INCOME TAX OFFICER, I P ESTATE vs. BANSAL INSULATION PRODUCTS PVT LTD., OKHLA DELHI

4. Whether the Ld. CIT(A) has erred in allowing the appeal of the assessee by holding that the assessment made u/s 147 on 27.3.2022 is in violation of principle of natural justice by ignoring the fact that the reasons for reopening the case had been provided to the assessee before the completion of assessment proceedings u/s 147.

5. The appellant craves leave to add, alter, amend, modify or delete all or any of the grounds of appeal at any time before or during the hearing of this appeal.”

3. On the other hand, the Ld. Counsel for the assessee strongly supported the orders of the Ld. CIT(Appeals).

4. Ld. Counsel for the assessee further made his submissions as under:

“4. The CIT (A) has observed that the AO has made addition of Rs.8,31,15,448/- U/s 68 of the Act as if the assessee has taken accommodation entries from these impugned entities. The AO has failed to appreciate that 3 the provisions of section 68 of the Act are not applicable where the amount in question represents purchases and the outstanding credit balance represent trade creditors. The provision of section 68 can only be invoked where any sum is found credited in the books of accounts of an assessee, maintained for any previous year. The appellant has neither taken any loan nor accepted any deposit from the impugned parties, but has actually made payment to such parties on account of the raw material. Section 68 which is deeming provision, is applicable only when the sum is found credited in the books of the assessee, and the assessee is not able to explain the nature and source or such credit. In this case there is no such credit and actually payment has been made by the assessee to such entities, hence the provision of section 68 are not applicable, at all.

5. The CIT (A) has observed that in this case, no discrepancy in the document submitted by the assessee has been highlighted and actually, the assessee has submitted all requisite documents (a) confirmed ledger account, (b) Copies of bank statements of the vendors, (c) Copy of Bank Statement of assessee company, (d) quantitative purchase summary of copper wire/rods, (e) Summary of production and duty, (f) Status of entities as downloaded from MCA website etc.

6. The CIT (A) has observed that if the purchases from the above impugned vendors are treated as bogus as alleged by the AO, the impugned purchases which is around 50% of total purchases of material by the assessee has to be reduced from the total quantity of material purchased/consumed production of finished goods which is required for admitted sale executed by the assessee during the year.

from the wing can be useful for making enquiry before issuance of notice U/s 148 but the assessment cannot be framed exclusively relied upon such information without making further enquiry.”

“Learned counsel for the petitioner states that pursuant to the directions of the Supreme Court in Union of India. Ashish Agarwal, 2022 SCC OnLine SC 543, the Petitioner was issued notices dated 2nd June, 2022 and 6th July, 2022 under Section 148A(b) of the Act alleging that petitioner had received accommodation entries of Rs.8,31,15,448/- from various entities. She states that the reassessment proceeding for the Assessment Year under consideration had already concluded vide reassessment order dated 27th March, 2022 passed under Section 147 of the Act pursuant to the reassessment notice dated 31 March, 2021 issued under [the erstwhile] Section 148 of the Act. She further states that the Petitioner has filed an appeal before the Commissioner of Income Tax (Appeals) ['CIT(A)'] against the assessment order dated 27th March, 2022 whereby an addition of Rs.8,31,15,448/- has been made to the income of the Petitioner on account of income from undisclosed sources under Section 68 of the Act. She emphasises that there cannot be a reassessment of a reassessment on the same allegations. Issue notice. Mr. Zoheb Hossain, learned Senior Standing Counsel for Revenue accepts notice. He has handed-over the following instructions received by him from the ITO, Ward-4(1), Delhi:- "Sir. As per discussion with the Ld. PCIT-1, Delhi the followings are the instruction in the above said case:-

2. The petitioner at Para 4.9 of the Writ Petition has disclosed that it has already filed an appeal before the Commissioner of Income Tax (Appeals) in Form 35 on 13.04.2022 u/s 246A of the Income Tax Act, 1961 against the reassessment order dated 27.03.2022.

5. In light of the above, the writ petition may be disposed of with liberty to the petitioner to approach the CIT(A) on any ground except the ground of limitation of notice dated 31.3.2021.

Regards, Jitender Nath ITO, Ward 4(1), Delhi.” Learned counsel for the petitioner undertakes that the petitioner has not taken and will not take the plea in any proceeding that the notice dated 31" March, 2021 was issued or dispatched beyond the limitation period, or on or after 01 April, 2021. 7

In view of the aforesaid and with consent of the parties, the impugned order under Section 148A(d) of the Act and the notice under Section 148 of the Act, both dated 28th July, 2022 are set aside and the present writ petition along with pending application stands disposed of. It is clarified that the present case is based on concession of the Respondent-Revenue and is confined to the present case only. MANMOHAN, J

MANMEET PRITAM SINGH ARORA, J”

7. Thus, in view of the above undertaking given by the assessee before the Hon’ble High Court the Assessee should not have raised/agitated the validity of notice issued u/s 148 of the Act dated 31.3.2021. The plea raised by the assessee before the Ld. CIT(A) on limitation of notice u/s 148, in our opinion should not have entertained by the Ld. CIT(A) since it is contrary to the undertaking given by the Assessee before the Hon’ble High Court. In the circumstances, the decision rendered by the Ld. CIT(A) holding that the assessment pursuant to the notice issued u/s 148 dated 31.3.2021 is barred by limitation, is hereby reversed by allowing ground nos. 3 & 4 of grounds of appeal of the Revenue.

9. On careful perusal of the Ld. CIT(A) findings, we do not see any good reason to interfere since the findings are based on evidences furnished by the assessee which proved beyond doubt that all these are outstanding trade creditors recorded in the books of account supported by purchase bills, vouchers etc. for which payments were made through banking channels sales against these purchases recorded in the books of account reflected in the VAT returns filed before the Sales Tax Authorities. Thus, we sustain the order of the Ld. CIT(A) in deleting the addition made u/s 68 on merits. Ground nos. 1 and 2 raised by the Revenue are rejected.

Order pronounced in the open court on 30.09.2025