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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI VIMAL KUMAR
O R D E R
PER VIMAL KUMAR, JUDICIAL MEMBER:
The appeal filed by the assessee is against order dated 11.11.2024 of Learned Commissioner of Income-Tax (Appeals)-3, Gurgaon (hereinafter referred as “the Ld. CIT(A)”) under Section 250(6) of the Income Tax Act, 1961 ( hereinafter referred as “the Act”) arising out of assessment order dated 27.02.2024 of the Learned Assessing Officer/Assistant Commissioner of Income Tax, Central Circle, Faridabad (hereinafter referred as “Ld. AO") under Section 147 the Act for assessment year 2019-20.
Brief facts of case are that a search & seizure operation under Section 132 of the Act was conducted on 10.11.2021 at the residential as well as office premises of LSL Tools Group of companies and others. Consequent upon implementation of the Faceless Assessment Scheme, Search cases were transferred from the jurisdictional assessing authorities to the central charges by the Ld. PCIT, Gurugram vide order dated 23.12.2022. The case of the assessee was re-opened with prior approval of Ld. PCIT, Gurugram. Accordingly, notice under Section 148 of the Act was issued and served upon the assessee on 26.03.2023. In response to this notice, the assessee filed its ITR, declaring income of Rs.2,33,45,110/- on 01.04.2023. Notice under section 142(1) of the I.T. Act along with a questionnaire was issued. In response to notice and questionnaire, assessee filed replies and submissions. On completion of assessment proceedings, Ld. AO vide order dated 27.02.2024 made additions of Rs.36,03,436/- and Rs.3,436/-.
3. Against order dated 27.02.2024 of Ld. AO, the appellant/assessee preferred appeal before the Ld. CIT(A) which was dismissed vide order dated 11.11.2024.
4. Being aggrieved, the appellant/assessee preferred appeal with following grounds:
“1. That the learned Commissioner of Income Tax (Appeals)-3, Gurgaon has grossly erred both in law and, on facts in upholding the determination of income made by the learned Assistant Commissioner of Income Tax, Central Circle, Farida 1, New of the appellant company at Rs. 2,69,48,546/- as against declared income of Rs. 2,35,45,110/- in an order of assessment dated 27.2.2024 u/s 147 of the Act.
2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147 of the Act without appreciating that the same were without jurisdiction and hence deserved to be quashed as such.
That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that initiation of proceedings was mechanical and without any application of mind much less independent application of mind, therefore the notice issued u/s 148 of the Act was an invalid notice and assumption u/s 147 of the Act was without jurisdiction. 3.1 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that Explanation 2 to section 148 of the Act has no application to the facts of the appellant and therefore assumption u/s 147 of the Act was without jurisdiction. 3.2 That in absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147 of the Act are invalid and deserve to be quashed as such. 3.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that initiation of proceedings by issuance of notice u/s 148 of the Act by the learned Jurisdictional Assessing Officer is contrary to section 151A of the Act; and therefore the assumption of jurisdiction was not in accordance with law.
4. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding a disallowance of Rs. 36,00,000/- representing salary paid by the appellant company to its director Smt. Sonia Singla by invoking section 37 of the Act. 4.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the director is qualified person and once salary paid stands assessed to tax at maximum marginal rate in the hands of director, no disallowance could validly be sustained by invoking section 37 of the Act.
4.2 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are factually incorrect, legally misconceived and wholly untenable. 4.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the submissions made by the appellant company and, evidences placed on record and, therefore, the disallowance upheld is not in accordance with law.
5. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining disallowance of Rs. 3,436/- representing the employees contribution to provident fund by invoking the provisions contained in section 2(24)(x) read with section 36(1)(v)(a) of the Act.
6. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the levy of interest of Rs. 5,91,416/- u/s 234B of the Act and, interest of Rs. 30,734/- u/s 234C of the Act which are not leviable on the facts of the appellant company.”
5. Learned Authorized Representative for the appellant/assessee submitted that issue of the initiation of proceedings for Assessment Year 2019-20 by issuance of notice dated 26.03.2023 u/s 148 of the Act by the learned Jurisdictional Assessing officer is contrary to section 151A of the Act and is no longer res integra in view of binding judgment of Hon'ble High Court of Punjab & Haryana at Chandigarh in the case of appellant itself for the assessment years 2015-16, 2016-17 and 2018-19, a tabulated chart is hereunder:
S. Assessment Date on which Notice issued by Jurisdictional Notice u/s 148 Assessing officer u/s 148 of the Act No. Year issued by and quashed by Hon'ble High Court of Punjab & Haryana at Chandigarh Jurisdictional Assessing officer 1 2015-16 22.03.2015 Decided the issue in favour of appellant in CWP-11685-2025, which reads as: (228-229 of Paper Book) 1. Challenge in the present petition is to notice dated 22.03.2025 issued under Section 148 of the Income Tax Act, 1961 (for short 'Act 1961") and all consequential actions, for AY 2015-2016.
2. Learned counsel for the petitioner contends that the issue involved in the present writ petition is covered by the judgment passed by a Co-ordinate Bench of this Court in the cases of Jatinder Singh Bhangu vs. Union of India and others, passed in CWP No. 15745-2024 and connected matter, decided on 19.07.2024 and Jasjit Singh vs. Union of India and others (CWP No. 21509- 2023 and other connected matters), decided on 29.07.2024.
3. Learned counsel appearing for Union of India has also not disputed the same.
We have heard learned counsel for the parties and perused the whole records of the case.
The petitioner has challenged the notice dated 22.03.2025 issued under Section 148 of the Act, 1961 and all consequential actions, for AY 2015-2016 on the ground that the Issuing Authority had no jurisdiction to issue the same, in view of the circular/notification 5 dated 29.03.2022 of the CBDT, wherein, it has been specifically enumerated that the NFAC has exclusive power to issue the notice under Section 148 of the Act, 1961.
A Co-ordinate Bench of this Court in Jatinder Singh Bhangu's case (supra) and Jasjit Singh's case (supra), allowed the writ petitions on the same issue, as raised in the present writ petition, by granting liberty to the revenue to follow the procedure as laid down under the Act, 1961 and proceed accordingly, if so advised.
In view of the above, the present writ petition is disposed of, in terms of Jatinder Singh Bhangu's case (supra), decided on 19.07.2024 and Jasjit Singh's case (supra), decided on 29.07.2024 2 2016-17 30.03.2025 Decided the issue in favour of assessee in CWP-11683-2025 (226- 227 of Paper Book) 3 2018-19 22.03.2025 Decided the issue in favour of assessee in CWP-11667-2025 (230- 231 of paper books )
6. Learned Authorized Representative for the Department of Revenue relied on order of Ld. AO.
7. From examination of record in light of aforesaid rival contentions, it is crystal clear that the proceedings for assessment year 2019-20 were initiated by issuance of notice under Section 148 dated 26.03.2023. The initiation of proceedings by Ld. AO, contrary to provisions of section 151A has been held to be illegal for assessment years 2015-16, 2016-17 and 2018-19 by Hon'ble High Court vide order dated 06.05.2025, 29.04.2025 and 06.05.2025 page nos. 228- 220, 226-227 and 230-231 respectively of the paper books. In view of above binding precedents in assessee’s own case, the orders of Ld. AO dated 27.02.2024 and of Ld. CIT(A) dated 11.11.2024 being illegal are set aside. The grounds of appeal are accepted.