AVON CONTAINNERS PVT. LTD.,FARIDABAD V. ACIT, CIRCLE-1, FARIDABAD

ITA 5161/DEL/2024

AI Insights

The case involves Avon Containers Pvt. Ltd., which appealed against the orders of the Assistant Commissioner of Income Tax and the CIT(A) concerning a reassessment for the Assessment Year 2012-13. The primary contention was the validity of the reopening of the assessment under section 148 of the Income Tax Act, 1961, which the assessee argued was based on incorrect and non-existent facts, and lacked proper approval under section 151. The Tribunal examined the procedural validity of the reopening, including the discrepancies in the reasons recorded for reopening and the approvals granted under section 151. The Tribunal concluded that the reopening was not valid, leading to the quashing of the subsequent orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773676 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2024
• Other Referred Cases: M/s Tia Enterprises Pvt. Ltd. vs ITO, Director of Income Tax Vs. Society for Worldwide Inter Bank Financial, Telecommunications, Rajiv Kumar Arora vs ITO, Aroni Commercials vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: DINESH KUMAR AGARWAL
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Income from undisclosed sources; Reopening of assessment; Principle of natural justice; Bogus Share capital; Opportunity of cross examination; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 68; 133(6)

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.5161/Del./2024, A.Y. 2012-13 Avon Containners Pvt. Ltd. 18/1, Mathura Road, Faridabad, Haryana- 121007 PAN: AADCA3625M Vs. Assistant Commissioner of Income Tax, Circle-1, Income Tax Office, Faridabad, Haryana (Appellant) (Respondent) Appellant by Shri Dinesh Kumar Agarwal, CA Respondent by Shri Javed Akhtar, CIT(DR) Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing 27/06/2025 Date of Pronouncement 23/09/2025 ORDER PER AVDHESH KUMAR MISHRA, AM The appeal for the Assessment Year (‘AY) 2012-13 filed by the assessee is directed against the order dated 30.10.2024 of the Ld. Commissioner of Income Tax (Appeals)-3, Gurgaon [‘CIT(A)’]. 2. The assessee has raised following grounds of appeal: - “1. That on the facts and in the circumstances of the case and in law, Ld. CIT Appeals erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that Ld. AO erred in initiating the reopening proceedings by issuing notice u/s 148 of the Act by issuing two different reasons to believe dated 22.03.2019 and 23.03.2019 vide letter dated 15.04.2019 and 25.10.2019 respectively without describing the reason Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 2 behind such action and ignoring the law that reasons to believe cannot be altered, changed or supplemented. There are major deviations in both the reasons which renders the reopening of case as illegal, invalid in law and void-ab-initio. 2. On the facts and circumstances of the case and in law, the assessment order passed by the assessing Officer liable to be quashed as there is no valid sanction/approval of the specified authority u/s 151 of the Income Tax Act, 1961 for issue of notice u/s 148 of the Act. Even delayed approval received by Ld. AO on 30.03.2019 was given on wrong facts, which is not related with the facts of the case. The above said issue is squarely covered by latest judgment of Hon'ble Delhi High Court in case of M/s Tia Enterprises Pvt. Ltd. vs ITO vide W.P.(C) 13903/2018, which was delivered on 26.09.2023. Hon'ble Apex Court also dismissed the SLP on 13.09.2024, which was filed by department against above said judgment of Delhi High Court. 3. That on the facts and in the circumstances of the case and in law, Ld. CIT-Appeals erred in sustaining the order passed by ld. AO u/s 147/143(3) without appreciating that \"rubber stamp\" reasons in present case are based on borrowed satisfaction and are without independent application of mind. Because Ld. Assessing officer has just reproduced the conclusion of investigation wing that M/s Rising Portfolio India Pvt. Ltd. and M/s To Cloud E Net Solutions Pvt. Ltd. are two different companies and assessee received share capital of Rs.30,00,000/- each from both the companies. Indeed it is \"Borrowed Satisfaction\", since later on during the reassessment proceedings Ld. A.O himself accepted that there is only one company (i.e., M/s Rising Portfolio India Pvt. Ltd.) and other company (i.e. M/s To Cloud E Net Solutions Pvt. Ltd.) is not separate company rather updated name of the same company and also decide not to made any addition in relation to transaction of Rs.30,00,000/- with M/s To Cloud E Net Solutions Pvt. Ltd., since he admit that he was wrong at the time of framing reasons to believe. 4. That on the facts and in the circumstances of the case and in law, Ld. CIT-Appeals erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that the Ld. Assessing officer has made the assessment without recording any failure on part of the appellant company to disclose fully and truly all material facts necessary for assessment as per the first proviso to section 147 of the Act. Rather Ld. Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 3 A.O has wrongly/mistakenly reopened the case of the appellant since neither clause (b) nor clause (c) of Explanation 2 to Section 147 of 1.T Act, 1961 are applicable to the present facts and circumstances of the case. 5. That on the facts and in the circumstances of the case and in law, Ld. CIT-Appeals erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that assumption of jurisdiction u/s 148 was by Ld. AO was in violation of jurisdictional conditions stipulated under the Act. Since Ld. A.O reopened the case of assessee on the basis of incorrect or non-existent facts (two different figures in reasons i.e., Rs. 60,00,000/-and Rs.80,00,000/-) and \"CHANGE OF OPINION\" without appreciating the fact that assessee has already assessed before Id. A.O in assessment proceedings u/s 143(3) of the Act. 6. That on the facts and in the circumstances of the case and in law, Ld. CIT-A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that objection filed in response to reasons recorded were never disposed off by a speaking order before passing the final assessment order, which has invalidated the entire proceedings, since objections should be disposed off point wise properly as directed by Apex Court in GKN Driveshafts reported in 259 ITR 19. 7. That on the facts and in the circumstances of the case and in law, Ld CIT- A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that notice u/s 143(2) issued without waiting for GKN Driveshaft procedure to be exhausted is invalid. Rather Ld. AO issued notice u/s 143(2) dated 23.04.2019 on the very same day when assessee company has filed its ITR against the notice u/s 148 of the Act which makes notice u/s 143(2) as invalid and resultantly, the assessment is vitiated and is liable to be quashed. Matter is directly covered by the judgment of Hon'ble Delhi High Court in the case of Director of Income Tax Vs. Society for Worldwide Inter Bank Financial, Telecommunications in ITA No. 441/2010, reported at 323 ITR 249. 8. That on the facts and in the circumstances of the case and in law, Ld CIT- A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that opportunity of cross examination of witness of the revenue and opportunity of confrontation of back material [as mandated on A.O as per section 142(3)] on basis of which case reopened of Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 4 appellant is not provided to the appellant company, which is in violation of Principle of Natural Justice. 9. That on the facts and in the circumstances of the case and in law, Ld CIT- A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that Ld. AO has erred in passing general order to dispose of the objections without provide \"FOUR WEEKS\" time period to assessee to seek its legal remedies from the date of receipt/service of said order on objections as well settled by Bombay High Court in cases of M/s Aslan Paints (296 ITR 90) and M/s Aroni Commercials (362 ITR 403). 10. That on the facts and in the circumstances of the case and in law, Ld CIT- A erred in sustaining the order passed by the AO u/s 147/143(3) without appreciating that on basis of surfeit and inundated evidences on records, burden u/s 68 of the Act lying on assessee has been fully discharged and met. So addition made by Ld. AO of Rs.55,00,000/- u/s 68 of the Act and confirmed by CIT-A in impugned order for share capital taken from M/s Rising Portfolio India (P) Ltd of Rs.30,00,000/-and from M/s Secur Portfolios India (P) Ltd. of Rs.25,00,000/- without appreciating the fact that assessee has already explained all the three ingredients of section 68 (identity, credit worthiness and genuineness) during the assessment proceedings u/s 143(3) of the Act as well as reassessment proceedings u/s 147 of the Act, deserves to be deleted. 11. That on the facts and in the circumstances of the case and in law, Ld CIT- A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that Ld. AO has grossly erred in making addition of Rs.25,00,000/- u/s 68 of share capital from M/s Secur Portfolio India Pvt. Ltd. without appreciating the fact and law that Explanation 3 to section 147 inserted to clarify that Ld. AO may assess or reassess the income in respect of any issue which comes to his notice SUBSEQUENTLY in the course of the proceedings u/s 147 of the Act. But the information in relation to share capital transaction of Rs.25,00,000/- was with the Ld. A.O prior to reopening of case 16, not comes subsequently to his notice. 12. On the facts and circumstances of the case and in law, the notice under section 148 of the Income Tax Act, 1961 issued in the case is bad in-law, void and without jurisdiction. Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 5 13. Ld. AO as well as Ld. CIT(A) has erred on facts and in law in relying upon case laws without appreciating that the facts of present case are distinguished from the facts of relied upon cases. 14. The above grounds of appeal are independent and without prejudice to one another. 15. The detailed submission shall be filed at the time of hearing before your honor. 16. Your appellant craves leave to add, alter, amend, modify, rescind, supplement or alter any of the grounds of appeal stated herein above, either before or at the time of hearing of this appeal.” 2.1 The substantive issues raised in this appeal are categorized in two heads; (i) whether the reopening of assessment under section 148 of the Income Tax Act, 1961 (‘Act’) in absence of valid reasoning and approval thereof under section 151 of the Act is valid in the eyes of the law and (ii) merit of addition of Rs.55,00,000/-. 3. The relevant facts giving rise to this appeal are that the assessee filed its Income Tax Return (‘ITR’) on 30.09.2012 for the relevant year declaring income of Rs.46,06,870/-. The original ITR was picked up for scrutiny to verify share capital. The consequential original assessment was completed on 6th February 2015 at income of Rs.50,42,370/-. Later, based on the information in possession, the Ld. Assessing Officer (‘AO’) reopened the assessment of the assessee vide notice dated 29.03.2019 issued under section 148 of the Act. The consequential reopened assessment was completed, on 14.11.2019, at income of Rs.1,05,42,370/- wherein the addition of Rs.55 Lakhs was made over and above the income originally assessed as under: - Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 6 “6.1 Therefore, the findings of Search proceedings and subsequent investigations made in the case of Sh. Himanshu Verma and Sh. Anirudh Joshi, corroborate the independent findings of the undersigned and he has considered the entire material and has applied his mind independently. The copies of entire material used by him before drawing the inferences have been given to the assessee. Assessee have received bogus share capital and share premium of Rs.30,00,000 from M/s. Rising Portfolio India P. ltd. controlled and managed by Sh. Himanshu Verma and Rs.25,00,000/- from Secure Portfolios India P. ltd. controlled and managed by Sh. Anirudh Joshi. Mere proof of identity without genuineness and creditworthiness is not enough for cash credit in books of accounts and assessee failed to prove identity, genuineness and creditworthiness of above transactions. Thus Rs.55,00,000/- was its own unaccounted income routed back using above modus operandi. Hence, the shame transactions made is treated as “undisclosed Income” and Rs.55,00,000/- is accordingly added back to its Total Income under section 68 of the Income Tax Act, 1961 in the relevant year.” 3.1 Aggrieved with the reopened assessment, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal. The issue of reopening of assessment under section 148 of the Act challenged before the Ld. CIT(A) was decided by holding that the Principal Commissioner of Income Tax (‘PCIT’) had granted approval through ITBA portal on 27.03.2029 before the issuance of notice under section 148 of the Act; hence, he dismissed the appeal as under: “The appellant, in its written submission dated 17.09.2024, emphasized on ground no. 2 only that challenges the reopening notice u/s 148 of the Act and reassessment order u/s 147 of the Act on the ground that the reassessment proceedings were commenced without the approval of the specified authority i.e. Pr. CIT. In this regard, the AO (DCIT Circle-1, Faridabad) was sought clarification on the issue. The AO, vide his letter dated 01.10.2024, (reproduced below) informed that approval was obtained Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 7 from Pr. CIT. The extract of the letter of the AO dated 01.10.2024, along with the copy of ITBA order sheet, is reproduced below: Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 8 3.2 The case was not heard on merit. So we are deciding the validity of assumption of jurisdiction of the reassessment only. The grounds challenging the addition of Rs. 55 Lakhs are left open for adjudication, if the need arises. Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 9 4. Before us, the Ld. Authorized Representative (‘AR’) argued the issue of validity of reopening of assessment under section 148 of the Act. It was argued that the Ld. AO was not having approval of the Ld. PCIT under section 151 of the Act before issuance of the notice under section 148 of the Act. The Ld. AR submitted the copy of online notice, dated 29.03.2019, issued under section 148 of the Act as under: 4.1 The Ld. AR submitted a Paper Book (‘PB’), which contained two different reasons for reopening submitted to the PCIT for granting approval for reopening the assessement; one for manual dated 22.03.2019 (Page 14-18 of PB) and another for online dated 23.03.2019 (Page 19-21 of PB) and such reasoning had different facts. The Ld. AR placed the format of approval granted under section151(2) of the Act as under: Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 10 Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 11 4.2 The Ld. AR further submitted that the order-sheet details of on-line approval of the Ld. PCIT under section 151 of the Act contained inaccurate forwarding of the Range Head. The said noting of the Range Head referred to Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 12 the cash deposit of Rs.10,58,000/- in the Axis Bank saving account of the appellant assessee, which had no relevance with the facts of the case and the reason on which the case was proposed for reopening. He thus, contended that this clearly demonstrated non-application of mind by the Range Head and mechanical approval by the Ld. PCIT under section 151 of the Act. Further, the Ld. AR drew our attention to the following two different reasons recorded by the AO for reopening of assessment under section 148 of the Act: Reasons dated 22.03.2019 (Manual copy) Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 13 Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 14 Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 15 Reasons dated 23.03.2019 (Electronic Copy) Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 16 Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 17 Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 18 4.3 The Ld. AR submitted that there were factual differences in the said two reasoning recorded by the AO. In reasons dated 23.03.2019 (electronic copy) the quantum of accommodation entry of Rs.60,00,000/- (Para 4) was mentioned as against Rs.80,00,000/- (Para 5) in reasons dated 22.03.2019 (Manual Copy). It was further submitted that the reference of Explanation 2 to section 147(b) of the Act is mentioned in reasons dated 23.03.2019 (electronic Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 19 copy) as against the reference of Explanation 2 to section 147(c) of the Act in reasons dated 22.03.2019 (Manual Copy). The reference of section 133(6) of the Act and details of information received from Investigation Wing mentioned in reasons dated 22.03.2019 (Manual Copy) are missing in reasons dated 23.03.2019 (electronic copy). Similarly, there were differences in dates of approval granted under section 151(1) of the Act by the Ld. PCIT. On such anomalies in two reasons recorded by the AO and mechanically approved under section 151(1) of the Act by the Ld. PCIT, the Ld. AR contended that none of the reasons could be held valid. 4.4 The Ld. AR contended that even if on-line approval considered to be valid for discussion only (without admitting the same), then also there could not be two reasons for reopening of assessment under section 148 of the Act. Further, there was anomaly in the forwarding of noting of the Range Head, which had also been considered by the Ld. PCIT while granting approval under section 151 of the Act. Further, the Ld. AR submitted that the response to the RTI application of the appellant assessee revealed that the Ld. AO had received approval of the Ld. PCIT under section 151 of the Act on 30.03.2019 through the letter No. 14253-54 dated 26/30.03.2019 as evident from the above extracted format of approval under section 151 of the Act, which was subsequent to the issuance of notice under section 148 of the Act. To augment his contention, the Ld. AR placed reliance on the decisions of the Hon’ble Delhi High Court in the cases of Tia Enterprises Pvt. Ltd. WP(C) Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 20 13903/2018 order dated 26.09.2023 (SLP dismissed by the Hon’ble Supreme Court) and Society for Worldwide Inter banking Financial in, 323 ITR 249. He also placed reliance on the decision of Tribunal in case of Rajiv Kumar Arora ITA No. 622/Del/2024 order dated 16.10.2024. The Ld. AR, placing reliance on the decision of the Hon’ble Bombay High Court in the case of Aroni Commercials, 362 ITR 403, contended that the Ld. AO had not disposed of the assessee’s objection on reopening of the assessment with well-reasoned order; therefore, the consequential assessment was not justified. 5. Per contra, the Ld. CIT-DR, placing emphasis on the finding of the Ld. CIT(A), contended that the reopening of the assessment was justified. 6. Now, we have to decide whether the approval under section 151 of the Act granted by the Ld. PCIT is valid and the same has been communicated to the AO prior to the issuance of notice under section 148 of the Act. We find merit in arguments of the Ld. AR that there are two separate reasons recorded by the AO for reopening of the assessment. Both proposals for reopening of the assessment have been sent, one through online and another manually, to the Ld. PCIT for approval under section 151 of the Act. Both reasoning recorded by the AO for reopening of the assessment differ as pointed out by the Ld. AR mentioned above in para 4.3. The Ld. CIT-DR failed to bring any material on the record to contradict the Ld. AR’s submission that there are two different reasoning recorded by the AO for reopening the assessment which have been separately approved under section 151 of the Act. We, Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 21 therefore, have taken note of the fact that there are two separate reasoning recorded by the AO for reopening of the assessment, which have been also approved independently and separately by the Ld. PCIT. In case first approval under section 151 of the Act granted by the Ld. PCIT is valid then the subsequent approval will become invalid and vice-versa. 7. Now we have to decide which approval out of the above-mentioned two is valid in the eyes of law. The first approval does not bear the signature including digital signature of the Ld. PCIT though it has been done with the help RSA Token issued by the Income Tax Department to the concerned officer. The RSA Token is used by the Officer concerned in person. We are unable to understand the reasoning on which the subsequent approval has been granted, under section 151 of the Act, by the Ld. PCIT. Normally, the Ld. PCIT would not grant subsequent approval under section 151 of the Act unless some inconsistency/illegality/mistake had not been noticed by him in the earlier approval under section 151 of the Act by the Ld. PCIT. We, therefore, are of the considered view that the subsequent approval overrides the initial approval granted, online, under section 151 of the Act by the Ld. PCIT as the initial approval contains incorrect forwarding of the Range Head, factual discrepancies mentioned above in para 4.3 and digitally unsigned by the Ld. PCIT (though approved by RSA Token). Therefore, we hold that the subsequent approval granted, communicated manually, under section 151 of the Act has to prevail upon the initial approval granted, online, under section Printed from counselvise.com ITA No.5161/Del/2024 Avon Containners P. Ltd. 22 151 of the Act. Since the subsequent approval granted under section 151 of the Act has been communicated manually on 30.03.2019 after the issuance of notice under section 148 of the Act; therefore, the notice issued under section 148 of the Act is held invalid and ab-initio void. And, thus, consequential assumption of jurisdiction by the Ld. AO is also held invalid. We, therefore, hold that not only the assessment order but also the impugned appellate order is void abinitio. Hence, the orders of the Ld. AO and the Ld. CIT(A) are hereby quashed being without valid jurisdiction. 8. In view of the above, other grounds, being academic, are not being decided here. 9. In the result, the appeal of the assessee is allowed as above. Order pronounced in open Court on 23rd September, 2025 Sd/- Sd/- (VIKAS AWASTHY) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 23/09/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT/PCIT 4. CIT(Appeals) 5. CIT (DR): ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "