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

आदेश / O R D E R

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

M/s DB Power Limited, Bhopal 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.

2. The background facts leading to present matters are as under:

(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

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

3. The assessee has raised following grounds:

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.

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

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.

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

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.”

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

4. Ld. AR for assessee started pleadings qua Ground No. 1(a), 1(c) and 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.

6. To show such violation, Ld. AR carried us to various Pages of Paper- 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:

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

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

7. Then, he showed that for obtaining approval u/s 151, the AO sent a 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:

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

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

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

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

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

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

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.

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.

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

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

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

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

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

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

8. Petition is allowed in terms of prayer clause - (a)…”

[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

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

“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 M/s DB Power Limited, Bhopal 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.

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:

Order pronounced in open court on 24.01.2024.