DB POWER LTD,BHOPAL vs. THE ACIT,CENTRAL CIRCLE-1, BHOPAL, BHOPAL

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by appeal-order dated 30.12.2022 passed by Commissioner of Income-tax (Appeal)-3, Bhopal [“CIT(A)”] which in turn arises out of assessment-order dated 30.03.2022 passed by ACIT, Central

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M/s DB Power Limited, Bhopal ITA Nos. 68/Ind/2023 and 73/Ind/2023- A.Y. 2015-16

Circle-1, Bhopal [“AO”] u/s 147 of the Income-tax Act, 1961 [“the Act”] for

assessment-year [“AY”] 2015-16, the assessee and revenue both sides have

filed the captioned cross-appeals.

(a) The assessee is a closely-held company incorporated under the

provisions of Companies Act, 1956 on 12.10.2006. It has been

incorporated with the main object of generation, transmission and

distribution of power. During the relevant AY 2015-16 under

consideration, the commissioning of assessee’s plant was in progress

and hence the assessee was not having any income from business.

However, the assessee filed its original return of income u/s 139(1) on

28.09.2015 declaring a total income of Rs. 22,73,04,890/- from

interest on bank deposits. This return was processed u/s 143(1) of the

Act. Subsequently, the AO re-opened assessment by issuing notice

dated 30.03.2021 u/s 148 calling the assessee to re-file return. In

response, the assessee re-filed return on 28.04.2021 repeating the

same income of Rs. 22,73,04,890/-. Thereafter, the AO issued

statutory notices u/s 143(2) and 142(1) from time to time which the

assessee complied with. The assessee submitted details/documents as

required by AO from time to time. Finally, the AO completed

assessment vide order dated 30.03.2022 u/s 147 assessing total

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income at Rs. 61,84,54,919/- with three (3) types of additions/

adverse conclusions as under:

(i) The AO made an addition of Rs. 38,08,18,089/- u/s 56(2)(viib)

on the premise that the assessee had received excessive

consideration for issue of shares;

(ii) The AO made an adverse conclusion that the assessee had

received cash of Rs. 34,43,98,002/- from different vendors from

whom depreciable fixed assets were acquired. Since the

assessee had not claimed any depreciation in current year due

to non-commencement of business, the AO made an adverse

conclusion in Para No. 5.5 of assessment-order for disallowing

deprecation in subsequent years on the enhanced value of Rs.

34,43,98,002/- of fixed assets.

(iii) With respect to (ii), the AO also made an addition of Rs.

1,03,31,940/- u/s 69C on the premise that the assessee must

have paid commission to those vendors who returned cash to

assessee.

(b) Aggrieved by order of AO, the assessee carried matter in first-appeal

before CIT(A). During first-appeal, the assessee not only contested the

merits of the additions/adverse conclusion made by AO but also

challenged the legality of re-assessment proceeding having been

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M/s DB Power Limited, Bhopal ITA Nos. 68/Ind/2023 and 73/Ind/2023- A.Y. 2015-16

conducted by AO u/s 148/147 on multiple grounds. One of the legal

grounds raised by assessee was such that the AO had issued notice

u/s 148 on an illegal approval u/s 151. The assessee made a detailed

submission to CIT(A) qua this ground but the CIT(A) remained un-

convinced and vide Para No. 3.1.2 to 3.1.3 / Page No. 32 to 47 of his

appeal-order, he rejected assessee’s ground. On merits of three (3)

addition/adverse conclusions made by AO as noted earlier, the CIT(A)

granted relief qua (i) but upheld (ii) and (iii).

(c) Now, both sides are aggrieved by order of CIT(A) and accordingly come

in these cross-appeals on their respective claims. We proceed to

dispose of both matters by this common order starting first with

assessee’s appeal.

Assessee’s appeal:

1(a). That, the act of the Ld. CIT(A) in confirming the actions of the AO of issuing notice under s. 148 of the Income-Tax Act, 1961 ['the Act'] and thereafter, passing of the assessment order under s. 147 of the Act in pursuance thereof, is quite unjustified, unwarranted, without jurisdiction and bad-in-law. 1(b). That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuance of the notice under s. 148 of the Act, merely on the basis of borrowed satisfaction of some other officer without having any satisfaction of his own on the subject issues. 1(c). That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuance of the notice under s. 148 of the Act, without considering the material fact that the notice under s. 148 of the Act was issued by the AO without first obtaining an appropriate sanction from an appropriate authority as prescribed under the then prevailing provisions of section 151 of the Act.

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1(d). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuance of the notice under s. 148 of the Act, without considering the material fact that first of all, the sanction was granted by an inappropriate authority and secondly, the sanction so granted was not in accordance with law, inasmuch, the sanction was granted in a mechanical manner and without application of mind. 2(a). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the findings given by the AO to the effect that the appellant company had booked excessive capital expenditure in its books of account under the garb of bogus payments aggregating to a sum of Rs.34,43,98,002/- to vendors during the relevant previous year and as also, in upholding the findings of the AO to the effect that the depreciation claimed by the appellant company in the subsequent years, on the enhanced value of Rs. 34,43,98,002/-, be disallowed in such years, without properly considering and appreciating the facts and circumstances of the case and as also detailed explanation of the appellant, made before him along with necessary documentary evidences. 2(b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO's allegation of bogus payments to vendors, merely on the basis of a statement of one of the employees of the appellant company recorded during the course of search, without considering the material fact that such statement was subsequently retracted and therefore, the same was not having any evidentiary value in the eyes of law. 2(c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO's allegation of bogus payments to vendors, without considering and appreciating the material fact that during the course of the assessment proceedings, the appellant was not given any opportunity of cross- examination of the persons on whose statements the AO had placed reliance for drawing adverse inferences against the appellant. 2(d) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO's allegation of bogus payments to vendors, by placing reliance upon the data allegedly recovered from the electronic devices without first complying with the provisions of the Indian Evidence Act, 1872 and The Information Technology Act, 2000 in letters and spirit. 2(e) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO's allegation of bogus payments to vendors, merely on the basis of certain excel sheets recovered from some personal email correspondence by one of the ex-employees of the appellant company, without considering and appreciating the material fact that at the first place, such excel sheets were not having any evidentiary value and secondly, the same were neither prepared by any of the authorized functionaries of the appellant company, nor the appellant company was aware of any preparation of such excel sheets.

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2(f) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the AO's allegation of bogus payments to vendors, without considering and appreciating the material fact that during the course of the assessment proceedings, the AO had not made any independent inquiry by way of issuance of any summons under s.131 or letter under s.133(6) of the Act to the concerning vendors. 3(a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.1,03,31,940/- made by the AO in the appellant's income on the allegation of payment of commission to various vendors in lieu of bogus capital expenditure, by holding the same as unexplained expenditure of the appellant under s. 69C of the Act without properly considering and appreciating the explanation of the appellant to the effect that the entire financial transactions undertaken by it during the relevant previous year with various vendors were fully genuine and duly supported by credible evidences and therefore, it was neither required, nor it had made any payment of commission to any vendor at any point of time. 3(b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the impugned addition of Rs. 1,03,31,940/- made by the AO in the appellant's income, under s. 69C of the Act, without considering the material fact that the entire capital expenditure incurred by the appellant were fully explained and were also supported by documentary evidences and therefore, the action of the ld. CIT(A) in upholding the AO's action of invoking the provisions of section 69C of the Act, without first finding any defect or discrepancy in the explanation and the documentary evidences furnished by the appellant, was completely unjustified, unwarranted and bad-in-law. 3(c) That, without prejudice to the above and without in any manner admitting any payment of commission, the learned CIT(A) grossly erred, both on facts and in law, in confirming the impugned addition of Rs.1,03,31,940/- in the appellant's income as unexplained expenditure under s. 69C of the Act, without considering the material fact that the sources of the alleged commission payment were fully explained being out of the alleged cash generated through vendors, as per the version of the AO himself. 4.That, without prejudice to the above and without in any manner admitting any of the allegations made against the appellant, the CIT(A) grossly erred in confirming the AO's presumption drawn against the appellant to the effect that the appellant had not actually incurred certain capital expenditure as claimed by it in its books of account, merely on the assumption of receipt of cash by the appellant company from the various vendors, without considering and appreciating the material fact that such an assumption as regard to the receipt of cash from the vendors, ipso facto, could not have been a reason for making assumption as regard to the non- incurrence of capital expenditure by the appellant.”

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1(d). In these grounds, the assessee assails the AO’s action of issuance of

notice u/s 148 as well as passing of assessment-order u/s 147 on the basis

of illegal approval u/s 151 obtained by AO from inappropriate authority. For

this purpose, Ld. AR carried us to section 147 which is the primary section

empowering the AO to make assessment or reassessment. The said section

147 reads thus:

“147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year.” [Emphasis supplied] 5. Ld. AR submitted that the section 147 is ‘subject to the provisions of

section 148 to 153’ and sections 148 to 153 prescribe different-different

requirements, conditions, time-limitations, etc. Section 151 is one section

falling in the series of sections 148 to 153 and therefore section 147 is also

subject to section 151. The means, the AO must follow the provision of

section 151 but in present case, there is a violation of section 151.

Book to apprise the factual position. Firstly, he demonstrated that the AO

issued notice dated 30.03.2021 u/s 148 to assessee, the said notice is

scanned and re-produced below:

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proposal dated 22.10.2019 to the Joint Commissioner of Income-tax-I,

Bhopal whereupon the Joint Commissioner granted approval on 23.10.2019

as under:

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dated 30.03.2021 u/s 148 for AY 2015-16 on the basis of approval obtained

from and granted by Joint Commissioner. Having shown this, Ld. AR

submitted that the AY 2015-16 expired on 31.03.2016 and 4 years’ period

expired on 31.03.2020 and the AO issued notice on 30.03.2021 after expiry

of 4 years. Therefore, the assessee’s case is covered by section 151(1) and

not by section 151(2). For the sake of immediate understanding, the section

151 is re-produced below:

“151. Sanction for issue of notice.

(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued u/s 148 by an Assessing Officer, who is below the rank of Joint Commissioner unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.”

Ld. AR submitted that the section 151(1) clearly prescribes that no notice

‘shall’ be issued u/s 148 by AO after expiry of four years from the end of

relevant assessment year unless the Principal Chief Commissioner or Chief

Commissioner or Principal Commissioner or Commissioner is satisfied, on the

reasons recorded by AO that it is a ‘fit case’ for issue of notice. Admittedly,

the AO issued notice on 30.03.2021 for AY 2015-16, after expiry of four

years, on the strength of approval from Joint Commissioner and not from

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competent authority i.e. Principal Chief Commissioner or Chief Commissioner

or Principal Commissioner or Commissioner as prescribed in law. Therefore,

the notice issued by AO u/s 148 is violative of section 151(1) and illegal in

the eyes of law. When it so, the ultimate passing of assessment-order u/s

147 is also illegal. Therefore, the entire proceeding done by AO has to be

quashed.

before CIT(A) and made a detailed submission also but the CIT(A) has

wrongly rejected assessee’s submission and upheld AO’s action. The Ld. AR

made following pleadings to oppose the CIT(A)’s order:

9.1 The CIT(A) has observed that the AO sent proposal to Joint

Commissioner on 22.10.2019 and the Joint Commissioner had also granted

approval on 23.10.2019, which was before 31.03.2020 i.e. before expiry of 4

years’ period from end of AY 2015-16; therefore the AO was having a valid

approval in possession in terms of section 151(2). Ld. AR submitted that

such observation made by CIT(A) is very much faulty for the simple reason

that the AO actually issued notice to assessee on 30.03.2021 which was

beyond the outer limit of four years. He argued that the section 151(1) and

151(2) are independent of each other and prescribe clear-cut and altogether

different provisions for issuance of notices based on time-frame. While

section 151(1) requires approval to be taken from higher authorities, namely

Principal Chief Commissioner or Chief Commissioner or Principal

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Commissioner or Commissioner for issuance of notice after expiry of four

years, section 151(2) permits issuance of notice within four years after

obtaining approval from much lower-level authority, namely Joint

Commissioner. When the law provides a clear-cut mechanism, the statutory

function has to be performed in the manner prescribed or it is not to be

done at all; there cannot be any other option. Ld. AR submitted that if the

AO is allowed to obtain approval within four years from lower-authority in

terms of section 151(2), just keep such approval in file and subsequently

issue notice after four years, it would be a clear-cut case of circumventing,

defiance and violation of section 151(1) and by-passing the authority vested

in Principal Chief Commissioner or Chief Commissioner or Principal

Commissioner or Commissioner who are only the competent authorities to

grant approval. Therefore, any such attempt or action of AO must be viewed

illegal and invalid.

9.2 That the CIT(A) has also observed that the issuance of notice on

30.03.2021 by AO is saved by Taxation and Other Laws (Relaxation of

Certain Provisions) Ordinance, 2020 dated 31.03.2020 [“TOLA”]

promulgated to deal with Covid-19 pandemic. But such observation of

CIT(A) is also bad. To show this, Ld. AR has filed a copy of TOLA in Case-law

Paper-Book and invited our attention to the following provision thereof:

“3(1) Where, any time limit has been specified in, or prescribed or notified under, the specified Act which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020 or such other date after the 29th

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day of June, 2020 as the Central Government may, by notification, specify in this behalf, for the completion or compliance of such action as – (a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the specified Act; or (b) /(c) XXX (not re-produced being irrelevant)” Ld. AR submitted that it is true that TOLA has granted several

extensions/relaxations to tax authorities due to Covid-19 Pandemic but

there are two vital propositions in assessee’s case to be taken note of. These

are as follows : (i) The assessee’s case relates to AY 2015-16 for which the

AO had time to issue notice u/s 148, of course after obtaining a proper

approval u/s 151(1), within 6 years from end of AY 2015-16, therefore the

time-limit to issue notice would expire on 31.03.2022. Being so, the TOLA is

not applicable because section 3(1)(a) of TOLA, re-produced above, clearly

prescribes its applicability to cases where the time-limit for issuing notice

was to expire during 20.03.2020 to 29.06.2020 or such other date after

29.06.2020 as the Central Govt. may notify. Since the Central Govt.

ultimately notified 31.03.2021, the section 3(1)(a) was applicable only for the

situations where the time-limit would expire upto cut-off date of 31.03.2021.

In assessee’s case, the time limit to issue notice was not expiring on

31.03.2021, the AO had time-limit upto 31.03.2022; and (ii) Even if the

TOLA may have extended the time-limit to issue notice as prescribed in

section 149 of the Act but that would not amount to amending the

provisions of section 151(1)/(2) requiring approval from a specific authority.

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Ld. AR submitted that exactly these twin-propositions of assessee’s case

have been dealt and decided by Hon’ble Mumbai High Court in a series of

decisions wherein the Hon’ble High Court was pleased to quash the

proceedings undertaken by AO:

(a) JM Financial and Investment Consultancy Services Private Limited Vs. ACIT, Circle-3(2)(1) and others order dated 04.04.2022: (2023) 451 ITR 205 (Bombay HC) / (2022) (4) TMI 1446 (b) Voltas Limited Vs. ACIT, Circle-8(3)(1), Mumbai (2022) (4) TMI 594, order dated 05.04.2022 (c) Asian Paints Ltd. Vs. ACIT, Circle-3(4), Mumbai and others (2022) (5) TMI 61, order dated 26.04.2022 (d) Johnson and Jonson Private Limited Vs. DCIT, Circle-3(4) and others (2022) (5) TMI 339, order dated 04.05.2022. 10. With these submissions, Ld. AR strongly contended that the notice

issued by AO u/s 148 after expiry of four years from end of relevant

assessment-year without taking approval of competent authority prescribed

in section 151(1) is absolutely bad, illegal, invalid and cannot be sustained.

Therefore, the entire proceeding done by AO on the basis of such illegal

notice including passing of order u/s 147, is invalid in the eyes of law and

the only option is to quash the same as decided in various decisions quoted

by him.

raised this issue before CIT(A) but the CIT(A) has rejected after due

consideration. Ld. DR submitted that the AO has sent a valid proposal dated

22.10.2019 to Joint Commissioner and obtained a valid approval on

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23.10.2019; both of these events have taken place within 4 years. Ld. DR

submitted that there is no requirement in law that the AO must issue notice

immediately after receiving approval. According to Ld. DR, once the AO had

taken a valid approval from Joint Commissioner within 4 years in terms of

section 151(2), the AO could validly issue notice u/s 148 even after expiry of

4 years without taking approval from authorities prescribed in section

151(1). Therefore, there is nothing wrong in the notice issued by AO.

Without prejudice, Ld. DR also submitted that w.e.f. 15.03.2020/

20.03.2020, there was Covid-19 Pandemic in the country due to which the

entire system had come to a halt. Hence the AO could not issue notice

before 31.03.2020. Ld. DR submitted that had there been no Covid, the AO

would have perhaps issued notice before 31.03.2020. But since the TOLA

extended time-limit uptill 31.03.2021, the AO issued notice on 30.03.2021.

Therefore also, the notice is saved by TOLA. Ld. DR made one more

submission that the assessee never objected AO’s action during assessment-

proceeding and participated in assessment proceeding, therefore the ir-

regularity in obtaining approval, even if there be, is saved by section 292BB

and the assessee is precluded from raising such an objection due to bar

imposed in section 292BB.

raised by Ld. DR and without prejudice to his earlier submission, when the

AO got approval as early as on 23.10.2019 and the Covid Pandemic came

into being on 15.03.2020/20.03.2020, the AO had about 5 months’ ample

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time to issue notice but the AO did not. Thus, the AO himself made a

serious lapse and now the revenue is just trying to cover up the AO’s lapse

by gaining sympathy and support from Covid-19 pandemic whereas the

Covid came into being in March, 2020. Therefore, the revenue cannot be

granted any such concession to cover up the lapse of AO. With regard to the

rescue sought by revenue on the strength of section 292BB, Ld. AR

submitted that the section 292BB applies in different situations, it does not

apply where the AO has not obtained a valid approval as mandated by

section 151(1) and yet issued notice to assessee.

orders of lower-authorities as well as the material held on record to which

our attention has been drawn. The issue being contested by assessee is with

respect to legality of notice issued u/s 148 by AO after expiry of four years

without having a valid approval in terms of section 151(1). The admitted

facts are such that the AO issued notice u/s 148 on 30.03.2021 on the

basis of approval dated 23.10.2019 obtained from Joint Commissioner in

terms of section 151(2). The assessee’s stand is that the AO issued notice

after expiry of four years from end of relevant assessment-year which could

have been done only after taking approval from Principal Chief Commissioner

or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1)

but since the AO has failed to do so, the notice is violative of section 151(1)

and illegal. We have anlaysed the situation of present case with reference to

the legal provisions and decided cases. At first, we find that section 147

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which enables the AO to undertake re-assessment proceeding as has been

done in present case, is subject to section 148 to 153 and thereby subject to

section 151. There can hardly be any dispute over this aspect. Going next,

we find that the section 151 is a mandatory provision which is very clear

from phraseology of section 151(1)/(2) itself. For the sake of immediate

reference, even at the cost of repetition, we re-produce section 151 which

reads as under:

“151. Sanction for issue of notice.

(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued u/s 148 by an Assessing Officer, who is below the rank of Joint Commissioner unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.”

A careful reading of above provision of section 151 shows that the sub-

section (1) as well as (2) use the wording “no notice shall be issued”. Thus,

the phraseology used by Parliament is negative and very much stricter. It

stops the AO from issuing a notice unless the proper authority prescribed

therein is satisfied that “it is a fit case for the issue of notice”. It is further

noteworthy that sub-section (1) prescribes a higher authority if the notice is

to be issued after expiry of four years. There is a significant purpose

involved in prescribing higher authority of department in sub-section (1) as

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compared to sub-section (2). The language is also very clear and does not

leave any scope of ambiguity and the words are very plain and specific. It is

clearly prescribed in sub-section (1) that “No notice shall be issued under

section 148 by an Assessing Officer, after the expiry of a period of four years

…..”. Thus, if the AO wants to issue notice after expiry of four years, this can

be done only under the approval of Principal Chief Commissioner or Chief

Commissioner or Principal Commissioner or Commissioner. The language does

not give any scope or flexibility to AO to obtain approval within four years

from lower-authority u/s 151(2), keep such approval in file and

subsequently issue notice after four years without taking approval from

higher authority u/s 151(1). Ld. AR is very much correct in submitting that

if such an approach is allowed to AO, this would be a clear circumvention as

well as defiance and violation of section 151(1) made by Parliament. We may

be hastened to add here that although in present appeal, the Ld. DR is

supporting AO’s approach just to save this case of department but otherwise

even the Principal Chief Commissioner or Chief Commissioner or Principal

Commissioner or Commissioner would not accept such approach of AO and

they would certainly say that such approach of AO is unauthoritative and

invalid. We may also add here that the AO was having time to issue notice

uptill 31.03.2022, therefore the AO could very well obtain a fresh approval

from Principal Chief Commissioner or Chief Commissioner or Principal

Commissioner or Commissioner u/s 151(1) and issue notice to assessee after

four years even though he had taken earlier approval u/s 151(2) from Joint

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Commissioner. In that case, there would have not been any lapse. But the

AO has not done so. Therefore, in the present case, we agree with Ld. AR’s

pleading that the AO was not having a valid approval from a competent

authority as required u/s 151(1), hence the notice issued u/s 148 suffers

from an invalidity.

approval on 23.10.2019 and the four years period was available upto

31.03.2020 but the AO could not issue notice because of Covid-19 pandemic

is not having any strength. We find a strong merit in the argument of Ld. AR

that the AO got approval as early as on 23.10.2019 and the Covid Pandemic

came into being on 15.03.2020/20.03.2020, therefore the AO had about 5

months’ ample time to issue notice but still the AO did not issue. Thus, the

AO himself made a serious lapse and now the revenue is just trying to cover

up the AO’s lapse by gaining sympathy and support from Covid-19

pandemic whereas the Covid came into being in March, 2020. Therefore, the

revenue cannot be granted any such concession to cover up the lapse of AO.

We are in full agreement with Ld. AR’s submission. There is one more

dimension to this very argument being claimed by revenue. The revenue is

claiming that due to Taxation and Other Laws (Relaxation of Certain

Provisions) Ordinance, 2020 dated 31.03.2020 [“TOLA”], there was an

extension of time-limit. But this argument is also not acceptable because of

direct decisions of Hon’ble Mumbai High Court governing assessee’s

facts/propositions as discussed in foregoing Para No. 9.2 at length. While

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Ld. AR has quoted several decisions but we re-produce below the first in

sequence referred by Ld. AR i.e. JM Financial and Investment

Consultancy Services Private Limited Vs. ACIT, Circle-3(2)(1) and

others order dated 04.04.2022: (2023) 451 ITR 205 (Bombay HC) /

(2022) (4) TMI 1446:

“1 Petitioner is impugning a notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 (the Act) for Assessment Year 2015-2016, an order dated 24th January 2022 rejecting petitioner's objections to reopening, the sanction granted under Section 151 of the Act dated 26th March 2021 for issuance of notice under Section 148 of the Act and a subsequent notice dated 24th January 2022 under Section 142(1) of the Act.

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Additional Commissioner of Income Tax was a valid approval because the Additional Commissioner of Income Tax was a competent authority.

[Emphasis supplied]

We have already noted the propositions of assessee’s case in foregoing Para

No. 9.2 and need not re-narrate same to avoid repetition. We only suffice to

mention that there is no rebuttal or contradiction by revenue against those

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propositions. Therefore, the assessee’s case is straightaway covered by Para

No. 6 & 7 of the above decision of Hon’ble Mumbai High Court. Respectfully,

following the same, we are of the considered view that the TOLA is not

appliable and in any case, the TOLA has not amended section 151. Hence,

the revenue’s claim that its case is protected by TOLA is meritless and liable

to rejected.

assessee never objected AO’s action during assessment-proceeding and

participated in assessment proceeding, therefore the ir-regularity in

obtaining approval is saved by section 292BB and the assessee is precluded

from raising such an objection due to bar imposed in section 292BB. In this

regard, we re-produce section 292BB which reads as under:

“292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was— (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.” Thus, the section 292BB has a limited application, it operates in only one of

the three situations mentioned in (a), (b) or (c) which are basically situations

of ir-regularity in “service” of notice. In present case of assessee, the AO has

issued notice u/s 148 without having a valid approval u/s 151(1) which is

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M/s DB Power Limited, Bhopal ITA Nos. 68/Ind/2023 and 73/Ind/2023- A.Y. 2015-16

not at all covered by section 292BB. Therefore, the Ld. DR’s pleading that

the revenue has protection of section 292BB is meritless and liable to be

rejected.

all contentions of parties. That brings us to conclude that the AO has issued

notice u/s 148 without having a valid approval mandated by section 151(1).

Being so, we are of considered view that the revenue’s case is suffering from

jurisdictional defect and the entire proceeding u/s 148 / 147 undertaken by

AO is illegal and unsustainable. We, therefore, allow ground 1(a), 1(c) and

1(d) of assessee’s appeal and quash the order passed by AO. Consequently,

we make it clear that not only the additions made by AO are deleted but also

the adverse conclusion made by AO for not allowing depreciation in

subsequent years on enhanced value of assets is also quashed. The AO shall

allow depreciation on full value of assets (including the enhanced value of

Rs. 34,43,98,002/- alleged by AO) in subsequent years. Ordered

accordingly.

Revenue’s appeal:

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scope for survival of revenue’s appeal. Consequently, revenue’s appeal is dismissed.

dismissed.

Order pronounced in open court on 24.01.2024.

sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore

िदनांक / Dated : 24.01.2024.

CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

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