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Facts
The assessee appealed against the reopening of assessment for A.Y. 2015-16 under Section 148. The reopening notice was issued within four years of the relevant assessment year, but approval was taken from the Pr.CIT, Dhanbad, instead of the JCIT/Addl.CIT, as statutorily required. The reopening was based on alleged introduction of ₹25.00 lacs towards share allotment/premium, which the assessee contended was incorrect, supported by their balance sheets showing no such increase in share capital.
Held
The tribunal held that the reopening was invalid as the approval was obtained from the Pr.CIT, a superior authority, instead of the JCIT/Addl.CIT, which is mandatory for reopening within four years, citing precedents from the Bombay High Court and Supreme Court. Furthermore, on merits, the balance sheets confirmed that the assessee had not received or introduced the alleged share capital during the impugned year, rendering the basis for reopening and the addition unsustainable.
Key Issues
1. Whether reopening of assessment under Section 148 is valid if approval is taken from Pr.CIT instead of JCIT/Addl.CIT within the four-year period. 2. Whether an addition based on alleged introduction of share capital is sustainable when balance sheets show no such increase during the relevant period.
Sections Cited
Section 148
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
O R D E R PER: BENCH 1. This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC, Delhi in Appeal No. CIT(A), Dhanbad/10119/2019-20 dated 05/08/2024 for the A.Y. 2015-16.
Shri Devesh Poddar, ld. A.R. is represented on behalf of the assessee and Shri Khubchand T. Pandya, ld. Sr. DR is represented on behalf of the revenue.
It was submitted by the ld. AR that the assessment of the assessee has been reopened by issuance of notice under Section 148 of the Act. The ld. Authorised Representative drew our attention to page No. 1 of the assessment order para 2 wherein the Assessing Officer has mentioned that P a g e 1 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO the proposal for reopening had been sent to the Pr.CIT, Dhanbad and the approval has been taken from the Pr.CIT, Dhanbad. It was a submission that the impugned assessment yes is 2015-16 and the notice under Section 148 has been issued on 25/03/2019 which is within four years period from the end of the relevant assessment year. It was a submission that when the reopening is done in respect of the an assessment year and the reopening is done within four years from the end of the relevant assessment year, the approval is to be taken from the ld. JCIT/Addl.CIT. It was a submission that the approval having been taken from the Pr.CIT is erroneous and the reopening is liable to be quashed on that ground. It was a further submission that even on merits, the reopening has been done for the reasons that the assessee has introduced ₹ 25.00 lacs towards allotment of shares including share premium. It was a submission that the assessee has not received such share application money. The ld. AR drew our attention to the balance sheet as on 31/03/2015 and 31/03/2014 which reads as follows:
P a g e 2 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO P a g e 3 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO P a g e 4 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO
P a g e 5 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO It was a submission that the balance sheet clearly showed that there was no increase in the share capital of the assessee from that of 31/03/2014. It was a further submission that even in the assessment order, the Assessing Officer
P a g e 6 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO does not make any reference to from whom the assessee has received the said share application money. It was a submission that even on merits, the addition itself was not called for.
In reply, the ld. Sr.DR vehemently supported the order of the Assessing Officer and the ld. CIT(A) 5. We have considered the rival submissions. Admittedly, when the reopening is being done within four years from the end of the relevant assessment year, the approval for the reopening is to be taken from the JCIT/Addl.CIT. In the present case, the approval has been taken from the Pr.CIT, Dhanbad. The Hon'ble Bombay High Court in the case of CIT Vs. Aquatic Remedies (P) Ltd. (2018) 406 ITR 545 (Bom) had categorically held that where the reopening is to be done by a specified authority, the same cannot be done by any other authority even if it is a superior authority. This being so, respectfully following the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Aquatic Remedies (P) Ltd. (supra) which has been approved by Hon'ble Supreme Court 113 taxmann.com 451 (SC), the reopening as done in the impugned appeal stands quashed.
Further even on merits, a perusal of the balance sheet clearly shows that the assessee has not received the share capital nor introduced such share capital during the impugned assessment year. Therefore, the reopening itself as also the addition in the assessment is reopening is on a wrong information and the addition as made is also not sustainable in so far as the assessee has not received such share applicable money.
P a g e 7 | 8 ITA 02/Ran/2025 Divya Engicon P. Ltd. Vs ITO