 ITR 1 (SC).re-issued on 26.07.2022 , which the appellant contends are time-barred under the provisions of the Income Tax Act as amended by the Finance Act, 2021, and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The appellant, Vighneshwar Ispat Pvt. Ltd., is a private limited company engaged in the business of manufacturing iron and steel products. The appellant filed its return of income for the Assessment Year (AY) 2014-15 on 23.09.2014, declaring a total income of Rs.NIL and taxes paid under Minimum Alternate Tax (MAT). Subsequently, the assessment for AY 2014-15 was reopened under Section 147 of the Income Tax Act, 1961, by issuing a notice under Section 148 on 30.06.2021 based on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) on extended time and further regularized w.r.t. the judgment of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2022) 444 ITR 1 (SC) and accordingly order passed to reopen the case u/s 148A(d) of the Act dt. 26.07.2022 'that the assessee has failed to explain the suspicious transaction of Rs.20,00,000/- made with M/s. Bluemoon Enterprises and non-genuine profit of Rs. 58,33,044/- earned from USE Equity Derivative through during the F.Y. 2013-14 relevant to A.Y. 2014-15'. On the conclusion of reassessment proceedings, the Assessing Officer (AO) made additions totaling Rs.2,19,11.713/- under Section 68 of the Income Tax Act, 1961, on various grounds, including unexplained credits, refunds of advances, and realization of income. The appellant has filed the present appeal against the assessment order dated 24.05.2023, challenging the additions made by the A.O on various ground. As per the assessment order against which present appeal is under adjudication the contents are mainly as under:

5.1.1 Ground No. 1: The appellant contended that the notice issued under Section 148 of the Income Tax Act, 1961, on 30/06/2021, and the reissued notice on 26/07/2022, were time-barred under Section 149 of the Income tax Act, 1961 despite the applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The appellant argued that the jurisdictional Assessing Officer (AO) ignored objections and proceeded with unlawful, unjustified, and arbitrary proceedings, requesting the assessment order to be set aside. 5.1.2 The appellant relied on TOLA, which extended the time limit for issuing reassessment notices under Section 148 of the Income tax Act, 1961 from 20/ 03/2020 to 31/03/2021, until 30/06/2021. The Hon'ble Supreme Court. in Union of India v. Ashish Agarwal, deemed the reassessment notices issued under the old regime as show-cause notices under the new regime, creating a legal fiction that preserved the time limit for further proceedings. 5.1.3 The legal fiction created by Ashish Agarwal judgement stopped the clock of limitation from the date of issuance of the deemed notices (30/06/2021) until the Hon'ble Supreme Court's decision on 04/05/2022. The period from 04/05/ 2022 to 26/05/2022 (when the AO issued the notice under Section 148A(b)) of the Income tax Act, 1961 was also excluded from the limitation period. Additionally, the two- week period granted to the appellant to respond to the notice was excluded. 5.1.4 By the time the AO issued the notice on 26/07/2022, the limitation period had already expired. The AO had no remaining time to issue the notice under Section 148 of the Income tax Act, 1961 or pass an order under Section 148A(d) of the Income tax Act, 1961 5.1.5 The notice dated 26/07/2022 was issued beyond the permissible limitation period. Consequently, the assessment order dated 24/05/2023, framed under Section 147 of the Income tax Act, 1961 , was set aside. 5.1.6 In result the appeal is allowed, and the impugned notice dated 26/07/ 2022, the order under Section 148A(d) of the Income tax Act, 1961 and the assessment order dated 24.03.2023 is hereby set aside.”

Order pronounced in the open court on 30th day of July, 2025.