DEPUTY COMMISSIONER OF INCOME TAX-1(1), RAIPUR, RAIPUR vs. SHRI VINAY AGRAWAL, MAHASAMUND

5. Any other ground which may be adduced at the-time of hearing.

Grounds of Cross Objection in (Arising out of 1. Ld. CIT(A) erred in confirming addition of Rs.4,51,400/- out of addition of Rs. 91,37,500/- made by AO on account of alleged bogus purchases from certain parties. The addition made by AO & confirmed by Ld. CIT(A) is illegal, arbitrary & not justified.

2. Without prejudice to above, notice u/s 148 issued by AO and consequent reassessment order passed by AO is illegal and bad in law.

3. The respondent reserves the right to add, amend or alter any of the ground/s of cross objection.

(AY 2015-16): 1. "Whether on the facts and in the circumstance of the case, the Id. CIT(A) was justified in deleting the additions made by the AO to the tune of Rs.1,49,23,907/- on account of bogus purchases relying upon the decision of ITAT Raipur in case of M/s Gopal Rice Industries vs. ITO In 74/RPR/2020 for the Asstt. Year 2014-15, without going to the merits of the case?"

2. "Whether on the facts and in the circumstance of the case Id. CIT(A) was justified in deleting the additions made by the AO to the tune of Rs. 1,49,23,907/- by applying GP @8% instead of entire bogus purchase?"

3. "Whether on the facts and in the circumstance of the case Id. CIT(A) has erred while deciding the appeal in favour of the appellant, failed to allude to relevant facts on record, misread the evidence and its probative value thereby giving rise to perversity in the order of Id. CIT(A), which itself gives rise to Question of Law as held in several case laws including the case of Sudarshan Silk and Sarees 300 ITR 205 (SC)?"

4. The order of the CIT(A) is erroneous both in law and on facts.

Grounds of Cross Objection in (Arising out of

1. Ld. CIT(A) erred in confirming addition of Rs.10,99,243/- out of addition of Rs. 1,60,23,150/- made by AO on account of alleged bogus purchases from certain parties. The addition made by AO & confirmed by Ld. CIT(A) is illegal, arbitrary & not justified.

2. Without prejudice to above, notice u/s 148 issued by AO and consequent reassessment order passed by AO is illegal and bad in law.

3. The respondent reserves the right to add, amend or alter any of the ground/s of cross objection.

3. Since the aforesaid two appeal pertains to the same assessee, involving therein similar facts and issues, which are interconnected, common and identical in nature, except the quantum of addition, therefore, these appeals are heard together and taken up for adjudication under this common order.

& 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund 5. Brief facts of the case are that the assessee is an individual has filed his Return of Income (ROI) for the AY 2014-15, declaring total income at Rs. 9,95,120/- on 30.09.2014. Since, the department has information in the case of assessee that certain income had escaped assessment, therefore, a notice/SCN u/s 148A(b) of the Act, was issued along with information for explanation of such information. However, in response, the assessee had not furnished any reply. Subsequently, an order u/s. 148A(d) is passed after taking prior approval of appropriate/ competent authority and the notice u/s 148 of the IT Act was issued. In compliance to aforesaid order and notice, assessee furnished ROI. Subsequently, in the course of assessment assessee had submitted requisite information pertaining to purchases carried out during the year under consideration. The submissions of assessee are considered by the Ld. AO but not found satisfactory, accordingly, after conducting necessary enquiries from AIR/CIB and 360 Degree profile of the assessee, Ld. AO revealed that during the year under consideration the assessee has taken accommodation entries in the form of bogus purchase amount to Rs.91,37,500/- from various concerns against which no explanation could have been furnished by the assessee. Accordingly, the expenditure in the form of bogus purchase, thereby reducing the profit of the assessee was added back to the income of assessee and after the aforesaid addition the assessed income of the assessee is determined at Rs.1,04,12,220/-.

& 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund 6. Aggrieved by aforesaid additions by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein Ld. CIT(A) had taken a different stand towards the purchases made by the assessee and had estimated profit on the amount of bogus purchases @ 8% which comes to Rs.7,31,000/- (8% of Rs.91,37,500/-) and the extra profit shown by the assessee in the return filed in response to notice u/s 148 for Rs.2,79,600/- was reduced from the aforesaid estimated profit, accordingly, the addition of Rs.4,51,400/- (7,31,000 – 2,79,600) was sustained by the Ld. CIT(A) and the appeal of assessee is partly allowed.

& 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund 9. It is also submitted by the Ld. AR that as per the facts and dates of events in the present case, notice u/s 148 was issued beyond the prescribed time permitted by the law, therefore, the case of assessee is squarely covered by the decision of this Tribunal in the case of Kachrulal Jitendra Kumar Vs. ITO in for the AY 2014-15 vide order dated 05.02.2025, wherein the relevant observations of the tribunal on the issue, are extracted as under: 13. Apropos the validity of the jurisdiction that was assumed by the AO for framing the impugned assessment, the Ld. AR submitted that as the notice u/s. 148 of the Act, dated 25.07.2022 is barred by limitation, therefore, the consequential assessment order passed by the A.O u/s. 147r.w.s. 144B of the Act, dated 29.04.2023 cannot be sustained and is liable to be quashed on the said count itself. Elaborating further on his contention, the Ld. AR had taken us through a "Chart", as per which, notice u/s. 148 of the Act, dated 25.07.2022 in the case of the assessee firm could have been issued latest by 16.06.2022. The Ld. AR submitted that as the notice u/s. 148 of the Act had been issued by the A.O on 25.07.2022 i.e. much after 16.06.2022, therefore, the same being barred by limitation was invalid.

14. Apropos the aforesaid issue, Dr. Priyanka Patel, Ld. Sr. Departmental Representative (for short 'DR'), submitted that as the A.O had validly assumed jurisdiction and framed the assessment vide his order passed u/s. 147 r.w.s. 144B of the Act, dated 29.04.2023, therefore, no infirmity did emanate from his order.

& 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund 16. The Finance Act, 2021 had substituted the entire scheme of reassessment under Sections 147 to 151 of the Income Tax Act w.e.f 1st April 2021. Broadly speaking, the changes made available on the statute by the legislature in all its wisdom are, viz. (i) Section 148 now mandates the assessing officer to initiate proceedings only based on prior information and with the prior approval of the specified authority; (ii) Section 148A requires the A.O to provide an opportunity of being heard to the assessee before deciding to issue a reassessment notice u/s. 148 of the Act; (iii) Section 148A requires the A.O to, viz. (a) conduct any enquiry, if required, with the prior approval of the specified authority; (b) provide an opportunity of being heard to the assessee, with the prior approval of the specified authority; (c) consider the reply furnished by assessee, if any, in response to the show-cause notice; and (d) decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice u/s.148 of the Act by passing an order; (iv) Further, the time limit under Section 149 has been reduced from four years to three years from the end of the relevant assessment year for all situations. However, an exception has been carved out, as per which, an assessment can be reopened beyond three years but within ten years from the end of the relevant assessment year if the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rupees fifty lakhs or more; (v) The "1st proviso" to Section 149 prohibits the issuance of a reassessment notice under the new regime if such notice have become time-barred under the old regime; and (vi) the sanctioning authorities specified under Section 151 of the new regime are different from those specified under the old regime.

20. Thereafter, the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal, (2022) 444 ITR 1 (SC), to resolve the multi-facet controversies that had cropped up inter-se the assessees and the department, had held, that it was in complete agreement with the view taken by the various High Courts in holding that the benefit of the new provisions shall be made available even in respect of proceedings relating to the past assessment years, provided Section 148 notice was issued on or after 01-4-2021. However, the Court in order to balance the interests of the Revenue and the assessee exercised its discretionary jurisdiction under Article 142 of the Constitution of India and directed that the reassessment notices issued under the old regime shall be deemed to have been issued under Section 148A(b) of the new regime. Further, it was provided that the A.O shall within 30 days provide to the respective assessees, the information and material relied upon by the department, so that the assessee's could reply to the show-cause notices within two weeks thereafter. The requirement of conducting any enquiry, if & 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund required, with the prior approval of specified authority u/s.148A(a) was hereby dispensed with as a one-time measure vis-à-vis those notices which had been issued u/s. 148 of the un-amended Act from 01-4-2021 till date, including those which was quashed by the High Courts. It was directed that the A.Os shall thereafter pass orders in terms of Section 148A(d) in respect of each of the assessees concerned and, thereafter, following the procedure as required u/s.148A of the Act, they may issue notice u/s.148 of the Act. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Union of India Vs. Ashish Agrawal (supra), wherein the notices issued by the department u/s. 148 of the Act, as per the old regime were to be treated as "Show Cause Notices" issued u/s. 148A(b) of the Act, are culled out as under:

"8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non-- application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per 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 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:

(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure vis à vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;

(iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees;

(iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and;

(v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not."

Accordingly, the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra), had held as under:

(i) the notices issued u/s. 148 of the Act to the respective assessees under the old regime during the period 01.04.2021 to 30.06.2021 shall be deemed to have been issued u/s.148A of the Income Tax Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of Section 148A(b) of the Act;

(ii) the A.O shall within thirty days from the date of order of the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra) i.e. 04.05.2022 provide to the assessee information/material that was relied upon by the department which suggested that his income chargeable to tax had escapement; (iii) that a period of two weeks shall thereafter be allowed to the assessee's to file reply in response to the notice issued u/s. 148A(b) of the Act;

(iv) the A.O shall, thereafter, pass an order u/s. 148A(d) of the Act with the prior approval of the specified authority, within one month from the end of the month, in which, the assessee's reply is received by him; or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish the aforesaid reply expires.

(i) The A.O is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148 of the Act which were required to be issued within the time limit specified under section 151 of the new regime r.w. TOLA, 2020, where applicable;

(ii) that the directions issued by the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra) applied PAN-India including all the 90,000 reassessment notices issued under section 148 of the old regime during the period April 1, 2021 to June 30, 2021.

(iii) the department was directed to provide all the relevant material or information to the assessee's and thereafter, allow the assessee's to respond to the "Show cause notices" by availing all the defences including those available under Section 149 of the Act.

(iv) that as per Section 148A(b) of the Act, the A.O. had to comply with two requirements, viz. (i) issuance of a show cause notice; and (ii) supply of all the relevant information which formed the basis of the show-cause notice.

(v) the total time that was excluded for computation of limitation for the deemed notices is, viz. (i) the time during which the show-cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1st April, 2021 and 30th June, 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Union of India & Ors Vs. Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show-cause notices.

(vi) that the time surviving under the Act read with TOLA, 2020 that would be available to the department to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices u/s. 148 of the new regime could be calculated by computing the number of days between the date of issuance of the deemed notice and June 30, 2021. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Union of India & Ors. Vs. Rajeev Bansal (supra) are culled out as under: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 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 under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;"

23. We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both the parties. Admittedly, the following facts are discernible from the record:-

 Notice u/s. 148 of the Act under the old regime (deemed notice u/s 148A) was issued by the A.O to the assessee firm on 30.06.2021; & 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund  show-cause notice u/s 148A(b) of the Act was issued by the A.O to the assessee firm on 26.05.2022;

 the time period of two weeks (14 days) from the date of issuing of notice u/s. 148A(b) dated 26.05.2022 [as per the judgment of the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra)] lapsed on 08.06.2022;

 the balance/surviving period available with the A.O to issue notice u/s 148 of the Act (under new regime) was 1 day [time between 30.06.2021 (the date of issuance of notice u/s.148A of the Act) AND 30.06.2021 i.e. (extended time period under TOLA, 2020);

 as the balance/surviving period available with the A.O for passing an order under clause (d) of 148A of the Act was 1 day i.e. less than 7 days, therefore, as per the "fourth proviso" to Section 148A of the Act, the period of limitation so available would stand extended to 7 days;

 the A.O could have validly issued notice u/s. 148 of the Act (under the new regime) latest by 14.06.2022;

24. As the A.O in the present case had issued notice u/s. 148 of the Act, dated 25.07.2022 i.e. much subsequent to lapse of the period of limitation as was available with him upto 13.06.2022, therefore, as stated by the Ld. AR (subject to correction of the date by the Ld. AR as 16.06.2022), and rightly so, the same is found to be barred by limitation. Accordingly, the assessment order passed by the A.O u/s. 147 r.w.s. 144B of the Act, dated 29.04.2013 in absence of a valid notice issued u/s. 148 of the Act cannot be sustained and, is quashed.

2. Date of show-cause notice u/s 148A(b) of the Act was 20.05.2022 issued by the A.O to the assessee firm.

3. The date on which, the time period of two weeks (14 days) 02.06.2022 from the date of issuing of notice u/s. 148A(b) [as per the judgment of the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra)]has been lapsed. 04. the balance/surviving period available with the A.O to 22 days (days from issue notice u/s 148 of the Act (under new regime) [time 09 to between the date of issuance of notice u/s.148A of the Act 30.06.2021) as per Sr. No. 1 of this table and 30.06.2021] i.e. (extended time period under TOLA, 2020); 05. the balance/surviving period available with the A.O for 22 days passing an order under clause (d) of 148A of the Act: (i) the days calculated at Sr. No.4 of this table or (ii) 7 days (as per the "fourth proviso" to Section 148A of the Act, the period of limitation so available would stand extended to 7 days), whichever is higher 06. the A.O could have validly issued notice u/s. 148 of the Act 23.06.2022 (22 days (under the new regime) latest by the days from the date from under Sr. No. 3 of this table (i.e., date of issuance of notice 02.06.2022) u/s 148A(b)

& 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund 12. In view of aforesaid information, it was the submission by Ld. AR, that the notice u/s 148 (new regime) in the instant case, was issued beyond the prescribed time available to the Ld. AO under the mandate of law r.w. permissible additional time on account of deeming fiction, as per under the judgments in the case of Ashish Agrawal and Rajeev Bansal (supra). Accordingly, as the issue in the instant case is covered by the decision in the case of Kachrulal Jitendra Kumar (supra), therefore, the assessment in the present case passed on the foundation of a notice u/s 148 issued on 29.06.2022, which should have been issued on or before 23.06.2022 was barred by limitation and is liable to be quashed.

15. Our aforesaid view is further fortified by the judgment of Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P.) Ltd. Vs. Income Tax Officer (2025) 171 taxmann.com 99 (Delhi), wherein under the similar facts and circumstances Hon’ble High Court has held as under:

Analysis – In the Factual Context

& 30/RPR/2025 and CO No. 2 & 3/RPR/2025 Dy. CIT-1(1), Raipur Vs. Shri Vinay Agrawal, Mahasamund 71. It is contended on behalf of the Revenue that the AO is required to pass an order under Section 148A(d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A(b) of the Act was received. Thus, the order under Section 148A(d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) are within the prescribed period. This contention is without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Act was in excess of the seven days.

17. Adverting to the grounds of appeal raised by the revenue in AY 2014-15, as we have quashed the assessment for the want of valid assumption of jurisdiction by the Ld. AO, therefore, the issues raised by the revenue become infructuous, accordingly, the appeal of the revenue stands dismissed.

19. Having identical issue, in for AY 2015-16 in the case of present assessee filed by the revenue and the CO against the appeal of revenue in CO No. 03/RPR/2025 filed by the assessee, wherein the facts regarding date of issuance of notices are produced as under:

Sr. Description Relevant No. of Remarks No. Date Days 01. Date of notice u/s. 148 of the Act under the old regime 09.06.2021 (deemed notice u/s 148A) was issued by the A.O to the assessee firm.

21. As the impugned assessment for AY 2015-16, in the instant case has been rendered as quashed for the want of valid assumption of jurisdiction by the Ld. AO, therefore, we refrain to deliberate upon and to deal with the other contentions raised by the assessee in CO No. 03/RPR/2025 qua the impugned addition made by the Ld. AO and to the extent sustained by the Ld. CIT(A), thus, the same is left open.

22. Adverting to the grounds of appeal raised by the revenue in for the AY 2015-16, as we have quashed the assessment for the want of valid assumption of jurisdiction by the Ld. AO, therefore, the issues raised by the revenue become infructuous, accordingly, the appeal of the revenue stands dismissed.

Order pronounced in the open court on 17/02/2025.