ASHIANA MANUFACTURING INDIA LIMITED,RAJASTHAN V. DCIT,CIRCLE-1(1), DELHI

ITA 2998/DEL/2024

AI Insights

The case involves M/s. Ashiana Manufacturing India Ltd appealing against the order of the National Faceless Appeal Centre (NFAC), which confirmed the addition of Rs 93,63,800 under section 69A of the Income-tax Act, 1961. The primary legal contention was the validity of the reassessment under section 147, challenged by the assessee on grounds that the notice was improperly signed and the reassessment was based on non-genuine trading activities alleged by the Assessing Officer. The Tribunal examined the procedural and substantive validity of the reassessment, ultimately finding it to be flawed and thus quashing the proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839830 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-06-2024
• Other Referred Cases: TKS Builders P Ltd vs ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: K. SAMPATH
• Keywords: Business income; Reassessment proceedings; Competent authority
• Section: 147; 148; 144; 68

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 2998/Del/2024 (Assessment Year: 2014-15) M/s.Ashiana Manufacturing India Ltd, A-47 & 50, Riico Industrial Ara, Kashrani, Bhiwadi Industrial Area, Alwar Rajasthan Vs. DCIT, Circle-1(1), New Delhi (Appellant) (Respondent) PAN: AAFCS0782D Assessee by : Shri K. Sampath, Adv Shri V. Rajakumar, Adv Revenue by: Shri Ajay Kumar Arora, Sr. DR Date of Hearing 11/12/2025 Date of pronouncement 25/02/2026 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No. 2998/Del/2024 for AY 2014-15, arises out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 07.05.2024 against the order of assessment passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.05.2023 by the Assessing Officer, NeFAC, Delhi (hereinafter referred to as ‘ld. AO’). 2. The only issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the addition made in the sum of Rs 93,63,800/- under section 69A of the Act in the facts and circumstances of the instant case. The Assessee had also raised an additional ground on 8-4- 2025 challenging the validity of reassessment under section 147 of the Act. Printed from counselvise.com ITA No. 2998/Del/2024 M/s.Ashiana Manufacturing India Ltd Page | 2 We find that the additional ground raised by the Assessee goes to the root of the matter and the facts relevant for its adjudication are on record. Hence the same are hereby admitted and taken up for adjudication along with original ground raised by the Assessee. 3. We have heard the rival submissions and perused the materials available on record. The first objection raised by the Learned AR while challenging the validity of notice under Section 148 of the Act is that the notice under Section 148 of the Act has been signed by the Jurisdictional Assessing Officer (JAO) instead of Faceless Assessing Officer (FAO). This issue is no longer res integra in view of the decision of the Hon’ble Jurisdictional Delhi High Court in the case of TKS Builders P Ltd vs ITO reported in 469 ITR 657 (Del), wherein the Hon’ble Delhi High Court has decided the very same issue against the Assessee. Hence this proposition advanced by the Learned AR is hereby dismissed. 4. The second proposition made out by the Learned AR is that the Learned AO in the order passed under section 148A(d) of the Act dated 22- 7-2022 had mentioned that assessee had carried out coordinated and pre mediated trading on the Bombay Stock Exchange and erstwhile United Stock Exchange by engaging in reversal trades in illiquid stock options resulting in non-genuine business loss/ gains to the beneficiary assessees and that the assessee herein is a party to such manipulation. The Learned AO in Para 2.1 of the said order had mentioned that the assessee had purchased stock options for an aggregate premium value amounting to Rs. 66,04,075/- and sold the same for an aggregate premium value of Rs. 1,59,67,875/- resulting in a profit of Rs. 93,63,800/-. Both the buy and sell trades have been executed through the same broker M/s R K Stock Holding Pvt. Ltd. on the Bombay Stock Exchange. The Learned AO noted that SEBI has been investigating cases involving reversal trades covering the period 1- Printed from counselvise.com ITA No. 2998/Del/2024 M/s.Ashiana Manufacturing India Ltd Page | 3 4-2014 to 31-3-2015 and in the interim order dated 20-8-2015, the SEBI had found that the loss-making entities were trading mainly in options on individual stocks which were thinly traded. The trades by these loss-making entities, in many cases, contributed to 70 to 100% of total traded volume for the contracts on those days. The trading done by loss-making entities in stock options in the above manner, accounted for significant proportion of their overall trading on that segment. On majority of occasions, the quantity of stock options bought and sold by the loss-making entities for a contract was identical, however, there was significant difference in the sale value and buy value of the transactions resulting into significant loss to the loss-making entities. The Learned AO had noted that this loss is not a genuine loss as it had emanated out of pre-planned and rapid reverse trades and it is an unfair trade practice. We are in agreement with the argument advanced by the Learned AR in this regard that the aforesaid observations of the Learned AO is totally not germane to the facts of the instant case before us as assesssee herein had actually made profit of Rs 93,63,800/- and that all the allegations levelled were on persons buying non-genuine losses. 4.1. Further the Learned AO observed that assessee for the Assessment Year 2014-15 had shown business income of Rs 3,15,20,361/- which was totally set off with brought forward losses of Assessment Year 2012-13. It is pertinent to note that the Learned AO had never sought to disturb the nature of losses and genuinity of losses that arose in Assessment Year 2012-13. Hence we hold that the entire observations made by the Learned AO are totally irrelevant to the facts of the instant case clearly depicting complete non-application of mind both on the part of the Learned AO and as well as the competent authority granting approval under section 151 of the Act. This also makes the entire approval proceedings under section 151 Printed from counselvise.com ITA No. 2998/Del/2024 M/s.Ashiana Manufacturing India Ltd Page | 4 of the Act an empty formality. All these collectively contribute to the scenario of entire reassessment proceedings getting vitiated. Hence the assumption of jurisdiction under section 147 of the Act by the Learned AO itself is flawed as it is based on irrelevant facts and mechanical approval by the competent authority for reopening. 4.2. We find that the Learned AO finally concludes that the assessee had earned non-genuine gain amounting to Rs 93,63,800/- which has been set off against unutilized losses of Assessment Year 2012-13. But the said gain of Rs 93,63,800/- has been already offered to tax by the assessee in the return of income itself. While this is so, where is the escapement of income by assessee? As stated in previous paragraph, the Learned AO is not seeking to disturb the genuinity of loss that arose in Assessment Year 2012- 13. Hence the said loss is very much available for set off against the business income in Assessment Year 2014-15. The alleged non-genuine gain of Rs 93,63,800/- has been duly shown as business income by the assessee in the return of income and the same had been set off with brought forward business loss of Assessment Year 2012-13 which is permissible in the statute. Hence we hold that there is no escapement of income and consequentially there could be no valid formation of belief on the part of the Learned AO that income of the assessee had escaped assessment warranting reopening. When the foundation / edifice of formation of belief itself is totally flawed, the entire superstructure falls. Hence the assumption of jurisdiction under section 147 of the Act is totally flawed on this count which makes the entire re-assessment proceedings void abinitio. 4.3. We also hold that even if the alleged non-genuine gain of Rs 93,63,800/- is sought to be treated as income in the nature as referred to in section 68 of the Act in order to invoke provisions of section 115BBE of the Act (i.e. enhanced rate of tax), the provisions of section 115BBE of the Act Printed from counselvise.com ITA No. 2998/Del/2024 M/s.Ashiana Manufacturing India Ltd Page | 5 duly permitted set off of loss with the said income upto 31.3.2017 and only from 1.4.2017, the law was amended prohibiting the set off. Hence there could not be any valid formation of belief in the mind of the Learned AO that income of the assessee had escaped assessment. 5. In view of the aforesaid observations, we have no hesitation to quash the entire reassessment proceedings as void abinitio for more than one reason as detailed above. Since the entire reassessment proceedings are quashed, the other grounds raised by the assessee on merits need not be gone into and they are left open. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25/02/2026. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25/02/2026 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "