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Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Order
: 30.12.2025 ORDER
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 04.02.2025 for the Assessment Year 2018-19 raising following grounds of appeal :-
1. The learned CIT(A) has erred in law and on facts in not upholding the validity of the notice issued under section 148 of the Income Tax Act, 1961 (the Act) without the proper and mandatory compliance with the provisions of section 148A(b).
2. The learned CIT(A) has further erred in law and on facts by failing to consider that the then AO has given notice u/s 148A(b) to assessee on 31.03.2022 and as per provision of 149 the period of limitation available to the AO for passing an orderunder clause (d) of section 148A is less than seven days, such remaining period shallbe extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.
3. The learned CIT (A) has erred in law considering the approval of PCIT not valid without proper mandatory compliance with the provision of section 151 of the Act.
4. The learned CIT (A) has erred in law by not considering compliance with the provision of section 292B of the Act and quashing the assessment merely based on wrong A.Y. in notice u/s 148A(b).”
Brief facts of the case are, the assessee is an individual and he did not file any return of income for the AY 2018-19 within due date. In this case, the AO received some information that the assessee made cash withdrawals of Rs.63,06,000/- from HDFC Bank Limited and also made deposits of Rs.2,04,000/-. Hence, a notice u/s 148A (b) of the Income-tax Act, 1961 (for short ‘the Act’) was issued on 31.03.2022. However, assessee did not file any reply to the notice. Hence, the AO passed an order u/s 148A (d) of the Act on 05.04.2022 and issued a notice u/s 148 of the Act on the same day. In response to the notice, the assessee filed return of income on 06.05.2022 by declaring net loss of Rs.1,26,797/-. Later, notice u/s 143 (2) of the Act was issued on 07.06.2023. During the course of assessment proceedings, various notices u/s 142(1) of the Act were issued and the assessee responded to the notices issued by the AO.
During the course of assessment proceedings, the AO had noticed that the assessee admitted gross turnover of Rs.7,85,83,897/- and declared purchase of Rs.7,50,28,198/-. In order to verify the genuineness of the purchases, the AO had issued notice u/s 133(6) of the Act to different parties. Upon verification, it is noticed by the AO that seven different parties did not respond to the notice issued u/s 133(6) of the Act. Hence, the AO called for the details of bank statements and other evidences in support of the alleged purchases from those seven parties. As the assessee did not submit evidence in the support of the purchase, the AO considered the total purchase of Rs.5,42,96,886/- from those seven parties as bogus purchase and disallowed the same u/s 37(1) of the Act. The AO completed the assessment u/s 147 r.w.s 144B of the Act on 25.03.2024 by assessing the total income at Rs.5,41,69,809/-.
Aggrieved with the above order, assessee preferred an appeal before the NFAC, Delhi and filed grounds of appeal and detailed submissions. Before the ld. CIT (A), assessee has raised the legal issues vide Ground Nos.1 to 7 regarding challenging the legal validity of notice u/s 148A(b), order u/s 148A(d) and notice u/s 148. Before the ld. CIT (A), assessee submitted that all these notices and order are invalid, illegal and without jurisdiction for the following reasons :- (i) That the notice u/s 148A(b), order u/s 148A(d) and notice u/s 148 were issued by Jurisdictional AO i.e. ITO, Ward-3, Rohtak. These notices and order are invalid, illegal and without jurisdiction since these notices and order were issued by the Jurisdictional Assessing Officer i.e. ITO, Ward-3, Rohtak. On the notices and order, name and designation of the officer who issued the notices and order is duly mentioned. As per the provisions of Section 151A, notice could not be issued by the Jurisdictional Assessing Officer and should have been issued by the Faceless Assessing Officer. In view of these circumstances, the proceedings initiated against the assessee is suffered from severe legal lapses and is liable to be quashed. In this regard, he relied on the following case laws :- 165 taxmann.com 114 (P&H) Jasjit Singh 165 taxmann.com 115 (P&H) Jatinder Singh Bhangu 165 taxmann.com 43B (P&H) Sandeep Kumar Gupta 164 taxmann.com 6S9 (Bom) Pravina Jagdish Patel 165 taxmann.com”265 (Bonn) Vidhyadhar Shetty 165 taxmann.com 192 (Bom) Everest Kanto Cylinder Ltd. 164 taxmann.com 414 (Bom) Venus Jeweł 164 taxmann.com 633 (Bom) Sushila Sureshbabu Malge 165 taxmann.com 424 (Bom) Navita S. Hetampuria (ii) That the notice u/s 148A(b) was issued by the AO on 31.3,2022 fixing the case for 7.4.2022, but the AO couldn't even wait for the date of hearing and was in such a hurry that he passed order u/s 148A(d) on 05.04.2022 only. Thus no proper opportunity of hearing was given by the AO to the assessee to file reply and the order passed u/s 148A(d) and notice u/s 148 and all the subsequent proceedings are void and non-est.
(iii) That in notice u/s 148A(b), AO had alleged that the assessee had made bogus purchase of Rs.18,28,800/- in AY 2015-16. But in order passed u/s 148A(d), AO alleged that assessee had made cash withdrawal of Rs.63,06,000/- from bank, made cash deposit of Rs.2,04,000/- and earned interest income of Rs.1,451/-. The transaction alleged in order u/s 148A(d) were never mentioned in notice u/s 148A(b) and transaction alleged in notice u/s 148A(b) was never mentioned in order u/s 14BA(d). This ground itself is sufficient to quash the proceedings initiated against the appellant. He further brought to the notice of ld. CIT (A) that in notice u/s 148A(b), it was alleged that the bogus purchases were made during the F.Y. 2014-15. He submitted that it is quite surprising that how the proceedings of AY 2018-19 could be opened for the alleged bogus purchases made during the FY 2014-15; (iv) That the order passed u/s 148A(d) and notice u/s 148 were issued by the AO with the prior approval of PCIT, Rohtak. He further brought to the notice of ld. CIT (A) provisions of section 151 and submitted that in the present matter, AO passed order u/s 148A(d) and issued notice 148 for A.Y. 2018-19 on 05.04.2022 i.e. after lapse of three years from the end of the relevant assessment year and according to Section 151, in the present matter, approval should have been taken from PCCIT or Pr. Director General or where there is no PCCIT or Pr. Director General, approval should have been taken from CCIT or Director General, but the AO seeks approval from Ld. PCIT, Rohtak which is in gross violation on Sec. 151 of the Act, which renders the whole re-assessment proceedings null and void. In this regard, he relied on the following case laws :- Ghansnyam K. Khabrani 346 ITR 443 (Born) SPL's Siddhartha Ltd. 345 ITR 223 (Delhi) Sunint Investment & Technologies P. Ltd. 54 SOT 126 (Del)
Ld. CIT (A) perused the written submissions and observed that the assessee has raised some of the valid objections in the written submissions dated 07.01.2025 by filing notice issued u/s 148A(b) of the Act. From the said notice, ld. CIT (A) observed that the information that suggested with the AO was pertaining to bogus purchase of Rs.18,28,800/- during the FY 2014-15 relevant to AY 2015-16. However, notice u/s 148A(b) of the Act dated 31.03.2022 was issued for the AY 2018-19. This notice has granted time limit upto 07.04.2022 for getting the reply. However, order u/s 148A(d) of the Act was passed on 05.04.2022 without waiting for the reply of the assessee. Further, ld. CIT (A) observed that this order passed by the AO talked about cash withdrawal of Rs.63,06,000/- and cash deposit of Rs.2,04,000/- from HDFC Bank Ltd but it was not the reason communicated in the notice dated 31-3-2022. He further observed that the AO stated in the order u/s 148A(d) of the Act dated 05.04.2022 which was approved by PCIT, Rohtak and notice u/s 148 of the Act was generated on the same day with the approval of the PCIT. He further observed that the assessment year involved was AY 2018-19 and notice u/s 148 of the Act was issued only on 05.04.2022 i.e. after three years from the end of the relevant AY 2018-19. He observed that as per section 151 of the Act, the approval should have been taken from Pr. CCIT or Pr. DGIT or CCIT or DGIT which is violation of the provisions of the Act.
Ld. CIT (A) observed that after committing series of blunders stated above, in the reassessment proceedings, the AO proceeded to disallow purchase of Rs.5,42,96,886/- as bogus purchase. However, the assessment was not reopened for that reason. He observed that the reason recorded in the notice issued u/s 148A(b) of the Act and order passed u/s 148A(d) of the Act were totally different. He observed that recording some reason pertaining to AY 2015-16 in the notice issued u/s 148A(b) of the Act for the AY 2018-19, passing statutory order u/s 148A(d) of the Act two days before the time limit given for compliance to the assessee in the statutory notice in violation of natural justice, recording irrelevant facts other than the reason communicated in the order passed u/s 148A(d) of the Act and issuing notice u/s 148 of the Act without obtaining proper sanction from the appropriate authority defeats the whole purpose of re-assessment. He observed that the JAO and FAO have committed irreparable mistakes in this assessment order and such mindless reassessment order passed by the Faceless Assessment Unit and casual approach of the JAO is not at all maintainable before the eyes of law.
Ld. CIT (A), after recording the above observations, held that the assumption of jurisdiction itself is not valid as the approval was taken from PCIT, Rohtak instead of CCIT or Pr. CCIT and accordingly, directed the AO to delete such disallowance made in the reassessment order.
Aggrieved against the above order, Revenue is in appeal before us.
At the time of hearing, ld. DR of the Revenue submitted that the ld. CIT(A) has erred in law and on facts in not upholding the validity of the notice issued under section 148 without the proper and mandatory compliance with the provisions of section 148A(b) and the ld. CIT (A) has erred in law considering the approval of PCIT not valid without proper mandatory compliance with the provision of section 151 of the Act. Further, he relied on the findings of the AO.
On the other hand, ld. AR of the assessee reiterated the submissions made before the ld. CIT (A) and relied on the findings of the ld. CIT(A).
Considered the rival submissions and material placed on record. We have already narrated the facts relating to the legal validity of the notice u/s 148A(b), order u/s 148A(d) and notice u/s 148 in detail above. We observed that the assessment year involved was AY 2018-19 and notice u/s 148 of the Act was issued only on 05.04.2022 i.e. after three years from the end of the relevant AY 2018-19 and accordingly, as per Section 151 of the Act, the approval should have been taken from Pr. CCIT or Pr. DGIT or CCIT or DGIT. Further we observed that the reason recorded in the notice issued u/s 148A(b) of the Act and order passed u/s 148A(d) of the Act were totally different. Further we observed that the statutory order u/s 148A(d) of the Act was passed two days before the time limit given for compliance to the assessee in the statutory notice in violation of natural justice. Further we observed that issuing notice u/s 148 of the IT Act without obtaining proper sanction from the appropriate authority defeats the whole purpose of re-assessment and the JAO and FAO have committed irreparable mistakes in this assessment order.
Further we observed that on careful perusal of the reassessment order, it is seen that the AO reopened the assessment to verify cash withdrawal of Rs.63,06,000/ from HDFC bank and cash deposit of Rs.2,04,000/ into the same bank and in para 3.3 of the assessment order, it is recorded that the assessee has submitted the response to the show cause notice and both the deposit and withdrawal has been verified. However, the AO disallowed bogus purchase of Rs.5,42,96,886/ out of total purchase of Rs.7,50,28,198/, which was not the reason communicated in the notice issued u/s 148A(b) of the Act or order passed u/s 148A(d) of the Act. Accordingly, we are of the considered view that ld. CIT (A) has rightly upheld that the assumption of jurisdiction itself is not valid as the approval was taken from PCIT, Rohtak instead of CCIT or Pr. CCIT and directed the AO to delete such disallowance made in the reassessment order. We are inclined not to disturb the findings of the ld. CIT (A). Accordingly, the grounds raised
by the Revenue are dismissed.
13. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 30th day of December, 2025.