ACIT, NEW DELHI vs. JAKSON LIMITED, DELHI

The above captioned appeals are filed by the Revenue as well as assessee against the order u/s 250 of The Income Tax Act, 1961

In the departmental appeals No. ITA No. 5010/DEL/2024 & ITA No. 4987/DEL/2024, the grounds of appeal are identical. Hence, Appel No. 4987/DEL/2024 being duplicate and is hereby dismissed as infructuous. Since these cross appeals pertain to the same assessment year, these are being disposed of vide a common order.

The Revenue has raised following grounds of appeal: “ (1) The Ld. CIT(A) erred in deleting the addition of Rs. 1,23,53,940/- u/s 69C of the Income tax Act, 1961 on account of bogus purchases made from M/s Akshay Sales Corporation (Prop. Sh. Bijender Jain) who is accepted to be entry operator providing bogus bills of purchases, and disallowance to 25% of the said amount u/s 37(1) of the Act. (a) The Ld. CIT(A) erred in restricting the disallowance on account of bogus purchases from M/s Akshay Sales Corporation, despite the fact that it has been held that the entire transaction with Akshay sales Corporation were not genuine..

The assessee has raised the following grounds of appeal: “ (a) That on the facts and in the circumstances of the case, the disallowance, imposition of tax and interest with reference thereto, the qualification of taxable income and the tax liability, has been grossly unjustified, erroneous and unsustainable and necessary direction be given to the AO to give appropriate relief in accordance with law. (b) That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in passing the order u/s 147 r.w.s.

Brief facts of the case are that the assessee had filed return for A.Y. 2016-17 on 30.11.2016, declaring total income of Rs. 16,14,95,670/-. Subsequently, the return was revised on 07.03.2018, declaring total income of Rs. 5,09,16,090/-. The case was selected for scrutiny and assessment was completed u/s 133(3) of the Act on 18.12.2019 at an ITA No. 5014, 5010, 4987/DEL/2024 6 | P a g e income of Rs. 5,43,51,070/-. Subsequently, on receipt of information form the Investigation Wing, with regard to bogus entries taken by the assessee company from M/s. Akshay Sales Corporation to the tune of Rs. 2,07,84,630/-, the case was re-opened and assessment was thereafter completed u/s 147 r.w.s 143(3) of the Act at an income of Rs. 72,54,47,390/- vide order dated 31.05.2023. 5.1 Aggrieved, the assessee preferred an appeal before Ld. CIT(A). Vide order dated 28.08.2024, Ld. CIT(A) allowed part relief to the assessee in respect of some of the grounds. Aggrieved with the order, both the revenue as well as the assessee are in appeal before the Tribunal. Although multiple grounds have been raised in both these appeals, we first take up the legal ground relating to absence of approval by the prescribed authority raised by the assessee vide Ground No. 4 of its appeal.

2 Brief facts relating to the issue are that a notice u/s 148 was initially issued on 30.06.2021, after obtaining approval of the PCIT Central- 1, Delhi. Thereafter, in view of the directions of the Hon’ble Apex Court in the case of Ashish Agarwal, a show-cause notice u/s148A(b) was issued on 25.05.2022, providing information based on which the earlier notice u/s 148 had been issued. The assessee replied to the same vide letter dated 08.06.2022. As the assessee’s reply was not found acceptable, an order u/s 148A(d) of the Act was passed by the Ld. AO on 28.07.2023 and, consequently, notice u/s 148 was also issued on 30.07.2022, after obtaining approval of the PCIT (Central)-1, Delhi.

3 Before us, Ld. AR has submitted that the notice u/s148 was issued on 30.07.2022 i.e., more than three years after the end of the relevant

4 We have heard the rival submissions and perused the material placed on record. It is seen that the issue regarding approval of the specified authority u/s 151 of the Act raised by the assessee is squarely covered by the decision of the Hon’ble Apex Court wherein it has been held as under: “73. Section 151 imposes a check upon the power of the Revenue to reopen assessment. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority Derore assessments. The provision issuing a notice under section 148. The purpose behind this procedural check is to save the assessee o harassment resulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. 110d Taxman 315/221 ITR 538 (SC)V[1996] 9 SCC 534. A table representing the prescription under the old and new regime is set out below:

The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime:

After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under ITA No. 5014, 5010, 4987/DEL/2024 9 | P a g e section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume juri iction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the juri iction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under section 151 affects their juri iction to issue a notice under section 148.”

5 Respectfully following the decision of the Hon’ble Apex Court, we, hereby hold that in the proceedings initiated u/s 148 for A.Y. 2016-17, approval of the specified authority i.e., PCCIT/CCIT has not been taken before issue of notice u/s 148 as required u/s 151(ii) of the ITA No. 5014, 5010, 4987/DEL/2024 10 | P a g e

Since the impugned notice and assessment order has been quashed, the remaining grounds of appeal raised by the assessee as well as the grounds raised by the revenue are rendered infructuous and, hence are not required to be adjudicated upon.

In the result, the appeal of the assessee is allowed and both the appeals of revenue are dismissed. Order pronounced in the Open Court on 23-12-2025. (MADHUMITA ROY) Accountant Member