B.C.ENTERPRISES,VIVEK VIHAR,DELHI V. ITO, VIKAS BHAWAN D BLOCK

CO 8/DEL/2025

AI Insights

The case involves the Income Tax Officer (ITO) appealing against the order of the Commissioner of Income Tax (Appeals), which had reduced the addition made to the assessee's income from alleged bogus purchases. The ITO argued that the CIT(A) erred in law and fact by restricting the addition to a mere profit margin when the assessee was involved in bogus purchase transactions. The assessee, B.C. Enterprises, contested the validity of the reassessment proceedings, claiming that the notices issued were based on vague and non-specific information, and that they were not given a fair opportunity to respond or cross-examine the witnesses whose statements were used against them.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41877 (ITAT-DELHI)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Other Referred Cases: Pr.CIT-09, Kolkata vs Mrs. Premlata Tekriwal, ACTT(OSC)Ward- 5(3), Nadiad v/s Pawanraj B Bokadia, Pooja Paper Trading Co (P.) Ltd v. ITO, Pr. CIT V. Synbiotics Ltd., Rajiv Bansal vs. ITO, Divya Capital One Pvt. Ltd. v. ACIT, Saraswati Petrochem Pvt. Ltd. vs. ITO, Tia Enterprises Ltd. vs. ITO, Ashish Agarwal vs. ITO, Best City Infrastructure Ltd. vs. ITO, PCIT vs. Pavitra Realcom Pvt. Ltd., PCIT vs. Esspal International Pvt. Ltd., Dr. M. Malliya vs. ACIT, R.K. Buildcreations (Pvt.) Ltd. vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Assessee Lawyers: KAPIL GOEL
• Keywords: Opportunity of being heard; Invalid notice; Reassessment proceedings; Bogus purchase; Period of limitation; Principle of natural justice; Accommodation entries; Opportunity of cross examination; Bogus
• Section: 147; 148; 143(2); 250; 143(1); 153; 132; 139(1); 133(6); 13; 12; 145(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4972/Del/2024 (ASSESSMENT YEAR 2018) Income Tax Officer, D-Block, Vikash Bhawan, Delhi-110002. Vs. B.C. Enterprises, D-235, Vivek Vihar, Delhi-110095. PAN-AAAFB7728A (Appellant) (Respondent) C.O. No.08/Del/2025 Arising out of ITA No.4972/Del/2024 (ASSESSMENT YEAR 2018) B.C. Enterprises, D-235, Vivek Vihar, Delhi-110095. PAN-AAAFB7728A Vs. Income Tax Officer, D-Block, Vikash Bhawan, Delhi-110002. (Appellant) (Respondent) Assessee by Dr. Kapil Goel, Adv. Department by Shri Ashish Tripathi, Sr. DR Date of Hearing 20/02/2025 Date of Pronouncement 04/04/2025 O R D E R PER MANISH AGARWAL, AM: This appeal is filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NAFC), Delhi passed u/s 250 of the Income Tax Act, 1961 in appeal No. NFAC/2017-18/1024/7317 dated 30.08.2024 for 2 ITA No.4972/Del/2024 C. O. No.08/Del/2025 Assessment Year 2018. Assessee also filed cross objections separately. 2. The brief facts of the case are that assessee is engaged in the business of trading in good grains, oilseeds, pulses or any other agricultural produce or commodity and also to act as commission agent for agricultural produce. The return of income was filed 31.10.2018 declaring total income at Rs.3,16,140/-. The said return was processed u/s 143(1) of the Act. The AO based on the information that assessee has received accommodation entries in the shape of bogus purchases from one Sh. Ashok Gupta and other entities controlled and managed by him amounting to Rs.5,58,30,830/-, initiated the proceedings by way of issue of notice u/s 148A(b) of the Act. Thereafter, order u/s 148A(d) was passed on 23rd March, 2022 holding that income to this extent has escaped assessment, and, subsequently, notice u/s 148 was issued on 29.03.2022 after prior approval of PCIT. In response, the assessee has filed the return of income on 06.12.2022 decaling the same income as was declared in the return filed u/s 139(1) of the Act. The reassessment order was passed vide order dated 27.03.2023 wherein the AO has made total addition of Rs.5,43,82,576/- being the gross value of purchases made from three entities alleged as bogus being made from the entities control and managed by Sh. Ashok Kumar Gupta. Against such order, the assessee preferred appeal before ld. CIT(A), who vide impugned order dated 30.08.2024 though has dismissed the legal ground taken by the assessee regarding re- 3 ITA No.4972/Del/2024 C. O. No.08/Del/2025 opening u/s 148, however, has reduced the addition from Rs.5,43,82,576 to Rs.4,78,566/- by applying G.P rate of 0.88% on such alleged purchased alleged as bogus. Again such order, the Revenue is in appeal before the Tribunal on the strength of following grounds of appeal: “1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct on facts and in law in restricting the addition of Rs.5,43,82576/- to Rs.4,78,566/- on the ground that only profit element embedded in bogus purchase/sale is chargeable to tax when it is established that the assessee is involved in bogus purchase transactions. In this regard, reliance is placed upon the judgement made in the case of Pr.CIT-09, Kolkata vs Mrs. Premlata Tekriwal by Hon'ble High Court of Calcutta dated 15.07.2022 ,ITAT/27/2022 (ΙΑ No. GA/2/2022) and in the case of ACTT(OSC)Ward- 5(3), Nadiad v/s Pawanraj B Bokadia, by Hon'ble High Court of Gujarat dated 27.09.2011, tax appeal no. 2345 of 2009. 2. Alternatively, whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct on facts and in law in computing the gross profit to mere 0.88% of bogus purchases whereas the one of the order of Tribunal on which Ld. CIT(A) has placed reliance, disallowance has been computed by ITAT at 12.5% of bogus purchases (refer- Pooja Paper Trading Co (P.) Ltd v. ITO (2019) 104 taxmann.com 95/264 Taxman 260(Bom.). In the another order relied upon by Ld. CIT(A) in the case of Pr. CIT V. Synbiotics Ltd. (2019) 106 taxmann.com 316/265 Taxman 34 (Gujarat) (Mag.), the disallowance has been computed to the extent of 25%. 3. That the appellant craves leave to add/alter/delete/modify any/all the grounds of appeal before or during the course of hearing of the appeal.” 3. The assessee has also filed C.O. wherein the assessee has taken following cross objections: “1. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid being founded on patently illegal and unlawful impugned \"reopening\" action made u/s 148/148A contrary to provisions of the 1961 Act and mandatory CBDT guidelines (non supply of sanction u/s 151 along with notice us 148) 4 ITA No.4972/Del/2024 C. O. No.08/Del/2025 2. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid being founded on invalid notice (SCN) u/s 148A(b) dated 11.03.2022 and invalid order u/s 148A(d) dated 24.03.2022 and consequential invalid jurisdictional notice u/s 148 dated 29.03.2022 and there is total non-application of mind at all stages of proceeding. 3. That based on admitted and undisputed facts impugned assessment order passed u/s 147/1448 dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid being made without requisite/valid sanction u/s 151 of 1961 Act. 4. That based on admitted and undisputed facts impugned assessment order passed u/s 147/1448 dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid being based on vague and nonspecific SCN U/s 148A(b) dated 11.03.2022 and without considering the reply filed 24.03.2022 which vitiates the Impugned reopening filed U/s 1481(c) dated action u/s 148/1484 of the Act. 5. That based on admitted and undisputed facts impugned assessment order passed u/s 147/1440 dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid being contrary to mandate of article 265 of constitution of India. And is totally arbitrary, perverse, irrational and is violation of mandate the of section 144B of 1961 Act. 6. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid as there is non rejection of books u/s 145(3) which is fatal to impugned assessment where recorded trading (purchase/sale) transaction are adversely treated without doubting/rejecting audited book results u/s 145(3), which amounts to impermissible aprobate and reprobate. 7. That based on admitted and undisputed facts impugned assessment order passed u/s 147/1448 dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid as there is lack of valid notice u/s 143(2) of the Act. 8. That based on admitted and undisputed facts impugned assessment order passed u/s 147/1448 dated 27.03.2023 and impugned first appeal order dated 30.08.2024 are both invalid as there is serious and grass violation of principle of natural justice including Jack of valid SCN u/s 144B of the Act and valid cross examination of revenue's witness. 9. That based on admitted and undisputed facts impugned assessment order passed u/s 147/1448 dated 27.03.2023 and impugned first appeal 5 ITA No.4972/Del/2024 C. O. No.08/Del/2025 order dated 30.08.2024 are both invalid as ld. CIT-A ought to have deleted the total additions made in impugned assessment order.” 4. As the cross objections taken by the assessee contained the objections with regard to the reopening of the assessment u/s 148, therefore, the C.O. of the assessee was taken up first for consideration. 5. In cross objection No.1 to 5, the assessee has challenged the validity of reopening u/s 148 of the Act based on the proceedings completed as provided u/s 148A of the Act. The Ld. AR submits that while assuming jurisdiction u/s 148 of the Act, the notice issued u/s 148A(b) is totally vague and non-speaking and without containing specific information of the alleged transactions. He drew our attention to the notice issued which is at Paper Book paged 25 to 26 are reads as under: Notice under clause(b) of section 148A of the Income-tax Act, 1961. Sir/Madam/M/s Whereas I have information which suggests that income chargeable to tax for the Assessment Year 2018-19 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. The details of the information enquiry, if conducted, are enclosed with this notice in Annexure A. 2. You are required to show-cause as to why, in view of the details contained in Annexure A, a notice section 148 of the Income tax Act, 1961 should not be issued. 3. You may, to the extent technologically feasible, submit your response with supporting documents (if any) on the above mentioned issues electronically in 'e-proceeding' facility through your account in e-filing portal at your convenience on or before 18/03/2022. 4. This notice is being issued after obtaining the prior approval of the PCIT, Delhi-20 accorded on date 11/03/2022 vide Reference No. 100000028952243. ANNEXURE 6 ITA No.4972/Del/2024 C. O. No.08/Del/2025 Information received though Insight Portal (High risk Transaction on verification module of Insight Portal) in the case of M/s B. C. Enterprises Pan AAAFB7728A for the AY 2018-19 that the assessee has made bogus purchases in form of accommodation entries provided by Ashok Kumar Gupta & entities operated and controlled by him amounting to Rs. 5,58,30,830 /- during the FY 2017-18.” 6. The Ld. AR argued that from the perusal of the said notice, it is clear that the AO in Annexure ‘A’ has referred certain information received through insight portal of the Department, according to which the assessee has made bogus purchase provided by Sh. Ashok Kumar Gupta and entities controlled by him. However, no specific information whatsoever such as the statement of Sh. Ashok Kumar Gupta, name and address of the entities with whom transactions were made, date of transactions etc. were supplied to the assessee. The assessee in response to the said notice vide letter dated 24th March, 2022 has filed detailed reply through email wherein it was requested to supply the relied upon material gathered as referred in the notice u/s 148A(b), however, the AO without taking cognizance of such reply, passed the order u/s 148A(d) on the very same on 24th March, 2024, wherein he had observed that no response was received from the assessee against the opportunity provided u/s 148A(b) of the Act. The Ld. AR further submit that the Hon’ble Supreme Court in the case of Rajiv Bansal reported in 167 Taxman.com 70 has held in para 94 to 102 as under: “94. Before we proceed, we need to bear in mind three important periods: i. The period up to 30 June 2021- this period is covered by the provisions of the Income Tax Act read with TOLA; 7 ITA No.4972/Del/2024 C. O. No.08/Del/2025 ii. The period from 1 July 2021 to 3 May 2022- the period before the decision of this Court in Ashish Agarwal (supra); and iii. The period after 4 May 2022 – the period after the decision of this Court in Ashish Agarwal (supra). This period is covered by the directions issued by this Court in Ashis Agarwal (supra) and the provisions of the Income Tax Act read with TOLA. a. Third proviso to Section 149 95. The third proviso to Section 149 reads thus: \"Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded.\" 96. The third proviso excludes the following periods to calculate the period of limitation: (i) the time allowed to the assessee under Section 148A(b); and (ii) the period during which the proceedings under Section 148A are \"stayed by an order or injunction of any court.\" 97. A legal fiction is a supposition of law that a thing or event exists even though, in reality, it does not exist. 153 The word \"deemed\" is used to treat a thing or event as something, which otherwise it may not have been, with all the attendant consequences. 154 The effect of a legal fiction is that \"a position which otherwise would not obtain is deemed to obtain under the circumstances. \"155 In K Prabhakaran v. P Jayarajan, 156 Chief Justice R C Lahoti, speaking for the majority, observed that: \"39. [...] While pressing into service a legal fiction it should not be forgotten that legal fictions are created only for some definite purpose and the fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. A legal fiction presupposes the existence of the state of facts which may not exist and then works out the consequences which flow from that state of facts. Such consequences have got to be worked out only to their logical extent having due regard to the purpose for which the legal fiction has been created. Stretching the consequences beyond what logically flows amounts to an illegitimate extension of the purpose of the legal fiction.\" 98. A legal fiction is created for a definite purpose and it should be limited to the purpose for which it is enacted or applied. It is a well-established principle of interpretation that the courts must give full effect to a legal fiction by having due regard to the purpose for which the legal fiction is created. 157 The consequences that follow the creation of the legal fiction \"have got to be worked 8 ITA No.4972/Del/2024 C. O. No.08/Del/2025 out to their logical extent.\" 158 The court has to assume all the facts and consequences that are incidental or inevitable corollaries to giving effect to the fiction, 159 99. In Ashish Agarwal (supra), this Court created a legal fiction by deeming the Section 148 notices issued under the old regime as show cause notices under Section 148A(b) of the new regime. The purpose of the legal fiction was to enable the Revenue \"to proceed further with the reassessment proceedings as per the substituted provisions\" of the Income Tax Act. Accordingly, all the reassessment notices issued under the old regime were deemed to always have been show cause notices issued under Section 148A(b) of the new regime. The fiction replaced Section 148 notices with Section 148A(b) notices with effect from the date when the notices under Section 148 of the old regime were issued between 1 April 2021 and 30 June 2021, as the case may be. This ensured the continuance of the reassessment process initiated by the Revenue from 1 April 2021 to 30 June 2021 under the old regime. 100. Importantly, this Court in Ashish Agarwal (supra) did not quash the reassessment notices issued under Section 148 of the old regime. In Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, 160 a three- Judge Bench of this Court explained the distinction between quashing an order and staying the operation of an order thus: \"10. [...] Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence.\" The reassessment proceedings erroneously initiated by the Revenue under the old regime were not wiped out from existence. Consequently, the Revenue was not required to start the procedure of reassessment afresh after the decision of this Court in Ashish Agarwal (supra). 101. Under Section 148A(b), the assessing officer has to comply with two requirements: (i) issuance of a show cause notice; and (ii) supply of all the relevant information which forms the basis of the show cause notice. The supply of the relevant material and information allows the assessee to respond to the show cause notice. The deemed notices were effectively incomplete because the other requirement of supplying the relevant material or information to the assesses was not fulfilled. The second requirement could only have been 9 ITA No.4972/Del/2024 C. O. No.08/Del/2025 fulfilled by the Revenue by an actual supply of the relevant material or information that formed the basis of the deemed notice. 102. While creating the legal fiction in Ashish Agarwal (supra), this Court was cognizant of the fact that the assessing officers were effectively inhibited from performing their responsibility under Section 148A until the requirement of supply of relevant material and information to the assesses was fulfilled. This Court lifted the inhibition by directing the assessing officers to supply the assesses with the relevant material and information relied upon by the Revenue within thirty days from the date of the judgment. Thus, during the period between the issuance of the deemed notices and the date of judgment in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from proceeding with the reassessment proceedings.” He also placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of Divya Capital One Pvt. Ltd. v. ACIT (2022) 445 ITR 436 (Del.) Best Buildwell Pvt. Ltd. vs. ITO [2022] 447 ITR 26 and also recent judgment of Hon’ble Jurisdictional High Court in the case of Saraswati Petrochem Pvt. Ltd. vs. ITO, 470 ITR 47 wherein it is consistently held that not providing relied upon the material is fatal to reopening. He thus, submit that when the assessee is not provided with complete relied upon material, the same would rendered the purposes and sprit behind section 148A(b) of the Act totally illusive and ephemeral and it is impossible for assessee to reply u/s 148A(c) in absence of such relied upon material. 7. The ld. AR further submit that the assessee vide reply dated 24th March, 2022 had requested for the cross examination of the persons whose statements are used against the assessee. However, despite of repeated request no such opportunity was provided to the assessee, though from the perusal of the assessment order, it is evident that AO has solely relied upon the statement of Sh. Ashok Kumar Gupta 10 ITA No.4972/Del/2024 C. O. No.08/Del/2025 stated to have been recorded during the course of search to hold that the assessee has taken accommodation entry in the shape of purchase from three entities managed and controlled by Sh. Ashok Kumar Gupta. Ld. AR submitted that admittedly sanction, if any, taken by AO before issue of notice u/s 148 was never supplied alongwith the said notice. In the instant case the order passed u/s 148A(d) was supplied but no such sanction was enclosed. Thus, according to Ld. AR entire reassessment proceedings are without jurisdiction. For this, he placed reliance on the judgment of Hon’ble Delhi High Court in the case of Tia Enterprises Ltd. vs. ITO in WP (C) No.13903/2018 dt. 26.09.2023 and against such order SLP filed by Revenue stood dismissed by Hon’ble Apex Court in SLP (Civil) Diary No.38611/2024 dt.13.09.2024. 8. In view of these facts, the AR submitted that the reassessment proceedings as initiated in terms of the notice issued u/s 148A(b) which is vague and incomplete and without jurisdiction. Thus, he prayed that consequent order passed u/s 148(d) of the Act and subsequent notice u/s 148 dated 29th March, 2022 deserves to be held bad in law and all the proceedings including the reassessment orders deserves to be quashed. 9. On the other hand, Ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that in the present case, opportunity was provided to the assessee vide notice issued u/s 148A(b) but the assessee has not made any compliance within the 11 ITA No.4972/Del/2024 C. O. No.08/Del/2025 time provided, therefore, the AO was of the opinion the assessee is involved in high value financial transactions of bogus purchases with the sole intention to evade tax. He further submitted that the AO during the course of assessment proceedings has issued show cause notice, wherein all the material available was confronted with the assessee, thus, it is wrong to say that the Assessing Officer has not provided the information to the assessee. Rather, the assessee has failed to justify the purchases made from three entities managed and controlled by Shri Ashok Kumar Gupta. Therefore, he requested that the reassessment proceedings were rightly initiated in the case of the assessee and the same deserves to be uphold. 10. We have heard the rival submissions and perused the material available on record. In the instant case, the assessee since inception of the proceedings asked the AO for supply of the material relied upon for initiating proceedings u/s 148A of the Act. The Hon’ble Supreme Court in the case of Ashish Agarwal reported in [2022] (5) TME- 240(SC) has held that material relied upon for initiating the proceedings u/s 148A should be supplied to the assessee so as to enable him to file the necessary reply. 11. The provisions as assessee contended u/s 148A at the relevant point of time are as under: “148A. Conducting inquiry, providing opportunity before issue of notice under section 148. The Assessing Officer shall, before issuing any notice under section 148,— 12 ITA No.4972/Del/2024 C. O. No.08/Del/2025 (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, [***] by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c)consider the reply of assessee furnished, if any, in response to the show- cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,— (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 2 [relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable 13 ITA No.4972/Del/2024 C. O. No.08/Del/2025 to tax escaping assessment for any assessment year in the case of the assessee.] Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.]” 12. From the perusal of the provisions of section 148A, it is clearly provided in sub-section (a) that before issue of notice u/s 148, AO should conduct enquiry with the prior to approval of the specified authority with respect to information suggest the income chargeable has escaped assessment. In the instant case, from the perusal of the notice issued u/s 148A(b) it appears that though the said notice was issued with the prior approval of the PCIT, Delhi-20, however, no material whatsoever was supplied nor the results of the enquiries, if any, conducted were confronted to the assessee and it is merely stated that based on the information received through insight portal it was found that assessee was having accommodation entry in the shape of bogus purchases. It is also seen that assessee in reply to the said notice had filed a detailed reply on 24th March, 2020 which was sent through email to the AO, however, such reply was not considered and the order was passed u/s 148A(d) recording the satisfaction that it is a fit case for issue of notice u/s 148 of the Act. 13. Further from the perusal of the order passed u/s 148A(d), we observed that the AO in para 3 of the order observed that the information was self-sufficient and it was considered that further enquiries u/s 148A(a) of the Act are not required. However, when we see the information as provided to assessee along with notice u/s 14 ITA No.4972/Del/2024 C. O. No.08/Del/2025 148A(a) as “Annexure” and reproduced herein above, we find that such information did not speak about the real transactions. It is simply stated that assessee has made bogus purchases in the form of accommodation entries provided by Ahok Kumar Gupta and other entities operated and controlled by him. It is also stated that such information was received through insight portal. However, nowhere it is stated as to how department was having such information, who is Ashok Kumar Gupta, what is the nexus between assessee and Ashok Kumar Gupta, which are the entities managed and controlled by him and which of such entities had sold good to assessee alleged as accommodation entry. Further the details of purchases made, date of transactions, item, value of each individual transaction of purchases etc. were never brought on record as provided in sub- section (a) to section 148A of the Act. Further, AO has never provided the statements of such Ashok Kumar Gupta and the other relied upon material based on which of transactions were alleged as accommodation entry of purchases alongwith the notice u/s 148A(b) of the Act. It appears that the AO simply proceeded to reopen the case of the assessee based on the information available on the insight portal which is uploaded under Risk Management Strategy formulated by CBDT and no independent application of mind by AO before using such information against the assessee nor any enquiry was made as provided in section 148A(a) of the Act. This action of AO is highly arbitrary as he failed to appreciate the intent of the legislation behind introduction of provisions of section148A before 15 ITA No.4972/Del/2024 C. O. No.08/Del/2025 issue of notice u/s 148 of the Act. The AO not only proceeded to issue notice u/s 148A(a) without making verification of the vague and insufficient information available with him to satisfy himself that income chargeable to tax has escaped assessment but at the same time also failed to provide the material relied upon to the assessee along with notice u/s 148A(b) of the Act. The Hon’ble Supreme Court in the case of Ashish Agarwal (supra) has held that AO should supply the relied upon material to the assessee so as to enable him to respond the show cause notice issued by AO. We also observed that ld. CIT(A) while dismissing this plea of the assessee in para 5.4.3 of the order has observed that department was in possession of the material which also include the statement of Shri Ashok Kumar Gupta. However, at no stage of proceedings u/s 148A of the Act, such statements were supplied to the assessee for rebuttal. 14. Further, from the perusal of the assessment order, it is seen that the Assessing officer has relied upon the statements of Sh. Ashok Gupta and also referred the results of the enquiry conducted u/s 133(6) of the Act from the respective parties, however, despite of request made by the assessee for cross examination of all such parties, no such opportunity was provided to assessee. It is settled proposition of law that if the Revenue is using the statement of third parties, the assessee should have been allowed an opportunity to cross examine those witnesses as has been held by the Hon’ble Supreme Court in the case of Adman Timber Products reported in 16 ITA No.4972/Del/2024 C. O. No.08/Del/2025 281 CTR 241. The relevant observations of the Hon’ble Court as under: \"6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross examine those dealers and what extraction the appellant wanted from them.\" [Emphasis supplied]” 15. The Co-ordinate Bench of Tribunal in the case of Best City Infrastructure Ltd. vide order dated 31.05.2016 has held that not providing opportunity of cross examination makes the addition invalid. This order is upheld by Hon’ble Delhi High Court as reported in 397 ITR 82. Similar view is expressed by Hon’ble High Courts in following cases: -PCIT vs. Pavitra Realcom Pvt. Ltd. in ITA No.579/2018 (Delhi) -PCIT vs. Esspal International Pvt. Ltd. in ITA No.25/2024 (Rajsthan) -Dr. M. Malliya vs. ACIT in TCA No.284/11 (Madras). Therefore, not providing the opportunity to cross examine the witness whose statements are relied upon by the Revenue is gross violation 17 ITA No.4972/Del/2024 C. O. No.08/Del/2025 of principal of natural justice. Moreover, the AO has failed to consider the reply filed by the assessee in response to notice issued u/s 148A(b) of the Act. Hon’ble Rajsthan High Court in the case of R.K. Buildcreations (Pvt.) Ltd. vs. ITO reported in [2024] 462 ITR 478 (Raj) has held as under: “It is mandatory for the AO to pass speaking order, taking into consideration not only the material on record but also the reply filed. The additional reply dt. 14.06.2022 was not considered, consequently there was no occasions to deal with the objections raised therein. The impugned order is not as per the procedure prescribed u/s 148A of the Act and cannot stand judicial scrutiny.” Thus, non-consideration of the reply filed by the assessee also render the reassessment order passed as invalid. 16. After considering the above discussion, we are of the view that the Assessing Officer has failed to comply with the direction given by the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) and also the assessee Ashish Agarwal (supra) wherein it is held that AO should provide all the information and relied upon material available with him to the assessee alongwith notice u/s 148A(b) of the Act. Nor the reply of the assessee was considered before passing order u/s 148A(a) of the Act. Accordingly, in our considered view notice u/s 148 is bad in law and thus, the entire reassessment proceedings is held as invalid and is hereby quashed. The cross objections of the assessee taken in ground of appeal no.1 to 5 of the assessee C.O. are allowed. 18 ITA No.4972/Del/2024 C. O. No.08/Del/2025 17. Since, we have already decided the legal issue in favour of the assessee, the remaining cross as well as grounds of appeal of the Revenue are not adjudicated. 18. As a result, the C.O. of the assessee is allowed and appeal of the Revenue is dismissed. Order pronounced on 04/04/2025. Sd/- Sd/- (ANUBHAV SHARMA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 04/04/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "