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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: Ms. MADHUMITA ROY & SHRI NAVEEN CHANDRA
O R D E R PER Ms. MADHUMITA ROY, JM: are directed against the order dated 25.01.2024 (DIN & Order No.
ITBA/NFAC/S/250/2023-24/1060138812(1) passed by the CIT(A)/NFAC, Delhi , arising out of the order dated 30.05.2023 passed by the Assessment Unit DEL-W- (42)(1), under Section 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2013-14. Both these appeals were heard together and are being disposed of by a common order for the sake of convenience.
2. The Assessee in its appeal (ITA No. 952/Del/2024) has taken following grounds of appeal:
1 That on the facts and circumstances of the case the order of CIT(A)/NFAC is bad in law as well as on facts 2 That on the facts and circumstances of the case Ld CIT(A)/NFAC has erred in affirming the jurisdiction of AO under section 148. 3 That on the facts and circumstances of the case Ld. CIT(A)/NFAC has erred in ignoring that the AO has not followed the mandate of section 147 to 151 of the Income Tax Act, 1961. 4 That on the facts and circumstances of the case Ld. CIT(A)/NFAC instead of quashing the entire proceedings being void-ab-initio has erred in directing the AO to commence reassessment after the order of Customs department. 5 That on the facts and circumstances of the case Ld CIT(A)/NFAC failed to appreciate that the entire proceedings of 148 was triggered on the basis of illegal show cause of DRI, and hence not tenable in law. 6 Without prejudice to the above the CIT(A)/NFAC, while directing the AO to commence reassessment, has erred in overlooking the limitation provided u/s 148 r.w.s. 149 & 1084/Del/2024 7 On the facts and circumstances of the case, the order of CIT(A)/NFAC is a nullity as the same was passed mentioning incorrect dates/observation/facts in the order. 8 The Appellant craves the leave to add/modify/alter any ground during the course of hearing/pendency of appeal.
3. The Revenue in its appeal (ITA No. 1084/Del/2024) has taken following grounds of appeal:
“(1) The order of Ld.CIT(A) is not correct in law and on facts? (2) "Whether on the facts and circumstance of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 10,05,81,118/-/- made by AO on account of unexplained purchase expenditure u/s 69C r.w.s. 115BBE". (3) "Whether on facts and circumstances of the case, the Ld. CIT(A) has ignored the facts that nothing has been brought on record to counter the variation of cost disclosed by the assessee with respects to imports made by the assessee for evasion of custom duty during the relevant A.Y." (4) Whether on facts and circumstances of the case, the Ld. CIT(A) has ignored the facts that Hon'ble supreme Court has not commented on the facts of the SCN. Rather SCN was set aside based on the authority of the DRI to issue SCN." (5) The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing.”
Relevant facts of the case, in brief, as recorded by the Learned Assessing Officer are as under:
“(1) The assessee M/s. Genesis Associates Pvt Ltd., has filed its return of income u/s. 139 of I.T. Act for the assessment year 2013-14 on 30.09.2013 declaring loss of (Rs. 2,87,246/-). The main business of the company is & 1084/Del/2024 trading in Furniture including purchases by imports and sales to Wholesalers, Corporate, Institution, and Local Retail Customers. (2) In the instant case, Information was received from the Directorate of Revenue Intelligence (DRI), Hqrs I.P. Estate, New Delhi. The information is in the form of a Show-cause notice dated 17.01.2014 issued by the Directorate of Revenue Intelligence to M/s. Empire Safe Co., M/s. Genesis Associates Pvt. Ltd and M/s DD Graphics. Based on specificinformation, the Officers of Directorate of Revenue Intelligence initiated an investigation in respect of fraudulent imports made in the name of M/s. M/s Genesis Associates Pvt. Ltd., M/s. Empire Safe Co. and M/s DD Graphics. As per the information, these entities were involved in evasion of custom duty by way of mis-declaration in the description of goods as well as value of goods. Search was carried out by the Directorate of Revenue Intelligence (DRI) on the above mentioned entities.
The Directorate of Revenue Intelligence has re-determined/revised assessable value of the goods for recalculating duty evaded in the case of M/s Genesis Associated Pvt. Ltd. (AAACG4978Q) and the details of the same are as under:- FY Total value Total actual Differential value declared before assessable value of not declared in customs (in Rs. the goods (in Rs. books (in Rs.) 2012-13 5,29,21,637 15,35,02,755 10,05,81,118
(4) Open enquiries were conducted by issuing Summons u/s 131(1A) of Income Tax Act, 1961 to M/s Genesis Associates Pvt Ltd and other parties on 07.08.2014. Assessee during the year under consideration was engaged in the business of trading of furniture items. During the course of enquiry and verification it is found that Assessee Company has imported PS plates and mentioned the same in bill of entry as "plates used for structure" only. Similarly, Glass chatons were described in bill of entry as 'decoration'. (5) On perusal of Income Tax Return filed by the assessee company for A.Y 2013-14, it is seen that the assessee has shown a business turnover of Rs. 2,78,17,801/- with taxable income as NIL and with current yearloss of (Rs. 2,87,246/-).. On further analysis of the financials of the assessee and details and report of Investigation wing of the Department, it is found that the company has not disclosed value of import transactions amounting to Rs.
& 1084/Del/2024 10,05,81,118/- in its books of accounts during F.Y 2012-13 relevant to Assessment Year 2013-14. (6) Based on the information available on records, the case was reopened u/s 147 of I.T. Act by issuing the notice u/s 148 of 1.T. Act on 28/07/2022 to the assessee after obtaining the approval from the competent authority i.e. the Principal Chief Commissioner of Income Tax. In response to Notice U/s 148 of I.T. Act, the assessee has however not filed a fresh Return of income within the prescribed period of 30 days. By an e-submission made by assessee on 12-05-2023 i.e. after lapse of almost an year later, the assessee has stated that in response to the Notice u/s. 148 of the Act they have tried to file the return of income, but could not file the same due to error from the portal. The assessee has however requested to treat the original return of income filed by it u/s 139 of the Act may be treated as a return filed in response to Notice u/s. 148 of I.T. Act. Therefore, after replication of assessee's original return filed u/s. 139 of I.T. Act, Notice u/s. 143(2) of I.T. Act was issued to assessee on 08-05-2023. The case of assessee is covered by the judgment of Hon'ble Supreme Court in Union of India vs. Ashish Agarwal in Civil Appeal No. 3005/2022 (2022 SCC online SC 543) dated 04/05/2022. (7) Statutory notices u/s 143(2) and u/s 142(1) of I.T. Act were issued on various dates as mentioned above table were properly served upon the assessee company electronically on the available E-Mail ids with the Department.”
5. In reassessment proceedings the Learned Assessing Officer made addition of Rs. 10,05,81,118/- as income of the assessee from unknown sources and added the same to the income declared by the assessee, inter alia, by observing as under:
5.1 In view of detailed discussion in the preceding paragraphs, and also for the reasons that despite of giving sufficient opportunities, the assessee has not furnished any proper explanation regarding the undisclosed value of import purchase transactions undertaken by assessee during the year under consideration. In view of these circumstances, the Assessing Officer is left with no other alternatives than to treat the above-mentioned difference amount of Rs. 10,05,81,118/- being the undisclosed value of imports as unexplained purchases by imports, etc. as income of assessee company from & 1084/Del/2024 other unknown sources. Therefore, the above sum of Rs. 10,05,81,118/-is treated as unexplained purchase expenditure of the assessee for the year under consideration under section 69C of I.T. Act. and this sum is brought to tax accordingly for the Assessment Year 2013-14.”
6. Aggrieved against the order of Learned Assessing Officer the assessee preferred appeal before the Learned First Appellate Authority, who partly allowed the appeal, inter alia, by observing as under:
“I have carefully considered the submissions made by the Appellant. It is observed that Revenue Intelligence (Hars.) had conducted a Search operation on the Appellant on 23/07/2013 and Show cause notice No. DRI/F, No. 500/55/2013-C.I dated 17/01/2014 was issued to the Appellant. Based on this information, the AO issued notice u/s 148 of the IT. Act, 1961 on 27/03/2018 and assessment was completed u/s 147 r.w.s 143(3) on 13/12/2018 making an addition of Rs. 10,05,81,118/- u/s 69C r.w.s 115BBE. It is observed that the notice u/s 148 was issued on the basis of Show Cause Notice by the DRI in No. 50D/55/2013-C.I dated 17/01/2014. The Hon'ble Supreme Court in the case of Canon India Pvt. Ltd. Vrs. Commissioner of Customs in Civil Appeal No. 1827 of 2018 with C.A. No. 1875. 1832 & 3213 vide its judgement dated 09/03/2021 has held that the proceedings initiated by DRI by Issuing Show Cause Notices are invalid and without any authority of law and hence set aside. As a consequence of this direction by the Hon'ble Supreme Court, the Principal Commissioner of Customs (Import) ICB, Tughlakabad, New Delhi-110020 vide letter dated 7/4/2021 has ordered that the proceedings vide Show Cause Notice DRI in No. 500/55/2013-C.I dated 17/01/2014, which is the sole cause of action u/s 148 by the AD, are to be kept in abeyance till further order. Thus, it is seen that the Show Cause Notice of the DRI on the basis of which this assessment was reopened u/s 148 of the IT Act is stayed by the Department of customs. Therefore, there is no reason to presume undeclared import by the AO for bringing to tax the Income that has allegedly escaped assessment. The proceedings initiated by the AO u/s 148 are premature and any suppression of imports and consequent sale will be determined only by an order of the authority holding Jurisdiction in the Department of Customs and not the show cause notice of the DRI. In view of the above, the additions made by the AO u/s 69C r.w.s. 115BBE is hereby deleted. However, the AO is also further directed to
7. Aggrieved by the aforesaid order of the Learned First Appellate Authority the assessee as well as the Revenue are in appeal before us in respect of their respective grievances. First we take up assessee’s appeal for adjudication.
Learned counsel for the assessee at the outset submitted that the impugned notice under Section 148 of the Act for reopening is time barred and therefore the subsequent reassessment proceedings are bad ab initio. The Ld. Counsel has also filed written submissions and synopsis in this regard. For the sake of clarity the same is reproduced hereunder:
“Written submissions and synopsis At the very outset it is submitted that case of the Assessee is squarely covered by the judgment of Hon'ble Supreme Court in the case Union of India vs. Rajeev Bansal: 2024 SCC OnLine SC 2693. In the said decision the Hon'ble Supreme Court adjudicated on the issue whether the reopening made pursuant to the judgment of in the case of Union of India vs. Ashish Agarwal: (2023) 1 SCC 617 are time barred or not. The Hon'ble Court upheld the validity of TOLA and reassessments for the AY 2013-14 & 2014- 15 were held valid, with a caveat that 'surviving period' of every case has to be judged independently in view of para 112 of the said judgment. Relevant para of the judgment is reproduced hereunder for reference:
"112. Let us take the instance of a notice issued on May 1, 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show-cause notices will also come into effect from May 1, 2021. After accounting for all the exclusions, the Assessing Officer will have sixty-one days (days between May 1, 2021 and June & 1084/Del/2024 30, 2021) to issue a notice under section 148 of the new regime. This time starts ticking for the Assessing Officer after receiving the response of the assessee. In this instance, if the assessee submits the response on June 18, 2022, the Assessing Officer will have sixty-one days from June 18, 2022 to issue a reassessment notice under section 149 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on August 18, 2022."
Brief Facts:
1. A notice dated 28.06.2021 issued under section 148 of the Act was issued to the Assessee under the erstwhile provisions of the Act i.e. period prior to promulgation of Finance Act 2021-refer Annexure 1.
Judgment of the Hon'ble Supreme Court in the case of Ashish Agarwal (Supra) was pronounced wherein it was held that all the notices under erstwhile provisions of section 148 were deemed to be show cause notices under section 148A(b) of the Act.
Notice dated 14.05.2022 under section 148A(b) of the Act was issued, wherein it was asked to furnish reply to same by 29.05.2022-refer Annexure 2. The assessee could not furnish his response within the said time limit.
4. Order dated 28.06.2022 under section 148A(d) of the Act was passed and notice of similar date (UDIN intimated on 29.06.2022) under section 148 of the Act was issued, and the case of the Assessee was reopened - Annexure 3 & 4.
Further the Hon'ble Delhi High Court in the case of Ram Balram Buildhome Pvt. Ltd. vs. ITO: WP(C) 16232/2024 dealt with the issue whether the reassessment notice for AY 2013-14, could be said to be sustainable when tested on the principles enunciated in Rajeev Bansal (Supra). The following was held:
"65. Thus, in the facts of the present case, the last date for issuance of notice under Section 148 of the Act for AY 2013-14 under the statutory framework, as was existing prior to 01.04.2021 was
By virtue of Section 3(1) of TOLA time for completion of specified acts, which fell during the period 20.03.2020 to 31.12.2020 were extended till 30.06.2021. Thus, the notice dated 01.06.2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under Section 148 of the Act as was extended by TOLA. As noted above, the period from 01.06.2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal is required to be excluded by virtue of the third proviso to Section 149(1) of the Act.
Additionally, the period from the date of decision in Union of India & Ors. v. Ashish Agarwal till the date of providing material, as required to the accompanied with a notice under Section 148A(b) of the Act, is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A(b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act as held by the Supreme Court in Union of India & Ors. v. Rajeev Bansal.
In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022-the period of two weeks -is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act. The petitioner had furnished its response to the notice under Section 148A(b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date.
As noted above, by virtue of TOLA, the AO had period of twenty- nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on & 1084/Del/2024 12.07.2022.
Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation." Submissions:
In view of the aforesaid facts, it is submitted that case of the Assessee is covered by the judgment in case of Rajeev Bansal (Supra) as the notice dated 29.06.2022 is time barred after considering the surviving period as explained by the Hon'ble Court. Kindly refer the chart below:
Particulars Assessment Year 2013-14 Last Date to Issue notice u/s 148 as per Old Law 31.03.2020 s.149 (6 years from the end of relevant AY) Extended deadline to issue notice under section 148 30.06.2021 as per TOLA and notifications issued therein Notice issued under section 148 of the erstwhile 28.06.2021 provisions (A-1) Hon'ble Supreme Court Order dated 04.05.2022 in 04.05.2022 Ashish Agarwal's case deeming notice under section 148 issued under erstwhile law as Notice under section 148A(b) of New Law as amended by Finance Act, 2021 and directing that material/information be given in 30 days from date of the said order and assessees shall reply within two weeks thereafter. Notice under section 148A(b) providing material in 14.05.2022 pursuance of Hon'ble Supreme Court Order in Ashish Agarwal's case (A2) Time limit to file reply 29.05.2022 Ν.Α. Reply filed by the assessee Time excluded as per third proviso to section 149(1) 28.06.2021 to as per Supreme Court decision in Rajeev Bansal's 29.05.2022 case Le. from the date of original 148 notice which was deemed as show cause notice u/s 148A(b) by the decision of Ashish Agarwal till the supply of the & 1084/Del/2024 material and time allowed to the assessee to file the reply. Time that was available/left to issue notice under 2 days (28.06.2021 section 148 as per section 149 read with TOLA to 30.06.2021) Extended time to be given as per fourth proviso to 7 days (29.05.2022 section 149(1) + 7 days i.e.. 05.06.2022 Time limit to issue notice under section 148 as per 05.06.2022 05.06.2022 section 149 as amended by Finance Act, (7 days from 2021 as per Rajeev Bansal's case 29.05.2022) Date of notice under section 148 along with Order 28.06.2022* under Section 148A(d) (A-3+A-4)
*The date may be 29.06.2022 as the DIN in respect of Notice under Section 148 was issued on 29.06.2022. (The said intimation is attached as Annexure 5)
It can be clearly ascertainable from the above table that the last date to issued notice under section 148 as per Finance Act, 2021 was 05.06.2022, however, same was actually issued on 28.06.2022, which makes it time barred and therefore, rendering whole of the proceedings as null and void.
8. It is therefore requested to kindly annul the assessment order passed in the case of the Assessee and comply with the direction of Hon'ble Court.”
The Explanation made by the assessee as above taking into consideration the judgment passed by the Hon’ble Supreme Court dated 4.5.2022 in the case of Union of India v. Ashish Agarwal (2023) 1 SCC 617 and the order passed by the Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal 2024 SCC OnLine SC 2693 the time limit to issue notice under Section 148 in terms of amended provision of Section 149 as amended by the Finance Act, 2021, has become 29.5.2022, whereas the impugned notice under Section 148 along with found to be barred by limitation and, therefore, the entire proceedings are vitiated and thus quashed.
As the reassessment proceedings are being quashed by us in assessee’s appeal the appeal preferred by the Revenue has become infructuous and is dismissed accordingly.
In the result Assessee’s appeal is allowed and the is dismissed.
Order pronounced in open court on 13.11.2025.