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Income Tax Appellate Tribunal, DELHI BENCH “E”, DELHI
Before: SH. SUDHIR KUMAR
Date of hearing: 24/09/2025 Date of Pronouncement: 17/10/2025 ORDER
PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] vide order dated 28.03.2025 pertaining to A.Y. 2016-17 arising out the assessment order dated 29.05.2023 u/s.147 of the Income- tax Act, 1961, (in short ‘the Act’).
The assessee has raised the following grounds in appeal: 1.On the facts and circumstances of the case and law, the order passed by the learned Commissioner of income tax(Appeals) [Ld. CIT(A)] is bad both in the eyes of the law and facts and thus, liable to be quashed.
2. On the facts and circumstances of the case the Ld. CIT(A) has erred both on facts and in law passing the order without giving assessee an opportunity of being heard, in violation of the principle of natural justice.
3. On the facts and circumstances of the case the Ld. CIT(A) in confirming the order of the Assessing Officer (AO) without appreciating that assessment can only be initiated under section 153C of the Act based upon documents/ information found during the course of search of the third party.
4. On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the reassessment proceedings initiated by the AO by issuing notice u/s 148 which is barred by limitation as per the provisions of section 149 of the Act.
5. On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the assessment proceedings initiated by the AO as notice u/s 148 of the Act is liable to be quashed in the absence of Document identification Number (DIN) on the notice u/s 148 of the Act.
6. On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the action of the AO in going ahead with the assessment despite the fact that the proceedings initiated u/s 148 were in contravention to the provision of section 151A of the Act.
7. On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the action of the AO in reopening the case of the assessee without possessing the jurisdiction in terms of instruction no. 1/2011[F.No. 187/12/2010-IT(A-1) , dt 31-01-2011.
8. On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the initiation of proceedings under section 147 which is bad in law having been made without proper sanction as prescribed under section 151 of the Act. 9.(i) On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the reopening of the assessment proceedings u/s 147 of the Act without having valid information.
(ii) That the reassessment proceedings have been initiated on the basis of information without there being any independent application of mind. (iii) That the reassessment order passed by the AO is bad and liable to be quashed as the same has been reopened on the basis of the information which are vague and against the facts on record.
On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the action of the AO in issuing notice of demand u/s 156 of the Act which is in contravention to the provision of section 157A of the Act.
On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the reassessment of income at Rs.1,20,45,652/- as against the returned income of Rs.10,56,270/-. 12. (i) On the facts and circumstances of the case the, Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs.1,09,89,382/- u/s 69 A of the Act by treating the long term capital gain on sale of shares as unexplained money. (ii) That the AO has erred in making addition despite the transaction having been done through proper
banking channel and as per the Rules and regulations of the Stock Exchange. (iii) That the AO has erred both on facts and in law in making the aforesaid addition by arbitrarily rejecting the material and evidence brought on record by the appellant. 13. That the appellant craves leave to add, amend or alter any grounds of appeal.
3. The brief facts of the case are that the assessee has filed return of income for A.Y.2016-17 on 17-10-2016 declaring total income of Rs.10,56,270/- and exempt income of Rs. 1,10,28,815/-. The department has received the information that during the Financial Year 2015-16 the assessee had sold the shares of MM/s Yamini Investment Company Limited for a consideration of Rs.1,10,43,685/- and assessee has gained bogus long term capital gain (LTCG) of Rs. 1,09,89,382/- u/s 10(38) of the Act through this transaction. Notice under section 148A(b) of the Act was issued on 22-05-2022 and served upon the assessee. The case of the assessee was reopened u/s 147 of the Act after obtaining the approval from the competent authority and notice u/s 148of the Act was issued. The assessee was filed the return of income at Rs.10,56,270/- in the compliance of the notice. The authorized representative filed the submission in the compliance of the notice. The Assessing Officer completed the assessment after making the addition of Rs.1,09,89,382/- under section 69 of the Act as unexplained income.
4. Aggrieved the order of the AO the assessee filed the appeal before the Ld. CIT(A), who vide his order dated 28- 03-2025 dismissed the appeal. Being aggrieved the order of the Ld. CIT(A) the assessee is in appeal before the Tribunal.
5. Ld. Counsel for the assessee has raised the legal ground no.6 and stated that first notice u/s 148 was issued on 30-06-2021 for the A.Y. 2016-17 under the old reassessment tax regime, however due to the introduction of new reassessment tax regime from 01-04-2021 and in the compliance of the Hon’ble Supreme Court Order in the case of Ashish Agarwal [2022] 444 ITR 1 SC, notice dated 04-05-2022 u/s 148A(b) of the Act was issued on 22-05- 2022 and consequent order was passed under section 148A(d) of the Act on 18-07-2022 subsequently, notice u/s 148 of the Act was issued on 19-07-2022. The case of the assessee relates to the A.Y. 2016-17 and the order was passed on 18-07-2022 and notice u/s 148 of the Act was issued on 19-07-2022 after a period of three years from the end of relevant Assessment Year, the sanctioning authority as per the section 151(ii) of the Act should have been Principal Chief Commissioner or Principal Director General or Chief commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. This issue is squarely covered by the Judgement of Hon’ble Jurisdictional Delhi High Court in the case of Communist Party of India (Maxist) V. CIT(Ex) WP 9031/2023 dated 28-04-2025 and the case of Sampark Management Consultancy LLP v. DCIT, Circle -5(2) (1) Noida the Co-ordinate bench held as under:
& 6026 /Del/2024 dated June 25,2025. In the case of Sampark Management Consultancy LLP v. DCIT, Circle - 5(2) (1) Noida as under :- “We find that section 148 of the Act was substituted by the Finance Act, 2021 wet. 01.04.2021. Notice 14 of the Act as per the old provisions of section 148 of the Act applicable till 31.03.2021 should have been issued only upto 31.03.2021. The issue stands settled by the Hon'ble Supreme Court in Union of India vs Ashish Agarwal, 444 ITR 1 (SC) The assessee company was part of the litigations. The AO has issued notice u/s 148A(b) on 27.05.2022 and on 28.07.2021 order was passed u/s 148A(d) and issued notice is 148 of the Act on the same date, i.e, on 28.07.2022 in AY 2016-17 and while in AY 2017-18 on 27.07.2022 order was passed u/s 148A(d) and issued notice w/s 148 of the Act on 28.07.2022. This notice dated 28.07.2022 u/s 148 of the Act, available at page 14-15 of the paper book for AY 2016-17 and on pages 16-17 for PB for AY 2017- 18, and same are shown to be issued after obtaining approval of Principal Commissioner of Income-tax, Noida. This approval is contrary to the provisions of section 151 of the Act as amended/substituted by the Finance Act, 2021 because, as per section 151 of the Act, if more than three years have lapsed from the end of the relevant assessment year, approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. In the present assessment years, notices u/s 148 have been issued on 28.07.2022 after expiry of three years from the end of relevant assessment years. Accordingly, sanction/ approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in Union of India vs. Rajeev Bansal, 2024 (10) TMI 264 SUPREME COURT) and various decisions. Thus, the approval is not sustainable under law. The grounds as raised deserves to be sustained. Consequently, the appeals of the assessee are allowed.”
Reliance also placed on the following decisions: (i) Bhagwan Sahai Sharma v. Deputy Commissioner of Income Tax, Circle 13-2 Delhi and Anr 2025 (5) TMI 1502 Delhi High Court
(ii) H And M Hennes And Mauritz Retail Private Limited vs. The Assistant Commissioner of Income Tax, circle 10(1) New Delhi & Anr. (iii) Ramesh Bachulal Mehta v. Income Tax Officer ward- 27(3) (1) Mumbai & ors 2025 (8) TMI 1322, Hon’ble Bombay High Court (iv) Upneet Singh Arneja V ITO Ward-4591) New Delhi 2025 (8) TMI 1646 ITAT Delhi (v) M/s Essel Housing Projects P.Ltd V. DCIT, 2025 (vi) Ajay Duggal vs, ITO, dated 30- 07-2025 (vii) M/s Genpact India [holdings vs. ACIT, ITA No. 1527/del/2024 ITAT Delhi
The Ld. Sr. DR has relied the order of the lower authorities and submitted that the notice/ order was issued as per the directions of the Hon’ble Supreme Court in the case of Ashish Agarwal [2022] 444 ITR 1 SC. In the present case the notice was issued on 19-07-2022 for the A.Y. 2016-17 from the prior approval of the Pr. Commissioner, without, the approval of the authority specified u/s 151 of the Act. The notice was issued beyond the period of three years from the end of the relevant assessment year, thus in term of section 151 of the Act the sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. Respectfully following the decision of the Hon’ble High Cort and the Co-ordinate Bench we allowed the appeal of the assessee and quashed the assessment order dated 20-04-2023.
We allowed the appeal of the assessee on legal ground the other grounds have become academic and keep them open for adjudication.
In the result the appeal of the assessee is allowed.
Order pronounced in the open court on 17.10.2025.