LISTER MOESSNER INDIA PRIVATE LIMITED,DELHI vs. ITO CIRCLE 13(1), DELHI

PER Ms. MADHUMITA ROY, JM: The instant appeal, filed by the assessee, is directed against the Assessment Order dated 20.12.2024 [DIN: ITBA/AST/S/147/2024-25/1071426224(1)], passed by the Assessment Unit, Income Tax Department, under Section 147 r.w.s. 144C(3) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), pursuant to the directions of the Dispute Resolution Panel (“DRP”) under Section 144C(5) of the Act for the Assessment Year 2018-19. 2. Grounds of appeal raised by the assessee are as under:

2
“1) The order passed by the Learned Assessment Unit under section 144C/147 read with section 144B of the Act on directions of the DRP is bad in law in so far as it confirms the additions proposed in the draft assessment order passed by the Transfer Pricing Officer
2) That the reopening of assessment made by the Assessment Unit/Learned
AO is illegal, bad in law, time barred pursuant to which the Assessment
Order passed thereto is void ab-initio and liable to be quashed.
3) The reopening of assessment being based on risk management strategy formulated by CBDT which posted the information on the insight portal that the assessee company had under-valued export of Rs. 1,61,83,593/- to its sister concern was incorrect and despite the reply of the assessee to the contrary that the amount represented the receipt of export proceeds in one of its bank accounts maintained with Central Bank of India, which information did not suggest any escapement of income rendering the passing of order under section 148(A)(d) and issue of notice under section 148 for reopening of assessment illegal, bad in law which is unsustainable in law and facts of the case.
4) Without prejudice to above Grounds of Appeal, the Learned Transfer
Pricing Officer has grossly erred in not providing a copy of the approval received from the juri ictional Commissioner of Income Tax for reference to determine the Arm's length price of export sales transactions between the assessee and its sister concern to the Transfer Pricing Officer under section 92CA(1) of the Act depriving the assessee of the opportunity to challenge the TP reference before commencement of transfer pricing proceedings which renders the order unsustainable in law and facts of the case.
5) That the Dispute Resolution Panel (DRP) has grossly erred in confirming part additions in determination of Arm's length price of transactions of export sale between the assessee and its associated enterprise in Germany by summarily dismissing the submission of the assessee during the proceedings before DRP which is arbitrary biased, bad in law and facts of the case.
6) That the Learned DRP and consequently the assessment unit grossly erred in not accepting the comparables selected by the assessee company and in substituting the comparable which 6 were functionally different for determining the Arm's length price of export sales transactions made by the 3
assessee company with its associate concern in Germany resulting in higher
Arm's length price which is unsustainable in law and facts of the case.
7) The Learned DRP and consequently the assessment unit have grossly erred in not allowing the adjustment for working capital contrary to established judicial precedents and OECD guidelines for which working was provided during the course of proceedings before the DRP which denial is unsustainable in law and facts of the case.
8) That the Learned DRP and consequently the assessment unit 8 have grossly erred in charging interest under section 234A and 234B of the Act.
9) That the Learned DRP and consequently the assessment unit 9 have grossly erred in initiating penalty proceedings under section 270A of the Act.
10) That the appellant craves leave to add, alter or delete the above grounds of appeal at the time of hearing.”
3. Certain clarification regarding the representations preferred by the assessee requiring for details relied on by the Revenue on the basis of information alleging under reporting of income was sought for when the assessee’s counsels appeared, none appeared for the Revenue but sought adjournment. As the representations have been brought to our notice by the Ld. AR, appearing in the paper book, we have concluded the hearing. The adjournment application, thus, preferred by the Revenue, has been rejected.
4. Facts of the case in brief are that the assessee mainly engaged in the business of manufacturing of Hookscrews & Clamps Brackets , Builders Hardware as like
Door locks, turning forks, chair bracket, Flat Bar, plastic chair brackets and other metals products, has filed its return of income for the A.Y.2018-19 on 29.11.2018

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declaring total income of Rs.NIL. The case was re-opened under Section 147 based on the information received from the DDIT(Inv.) Unit II, Noida that a Tax
Envision Petition (TEP) was received stating that the assessee had underreported the exports of Rs. 1,61,53,593/- to its sister company M/s. Everest International,
Germany. In connection with the TEP, an enquiry/investigation, summons under Section 131(1A) of the Act was issued to the assessee company to provide the copy of ITRs, balance sheet, Audit Report, P&L account, details of the sources of income, details of exports and details of bank accounts. On perusal of the bank statement of the assessee, maintained with Central Bank of India bearing A/c No.
1201870231, credit entries of Rs. 1,61,83,593/- was found for the F.Y. 2017-18
relevant to A.Y. 2018-19. Accordingly, the case was reopened under Section 147
with the prior approval of the competent authority and notice under Section 148
was issued to the assessee on 27.03.2022 sourced from sale proceeds. Since, in the Tax Envision Petition (TEP) it was alleged that the assessee had underreported the exports of Rs. 1,61,83,593/- to its sister company M/s. Everest International situated in Germany, the issue pertained to Transfer Pricing Officer for the determination of Arm’s Length Price of the Items manufactured by M/s. Lister
Moessner India Private Limited to its sister company M/s. Everest International.
Subsequently, the case was referred to the TPO with the prior approval of PCIT(AU) for passing Order under Section 92CA(3) of the Income Tax Act, 1961. 5
4.1
The TPO vide order dated 29.01.2024 under Section 92CA(3) of the Act proposed total adjustment of Rs. 28,20,585/- to be made to the income of the assessee as arm’s length price of the international transactions, inter alia, by observing as under:
“DETERMINATION OF ARM’S LENGTH PRICE

Further, it has been seen that one comparable namely, Acme Locks
Limited is a persistent loss making company which does not represent trend of this sector and thus it has been rejected as a comparable and therefore dropped from the final list of comparables.

In the light of discussion made above, the comparables that shall be finally selected for benchmarking the international transaction relating to sale of goods were as follows:
Sl. NO.
COMPANY NAME
Weighted OP/OC (%)

Rishi Seals Pvt. Ltd.
2.84%

Kaushik Udyog Pvt. Ltd.
4.49%

A R F Engineering Pvt. Ltd.
7.92%

Dormakaba India Pvt. Ltd.
9.05%

Quba Architectural Products Pvt. Ltd.
11.19%

Ebco Pvt. Ltd
11.33%

Star Circlips & Engg. Ltd.
12.51%

Median
9.05%

35th percentile
7.92%

65th percentile
11.19%
Accordingly, the arm’s length price of the international transaction related to sale of goods was computed as below:
Particulars
Amount (Rs.)
Operating Cost (A)
4,47,65,678
OP/OC of Comparable (B)
9.05%
Arm Length Margin C= A*B%
40,51,294
Arm Length Revenue D =(A+C)
4,88,16,972
Revenue shown by the Assessee (E)
4,59,96,387
Difference F (D-E)
28,20,585
Proposed Adjustment
28,20,585

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In view of the above, total adjustment u/s 92CA of Rs. 28,20,585/- is to be made to the income of the assessee, being the arm’s length price of the international transaction.”
4.2
Apropos to TPO’s order, Draft Assessment Order under Section 144C of the Act was framed by the FAO on 21.02.2024, proposing to determine the total income at Rs. 28,20,525/-. Against this the assessee filed objections before the Learned Dispute Resolution Panel-2 (“DRP), New Delhi. The Learned DRP passed directions under Section 144C(5) of the Act vide order 30.11.2024. Pursuant to directions of the Learned DRP, assessment under Section 147 r.w.s. 144C(3) read with Section 144B of the Act was framed on 20.12.2024, making adjustment of Rs.
12,01,473/- under Section 92CA to the income of the assessee, being the arm’s length price of the international transaction, inter alia, by observing as under:
“3. The TPO proposed an adjustment of Rs 28,20,585/- on the international transaction related to sale of goods. Aggrieved by the adjustments made by the Ld. TPO, the Assessee filed its objections before the Hon'ble DRP. The Hon'ble DRP after hearing the Assessee's contentions passed its directions dated 12.12.2024 u/s 144C(5) of the Act. The directions of the Hon'ble DRP and consequent action taken by the TPO is discussed below.
4. The Hon'ble DRP's Directions on margins calculation of the assessee.
The assessee raised an objection that ... The Ld. TPO erred in not treating
Sundry balances written back and Short & Excess as operating while computing the operating margin of the assessed."
The DRP directed the TPO in this regard as under “ …… Therefore, in view of the facts of the case and the findings of the Hon'ble Court (supra), the penal is of the view that the sundry balances written back and short & excess shall be treated as operating income and operating margins (OP/OC%) shall be recalculated accordingly.

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Accordingly, the revised calculation of the margins of the assessee is as under:-

Particulars
Amount (In lakh)
Revenue from Operation
4,59,96,387
Add: Other Income
Sundry Balances Written Back
16,16,591
Short & Excess
2,521
Operating Income
4,76,15,499

Total Expenses
4,90,42,068
Less: Non Operating Expenses
Finance cost
1,28,559
Foreign exchange fluctuation
41,47,831
Total non-operating exp
42,76,390
Operating Cost
4,47,65,678

Operating Profit
28,49,821
OP/OC
6.37%

The DRP directed the TPO to compute the margins of the comparable i.e.
M/s. Kaushik Udyog Pvt. Ltd. as per annual report.

Accordingly, the margin is calculated as under:-

2018
2017
2016

Operating Revenue
36,68,11,775
23,47,41.067
49,49,64,365

Total Expenses
36,90,02,120.50
23.60.31.261
50,30,97.285

Less:

Finance Cost
1.23,35.220
1,19,12,601
1,92,66,777

Bank charges
4,509
0
13,086

Total
Non-operating
Expenses
1,23,39,729
1,19,12,601
1,92,79,863

Operating Cost
35,66,62,392
224118660
483817422

Operating Profit
1,01,49,383.50
1,06,22,407.00
1,11,46,943.00
Wt. Avg.

OP/OC
2.85%
4.74%
2.30%
3.00%

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S. No.
Name of the company
Wt. Avg.
(OP/OC)
1
Rishi Seals Pvt. Ltd.
2.84%
2
Kaishik Udyog Pvt. Ltd.
3.00%
3
ARF Engineering Pvt. Ltd.
7.92%
4
Dormakaba India Pvt. Ltd.
9.05%
5
Quba Architectural Products Pvt. Ltd.
11.19%
6
Ebco Pvt. Ltd.
11.33%
7
Star Circlips & Engg. Ltd
12.51%

35th percentile
7.92%

Median
9.05%

65th percentile
11.19%

The arm's length price of the international transactions in respect of sale of goods is computed as below:-

Particulars
Amount
Operating Cost(A)
4.47.65.678
OP/OC of comparable (B)
9.05%
Arm's Length Margin (C=A'B)
40,51,294
Arm's Length Revenue (D+A+C)
4.88.16 972
Revenue shown by the assessee (E)
4,76,15,499
Difference (F-D-E)
12.01,473
Proposed Adjustment
12,01.473

In view of the above, TP adjustment amounting to Rs. 28.20.585/ has revised to Rs.12,01,473/consequent to the directions of the Hon'ble DFRP and the order giving effect may be passed accordingly Assessing Officer is requested to make the necessary changes as discussed above.”

For the sake of brevity, TPO's order giving effect dtd 13.12.2024. is made part of this order.

The copy of order giving effect has already been served to assessee by ΤΡΟ.

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In view of the above, total adjustment u/s 92CA of Rs. 12,01,473/- is to be made to the income of the assessee, being the arm's length price of the international transaction.

As the TPO determined a higher value of Arm's Length Revenue arising out of the international transaction entered into by the assessee company with its Associated Enterprise during the period under consideration, the corresponding difference in value leads to higher taxable income of the assessee. Accordingly, the same is being considered as under-reporting of income by the assessee for the relevant period and corresponding penalty u/s 270A r.w.s274 for under reporting in consequence of mis reporting of income is initiated separately.

The income of the assessee is therefore computed as under:-

S. No.
Description
Amount (In INR)
1
Income as per return
Nil
2
Variation on account adjustment u/s 92CA
(as discussed above) in respect of TP issue
12,01,473/-
3
Total income/ loss determined

12,01,473/-

On the basis of above fact and discussion of the case, final assessment order u/s 147/144C(13) r.w.s. 144B of the Act is passed.

Aggrieved, the assessee is in appeal before us.
5. Learned counsel for the assessee submitted that the notice dated 12.03.2022
issued u/s 148A(b) of the Act, stated that the assessee had receipts of Rs.
1,61,83,593/- in its bank account maintained with Central Bank of India resulting in under reporting of export sales by the similar amount, which was rebutted by the 10
assessee on 17.03.2022 vide its reply requesting the Department to furnish the information/ material on the basis of which alleged underreporting export sales to its AE had been made by the assessee but without any result. It is the case of the assessee that the fact of under reported export sales by an amount of Rs.
161,83,593/- was the amount of export proceeds in the bank account maintained with the Central Bank of India which could not be said to be under-reporting of export sales. Therefore, the reopening under Section 148 of the Act on the basis of incorrect information uplinked on the Insight Portal, appearing at pages 8-10 of the paper book filed before us is illegal and bad in law as neither the same suggests of suppression of income as is evident from the observation of the Assessing Officer in the order passed under Section 148 (d) of the Act. In support of the same certain judgments were relied upon by the assessee. On the other hand the Learned DR relied upon the order passed by the authorities below.
5.1
We have further perused certain details filed by the assessee, annexed with the paper book filed before us, which was also placed before the authorities below.
It is the further case of the assessee that inspite of request made to the Assessment
Unit the assessee was not supplied with material relied upon on the basis of information of under reporting of income in export sales made to its sister concern which is contrary to the direction passed by the Hon’ble Apex Court in the case of Ashish Agarwal v. Union of India (Civil Appeal No. 3005/202), wherein it has 11
been held that the Revenue is bound to furnish the material relied upon for issue of notice under Section 148A(b) of the Act. It is also submitted that copy of reference made to the TPO was also not supplied to the assessee inspite of the specific request made by the assessee on 12.01.2024 and 27.01.2024, copy whereof is enclosed with the paper book appearing from pages 44-47, as reproduced below:
“To.
DC/ACIT
TP 2(2)(2)
Civic Centre, Delhi.
Ref. No.: 228/2024
Dated: 12.01.2024
Subject:-
Reply to proceedings under section 92CA (2) of the Income

Tax Act, 1961-in the case of Mis. Lister Moessner India Pvt.

Ltd. for the Assessment Year 2018-19 PAN: AABCL0639G

DIN: ITBA/TPO/F/17/2023-24/1059622901(1)
Dear Madam,
We on behalf and instructions of our client above named in the captioned matter in continuation to our submission dated 14.06.2023 submit as under-
1. The allegation contained in the DIN & Letter No.: ITBA/TPO/F/17/2023-
24/1059622901(1) for the above assessment year are incorrect as these seem to have been made without examining the reply of the assessee dated
14.06.2023, a copy of which is again enclosed for ready reference as PDF-
1-8. 2. The assessee submitted a copy of Transfer Pricing Study Report in PDF-4
in response to earlier notice under section 142(1) vide our reply dated
14.06.2023. 3. It is completely denied that the transactions of export to sister concern allegedly of Rs. 1,61,83,593/- have not been disclosed in form-3CEB or have not been accounted for in the Transfer Pricing Study Report.
4. The assessee during the course of proceedings under section 148A had requested the Assessing Officer to furnish the basis of alleged escapement of 12
income of Rs. 1,61,83,593/-However, no basis was furnished, nor any communication to this effect was made with the assessee. The case have been reopened u/s 148 and a reference for Transfer Pricing assessment was made mechanically.
5. A reference was made to the juri ictional Principal Commissioner of Income Tax for conduct of transfer pricing assessment. The assessee had requested to furnish a copy of communication sent for approval of PCIT as required under section 92CA(1) for referring the determination of Arm's
Length Price to the assessee vide communication dated 31.03.2023. 6. The assessee in response to the above communication was furnished a communication dated 29.05.2023 wherein extract of the approval granted by the juri ictional PCIT has been furnished. However, the assessee has till date not been furnished a copy of the communication making reference for transfer pricing assessment.
Your honour is requested to furnish a copy of communication made seeking reference for transfer pricing assessment by the juri ictional Assessing
Officer/ Assessment Unit. The reference itself will apparently make it clear that the reopening of assessment itself is not based on any tangible information and the reopening of assessment itself is bad in law.
Without prejudice to above, the assessee had furnished the complete information as directed under notice under section 142(1) dated 03.03.2023. It is further reiterated that the Transfer Pricing Study includes the export sales made by the assessee in accordance with RBI Regulations and provisions of Foreign Exchange Management Act.
If the department is in possession of any tangible information on the basis of which it had been alleged in the notice that assessee had not included the export sale amounting to Rs. 1,61,83,593/-, your honour is requested to furnish the requisite information to the assessee to enable the assessee to submit a reply on the issue
The assessee has furnished complete reply as directed in the notice u/s 142(1) dated 03.03.2023. We hope the above would suffice in compliance to the above referred notice.
As requested above, your honour is requested to furnish the particulars of alleged under reporting of export of Rs. 1,61,83,593/-. In case your honour

13
wishes to seek any further information or clarification, we shall be glad to furnish the requisite on hearing from you.

Thanking you,
Yours faithfully. (Satish Aggarwal)
“To,
DC/ACIT (TP) 2(2)(2),
Income Tax Department,
Delhi.

Ref. No.: 250/2024

Dated: 27.01.2024

Subject:-
Reply to show cause notice proceedings u/s 92CA (2) of the Income Tax Act, 1961 in the case of M/s. Lister

Moessner India Pvt. Ltd. for the Assessment Year 2018-

19 PAN: AABCL0639G DIN: ITBA/TPO/F/17/2023-

24/1059947137(1),
Dear Sir/Madam,
We on behalf and instructions of our client above named in the captioned matter submit as under:
1) The assessee is in receipt of show-cause notice dated 19.01.2024 wherein the revenue has accepted vide para 2 that the assessee had made sale of goods amounting to Rs. 4,29,95,843/- to its associate concern and that no sale transaction had been undisclosed.
2) The case of the assessee was reopened under section 148 of the Act on the allegation that the assessee had not disclosed allegedly transactions of Rs.
1,61,83,593/- of export sales made to its sister concern in form 3CEB.
3) The assessee had requested the department during the proceedings under section 148A as also your honour during the course Transfer Pricing
Proceedings to furnish the information/particulars on the basis of which such observations were being made. However, the assessee has not been furnished any such detail or information till date. The foundational fact for reopening of assessment is lacking. There is no live link between the 14
information on record and reopening of assessment. The reopening of assessment is illegal and bad in law.
4) The assessee had requested to furnish a copy of communication sent by the juri ictional Assessing Officer for TP reference approval to the PCIT as required under section 92CA(1) for referring the determination of arm's length price. In response to the request the assessee was furnished a communication dated 29.05.2023 wherein extract of the approval granted by the juri iction PCIT has been furnished. However, till date the assessee has not been furnished communication made by the Assessing Officer seeking reference to PCIT for transfer pricing assessment.
Without prejudice to above, the assessee has furnished its response to the show-cause notice dated 19.01.2024 on 25.01.2024. Thanking you,
Yours faithfully, (Satish Aggarwal)”

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had replied that, there was no under reporting of export sales to its sister concern and that the amount of Rs. 1,61,83,593/- was credited to its bank account maintained with Central Bank of India sourced from sale proceeds.
The company had furnished bill wise details of export sales made to its AE.
(Copy of notice u/s 148(A)(b) of the Act is enclosed at page no. 5-7 in P.B)
4. The case of the assessee company was reopened under section 148
of the Act, on the basis of incorrect information on Insight Portal as per the Risk Management Strategy Formulated by CBDT that the assessee had underreported the export sales of Rupees 1,61,83,593/- to its sister concern
M/s Everest International, Germany.
5. The copy of notice issued u/s 148A(b) of the Act, dated 12.03.2022, wherein in the notice it is clearly stated that the assessee had receipts of Rs.
1,61,83,593/-in its bank account maintained with Central Bank of India simultaneously alluding to the fact of under reporting of export sales by the similar amount, which on the face of it is a contradictory observation.
6. The company vide its reply dated 17.03.2022 in response to notice u/s 148A(b) requested the department to furnish the information/material on the basis of which it had been alleged that the company had underreported export sales to its AE to the extent of Rs. 161,83,593/-
7. The assessment unit was unable to furnish any information material to the assessee on the basis of which it was alleged that the company had under-reported its export sales by an amount of Rs.1,61,83,593/-, which as stated above was the amount of export proceeds banked in the bank account maintained with Central Bank of India. The amount of export proceeds cannot be the amount of under-reporting of export sales.
8. The Order under section 148A(d) of the Act, was passed on 27.03.2022 wherein the Juri ictional Assessing Officer has observed in the Order that the amount of Rs. 1,61,83,593/- is the amount credited in the bank account maintained by the company with Central Bank of India in spite of which the case was reopened under section 148 of the act, on the basis of incorrect information uplinked on the Insight Portal.
(Copy of order passed under section 148A(d) of the Act, enclosed at page no. 8-10 P.B).
9. The reopening of assessment is illegal and bad in law as the information in possession of the assessing officer did not suggest

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escapement of income as is evident from the observation of the assessing officer in the order passed under section 148A(d) of the Act.
10. Reference is invited to the decision of Madras High Court in which it had been held that the information on the basis of which the case is reopened should be capable of suggestion of escapement of income, failing which the notice u//s 148 deserved to be quashed.
(i) (2022) 329 CTR (Mad) 809 DR. MATHEW CHERIAN & ORS. vs.
ACIT (Copy of judgement is enclosed at page no. 24-43 in P.B)
28. No doubt, the definition of information' is wide and could include just about any material in the possession of the officer. However, the caveat/pre- condition is that such information must enable the suggestion of escapement of tax. Then again, the mandate cast upon the officer under Section 1494(d) is W.P.Nos. 12692 of 2022 etc. batch that he is to decide whether it is a 'fit case for issue of a notice for re- assessment, upon a study of the material in his possession, including the response of the assessee.
29. Thus, not all information in possession of the officer can be construed as 'information that qualifies for initiation of proceedings for re- assessment, and it is only such information that suggests escapement and which, based upon the material in his possession, that the officer decides as 'fit' to trigger reassessment, that would qualify
30. The information' in possession of the Department must prima facie, satisfy the requirement of enabling a suggestion of escapement from tax. This is not to say that the sufficiency or adequacy of the information must be tested, as such an analysis would be beyond the scope of juri iction of this Court in writ juri iction. However, whether at all the 'information' gathered could lead to a suggestion of escapement from tax can certainly be ascertained.
31. For the purposes of such ascertainment and to determine 'fitness'
to re-assess, the materials gathered must be seen in the context of the allegation of tax evasion, taking assistance of decided cases to ascertain whether the allegation is sustainable or not. With the necessity for 'belief effaced from the statutory provision, the dimension of subjectivity that existed pre 01.04.2021 stands substantially whittled.
32. In the present regime of reassessments, an assessing officer must be able to establish proper nexus of information in his possession, with 17
probable escapement from tax. No doubt the term used is 'suggests'. That is not to say that any information, however tenuous, would suffice in this regard and it is necessary that the information has a live and robust link with the alleged escapement. This is where settled propositions assume relevance and importance
(ii) Jagadeesan Mani Vs. ITO [2024] 166 taxmann.com 320 (Mumbai
- Trib.) (Copy of judgement is enclosed at page no. 11-15 in P.B)
"Where Assessing Officer issued a reassessment notice on ground that assessee-NRI had entered into certain transactions for which assessee had not filed his return of income, however, assessee denied alleged transactions, since Assessing Officer had reopened assessee's case based on erroneous facts and premise which did not relate to assessee, impugned draft assessment order and consequential final assessment order were to be held invalid and were to be quashed"
(iii) Excel Commodity and Derivative (P.) Ltd. Vs. Union of India
[2023] 150 taxmann.com 94 (Calcutta) (Copy of judgement is enclosed at page no. 16-18 in P.B)
"Section 68, read with section 1484, of the Income-tax Act, 1961-
Cash credit(Accommodation entry)- Whether term 'information' in Explanation 1 under all the 'information' gathered could lead to a suggestion of escapement from tax can certainly be ascertained.
31. For the purposes of such ascertainment and to determine 'fitness'
to re-assess, the materials gathered must be seen in the context of the allegation of tax evasion, taking assistance of decided cases to ascertain whether the allegation is sustainable or not. With the necessity for 'belief effaced from the statutory provision, the dimension of subjectivity that existed pre 01.04.2021 stands substantially whittled.
32. In the present regime of reassessments, an assessing officer must be able to establish proper nexus of information in his possession, with probable escapement from tax. No doubt the term used is 'suggests'. That is not to say that any information, however tenuous, would suffice in this regard and it is necessary that the information has a live and robust link with the alleged escapement. This is where settled propositions assume relevance and importance

18
(ii) Jagadeesan Mani Vs. ITO [2024] 166 taxmann.com 320 (Mumbai
- Trib.) (Copy of judgement is enclosed at page no. 11-15 in P.B)
"Where Assessing Officer issued a reassessment notice on ground that assessee-NRI had entered into certain transactions for which assessee had not filed his return of income, however, assessee denied alleged transactions, since Assessing Officer had reopened assessee's case based on erroneous facts and premise which did not relate to assessee, impugned draft assessment order and consequential final assessment order were to be held invalid and were to be quashed"
(iii) Excel Commodity and Derivative (P.) Ltd. Vs. Union of India
[2023] 150 taxmann.com 94 (Calcutta) (Copy of judgement is enclosed at page no. 16-18 in P.B)
"Section 68, read with section 1484, of the Income-tax Act, 1961-
Cash credit(Accommodation entry)- Whether term 'information' in Explanation 1 under section 148cannot be lightly resorted to so as to reopen assessment and this information cannot be aground to give unbridled power to revenue
Held, yes-Assessee was issued with notice under section 1484(b) on ground that assessee had done fictitious derivative transactions with a company-
However in order passed sonder section 148A(d). Assessing Officer alleged that prima facie assessee haid taken accommodation entry by way of fund transfer from a different company-Single Judge held that said order was devoid of reasons and without any discussion on contentions raised by assessee in his objections to section 1484 notice and remanded back matter -
Whether since order passed under clause (d) of section 148A was not based on reason for which notice was issued under section 1484(b), said order was illegal and had to be held to be wholly unsustainable - Held, yes-Whether, consequently, direction issued by Single Judge remanding matter to Assessing Officer was also to be set aside Held, yes [Paras 6 to 9] [In favour of assessee)"
(iv) Paranjape Schemes (Construction) Ltd. Vs. Deputy Commissioner of Income-tax, [2024] 160 taxmann.com 730 (Bombay). (Copy of judgement is enclosed at page no. 19-22 in P.B)
11. The company was not supplied any material relied upon or the basis of the information alleging under reporting of income in export sales made to its sister concern contrary to the direction of Supreme Court in the 19
case of Ashish Agarwal versus union of India in Civil Appeal No. 3005/2022
wherein the Supreme Court held the Assessing Officers were duty bound to furnish the material relied upon for issue of notices under section 148A(b) of the Act
12. The relevant extract from the judgment of the Supreme Court in the case of Ashish Agarwal versus union of India is as under: -
Hon'ble Supreme Court in Union of India and Ors. Vs. Ashish
Agarwal in Civil Appeal No. 3005/2022 held, inter alia, as under:
10. (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective
High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act. 2021 and construed or treated to be show-cause notices in terms of section 1484(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter:
10. Without prejudice to the fact that the reopening of assessment is illegal, bad in law and the assessment order passed pursuant there to is void ab-inito and deserves to be quashed.
11. The copy of reference made by the TPO to the PCIT was not supplied to the assessee in spite of specific request made by the assessee dated 12.04.2024 and 27.01.2024. (Copy of Communication dt 12.01.2024
and 27.01.2024 is enclosed at page no. 44-47 in P.B)
12. The assessing officer vide communication dated 29.05.2023
furnished to the assessee online approval received from the PCIT wherein the PCTT had mechanically approved the response to TPO by stating approved as proposed. (Copy of Intimation dt. 29.05.2023 from TPO and copy of online approval given PCIT for TP reference is enclosed at page no.
48-29 in P.B).
13. The PCIT granted mechanical approval without ascertaining the facts of the case which is bad in law as there was no escapement of income as alleged in notice u/s 148 of the Act.
14. Without prejudice to fact that, reopening of assessment is illegal and bad in law on account of incorrect information of suggesting

20
escapement of income the reopening of assessment is bad in law due to order us/ 148A(d) of the Act, and notice u's 148 of the Act, issued by JAO instead of Faceless Assessment Unit. The assessee had filed Additional
Ground to this effect.
That the Learned Juri ictional Assessing Officer has grossly erred in reopening the assessment under section 148 of the Act, and in passing an order under section 148A(d) of the Act, instead of the Faceless Assessment
Unit in accordance with the provisions of section 144B and section 151A of the Act, which is illegal, bad in law, pursuant to which the order passed u/s 147 r.w.s 1440 (3) r.w.s 144B of the Act is void ab intio.
15. The Hon'ble Supreme Court vide its judgement in the case of Deepanjan Roy v. ADIT (INT TAXN) 2 HYD & ANR. (SPECIAL LEAVE
PETITION (CIVIL) Diary No(s). 33956/2025) upheld the judgement of Telangana High Court quashing the notice issued u/s 148 of the Act, issued by JAO instead of Faceless Assessment Unit by dismissing the SLP filed by the department against the judgement of Telangana High Court. (Copy of the judgement of the Supreme Court at page no. 23 of P.B).”
5.3
It is the case of the assessee that there is no under reporting of export sales made by the assessee to its sister concern, rather reopening of assessment under Section 148/148A(b) of the Act is not valid on the basis of incorrect finding of fact. In this case the assessee has drawn our attention to copy of notice available at pages 5 to 7 of the paper book filed before us, the contents whereof are as under:
“GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
OFFICE OF THE DEPUTY

COMMISSIONER OF INCOME TAX

CIRCLE 13(1), DELHI

To,
LISTER MOESSNER INDIA PRIVATE LIMITED
6/2 BACHAN HOUSE, TILAK NAGAR

21
NEW DELHI 110018, Delhi India

PAN: AABCL0639G
A.Y:2018-19
Dated:12/03/2022

DIN & Notice No:ITBA/AST/F/148A(SCN)/2021-22/1040657006(1)

Notice under clause(b) of section 148A of the Income-tax Act.1961

Sir/Madam/Mis

Whereas I have information which suggests that income chargeable to tax for the Assessment Year 2018-19 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961, The details of the information and enquiry, if conducted, are enclosed with this notice in Annexure A.
2. You are required to show-cause as to why, in view of the details contained in Annexure A, a notice section 148 of the Income tax Act, 1961 should not be issued.
3. You may, to the extent technologically feasible, submit your response with supporting documents (if any) on the above mentioned issues electronically in 'e-proceeding' facility through your account in e-filing portal at your convenience on or before 19/03/2022. 4. This notice is being issued after obtaining the prior approval of the PCIT,
Delhi-4
accorded on date
12/03/2022
vide
Reference
No.
100000029121483. RAM NIWAS
CIRCLE 13(1), DELHI

ANNEXURE

SHOW CAUSE
The case of M/s Lister Moessner India Pvt Ltd. (AABCL0639G) for AY
2018-19 has been flagged as potential case on Insight Portal for considering re-opening u/s 148 of the Act. The information available indicate that the beneficiary has shown under valued exports. The details of information given in the table given below :-

22
S.
No.
Name of the beneficiary

Information source
Description
Value
Remarks
1
M/s Lister Moessner India
Pvt. Ltd.
(AABCL 0639 G)

Under valued
Exports
1,61,83,593/- TEP source under valued export

TOTAL
1,61,83,593/-

The concern company is the under-reporting of the exports to its sister company in Germany the issue pertains to TPO for the determination of Arm's Length Price of the items manufactured and exported by M/s Lister
Moessner India Pvt Ltd.
On the analysis of bank statement of M/s Lister Moessner India Pvt Ltd
Central Bank of India A/c No 1201870231, it was found that credit entries for F.Y 2017-18 is Rs 1,61,83,593/-
The enquiries made by the Investigation Wing indicate that the company indulge in under value export. Accordingly you are hereby required to show cause why proceedings u/s 148 of the Act should not be initiated.
Your reply with copy of ledger account of these parties and other documentary evidences in support of your contention should be furnished on ITBA Portal within 7 days from the date of issue of this notice, failing which it will be presumed that you have nothing to say in this regard and necessary steps will be taken to initiate the proceedings as per provisions of I.T. Act.
This is issued as per provisions of sec. 148A(b) of the Act.
RAM NIWAS
CIRCLE 13(1), DELHI”

Order pronounced in open court on 23.12.2025. (S. RIFAUR RAHMAN)
JUDICIAL MEMBER

Dated: 23.12.2025. *MP*