B.C.ENTERPRISES,VIVEK VIHAR, DELHI V. ITO WARD, DELHI

CO 7/DEL/2025

AI Insights

The case involves B.C. Enterprises, which was reassessed under Section 147 read with Section 148 of the Income Tax Act, 1961, based on information suggesting involvement in bogus purchase transactions. The initial assessment added a substantial amount to the assessee's income, which was later partially reduced by the CIT(A). Both the Revenue and the assessee appealed against the CIT(A)'s decision. The Tribunal found that the reassessment and subsequent orders were flawed due to non-compliance with procedural requirements, lack of proper notice, and failure to provide an opportunity for cross-examination, which are essential for upholding the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397283 (ITAT-DELHI)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: Pooja Paper Trading Co (P.) Ltd v. ITO, Pr. CIT V. Synbiotics Ltd., Multimetal Ltd v/s DCIT, Adman Timber Products v/s ACIT, Best City Infrastructure Ltd., 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: RAJESH KUMAR DHANESTA; RAJESH KUMAR DHANESTA
• Assessee Lawyers: KAPIL GOEL; WAY OF REPLY SOUGHT; KAPIL GOEL; WAY OF REPLY SOUGHT
• Keywords: Invalid notice; Unexplained cash credit; Bogus purchase; Principle of natural justice; Accommodation entries; Opportunity of cross examination; Bogus
• Section: 147; 148; 68; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘B’: NEW DELHI) BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 4975/Del/2024 (Assessment Year- 2019) Income Tax Officer, Ward 58(3), Vikas Bhawan I.P. Estate, New Delhi- 110002. Vs. B.C. Enterprises, c/o Dr. Kapil Goel Advocate, F-26/24 Sector 7, Rohini, Delhi-110085. PAN No: AAAFB7728A APPELLANT RESPONDENT C.O. No.:- 7/Del/2025 (Arising out of ITA No.- 4975/Del/2024) (Assessment Year- 2019) B.C. Enterprises, c/o Dr. Kapil Goel Advocate, F- 26/24 Sector 7, Rohini, Delhi-110085 Vs. Income Tax Officer, Ward 58(3), Vikas Bhawan I.P. Estate, New Delhi-110002. PAN No: AAAFB7728A APPELLANT RESPONDENT Assessee by : Dr. Kapil Goel, Adv. Revenue by : Shri Rajesh Kumar Dhanesta, SR. DR Date of Hearing : 29.04.2025 Date of Pronouncement : 30.05.2025 ITA No.- 4975/Del/2024 B. C. Enterprises. 2 ORDER PER SUDHIR PAREEK, JM ITA No. 4975/Del/2024 by the Revenue and Cross Objection No. 07/Del/2025 of the Assessee preferred against the order of the National Faceless Appeal Centre (NFAC), Delhi, in short “Ld. CIT(A)”, dated 30.08.2024 pertaining to A.Y. 2019-20. 1.1 The appeal and the cross objection were heard together and are being disposed of by this common order for the sake of convenience and brevity. 1.1. The Revenue has raised the 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.4,25,31,727/- to Rs.3,23,241/- 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. 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 0.76% of bogus purchases and sales whereas in 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.” ITA No.- 4975/Del/2024 B. C. Enterprises. 3 Grounds of Cross Objection: “1. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 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 dated 01.08.2022 (non supply of sanction u/s 151 along with notice us 148) 2. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being founded on invalid notice (SCN) u/s 148A(b)dated 24.02.2023 and invalid order u/s 148A(d) dated 24.03.2023 and consequential invalid jurisdictional notice u/s 148 dated 24.03.2023 and there is total non application of mind at all stages of proceedings. 3. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being made without requisite/valid sanction u/s 151 of 1961 Act. 1 4. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being without being passed with fleeting and changing basis/reasoning with every stage of the proceedings which vitiates the impugned reopening action w/s 148/148A of the Act 5. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being contrary to sec 151A/CBDT notification dated 29.03.2022 6. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 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 147/144B dated 29.03.2024 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. ITA No.- 4975/Del/2024 B. C. Enterprises. 4 8. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as there is serious and gross violation of principle of natural justice including lack of valid SCN u/s 144B of the Act and valid cross examination of revenue's witness. 1 9. That based on admitted and undisputed facts impugned assessment order passed w/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as ld. CIT-A ought to have deleted the total additions made in impugned assessment order.” 2. Facts of the case may be narrated as that the assessee has filed its return of income for the A.Y. 2019-20, on 31.10.2019 declaring total income of Rs. 3,51,740/-. As per the information received in the case of assessee in accordance with the Risk Management Strategy formulated by CBDT, on insight portal maintained by the Income Tax Department, under the head High risk CRIU/VRU cases, the assesse, M/s BC Enterprises, has carried out certain transactions during the financial year 2018-19, relevant to the assessment year 2019-20 and the case was selected for reassessment under Section 147 r.w.s. 148 of the Income Tax Act, 1961, (“the Act”, for short). In compliance with notice u/s 148, the assessee filed its return of income on 09.02.2024 declaring a total income of Rs. 3,51,740/-. The Assessment has been completed on a total income of Rs. 4,28,83,467/-, thereby making alleged addition in income aggregating to Rs. 4,25,31,727/-. ITA No.- 4975/Del/2024 B. C. Enterprises. 5 3. While framing the assessment order, Ld. AO had disallowed the purchases made by the assessee as unexplained / non-existent purchase of Rs. 4,22,78,376/- and added back under the head PGBP, and also treated the sales of Rs. 2,53,351/- made by the assessee as unexplained credits under section 68 of the Act. 3.1 The Learned AO relied upon information regarding transactions caried out by the assessee with alleged entry operators during financial year 2018-19, relevant to A.Y. 2019-20 as follows: Rs. 2,53,351/- (by Mr. Ashok Kumar Gupta through M/s Madanlal Madho Prashad) Rs. 4,22,78,376/- (by Mr. Ashok Kumar Gupta through M/s Kalki Trading Company) 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A), which is partly allowed vide order 30.08.2024, by restricting the addition from Rs. 4,25,31,727/- to Rs. 3,23,241/-. 5. Against the aforesaid order of the Learned CIT(A), both the Revenue and the assessee have preferred the present appeal and Cross-Objection respectively before the Tribunal. 6. We have heard the rival submissions and carefully scanned the material available on record. ITA No.- 4975/Del/2024 B. C. Enterprises. 6 7. At the outset, assessee/appellant filed cross objection with regarding reopening of the assessment u/s 148 of the Act and and others, so it expedient to take up first the cross objection of the assessee. 8. In the course of hearing, the Learned AR submitted that no any approval u/s 151 of the Act supplied to assessee alongwith notice u/s 148 of the Act and 148A(d) as mandate in CBDT guidelines dated 01-08-2022 and non supplying the same is fatal. It is also submitted that the assessee by way of reply sought for adverse material and cross examination but none of them was provided and same is fatal as held by the coordinate bench in assessee’s own case for AY 2018-19 dated 04-04-2025 to same effect of the judgement in the case of Multimetal Ltd v/s DCIT (DBCWP 9007/2022 dated 19-03-2025) .It is also submitted that the lack of cross examination being provided to assessee despite request is fatal. From the perusal of assessment order, it reveals that vide response dated 16-03-2023 and19-03-2023, placed request for opportunity of cross examination of Shri Ashok Gupta on whose statement, case was reopened for the assessment u/s 147 of the Act but desired cross examination couldn’t took place and the addition in question made on the basis of uncrossed ITA No.- 4975/Del/2024 B. C. Enterprises. 7 statement as mentioned above and when such a material issue raised before the Learned CIT(A) by way of appeal, it is observed that the Learned AO has made every efforts to provide cross examination but in our humble opinion there is vast difference between making efforts and making ensure. It is also submitted that the notice in question SCN u/s 148A(b) issued to assessee is quite vague lacking application of mind. 9. There is material substance in the submission advanced on behalf of the assessee that the Learned AO solely relied upon the statement of Shri Ashok Kumar Gupta recorded during search and held that Shri Ashok Kumar Gupta himself admitted that he was engaged in providing accommodation entries of non-genuine purchases and non-genuine sales to various parties. The Learned AR in support to above submissions, relied upon assessee’s own case for A.Y. 2018-19 in ITA 4972/Del/2024 in the case of ITO Delhi v/s B.C. Enterprises, order dated dated 04-04-2025 which is squarely identical with present case, relevant extract thereof as under: - “ 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 ITA No.- 4975/Del/2024 B. C. Enterprises. 8 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/s148A(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 section 148A beforessue 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 Id. CIT(A) while dismissing this plea of the assessee in para 5.4.3 of the order has observed that ITA No.- 4975/Del/2024 B. C. Enterprises. 9 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 in281 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 flow 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) ITA No.- 4975/Del/2024 B. C. Enterprises. 10 -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 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 Rajasthan 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.” 10. On the basis of foregoing fact situation, the judicial precedents mentioned hereinbefore, and by following the order of the coordinate bench in the assessee’s own case for A.Y. 2018, we find that the addition made without providing an opportunity for cross examination is invalid in the eyes of law and there is material substance in the plea of assessee that the Learned AO supposed to provide all the relied-upon materials and relevant information alongwith notice u/s 148A(b). 10.1 Accordingly, in view of the foregoing discussion, the impugned assessment order dated 29.03.2024 passed under Section 147/144B and the first appellate order dated 30.08.2024 are held to be invalid and bad in law, having been passed in ITA No.- 4975/Del/2024 B. C. Enterprises. 11 violation of statutory provisions and principles of natural justice. Consequently, the additions made therein are directed to be deleted. 11. As we have decided the legal issue in favour of the assessee, the remaining grounds of Cross Objection as well as grounds of appeal of the Revenue need not be adjudicated. 12. Consequently, the appeal filed by the Revenue is dismissed, and the cross objection filed by the assessee is allowed. Order pronounced in the open court on 30.05.2025 SD/- SD/- (SHAMIM YAHYA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30.05.2025 Pooja, Sr. PS/- Copy forwarded to: 1. Appellant 1. Respondent 2. CIT 3. CIT(Appeals) 4. DR: ITAT ASSISTANT REGISTRAR ITAT, Delhi IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘B’: NEW DELHI) BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 4975/Del/2024 (Assessment Year- 2019) Income Tax Officer, Ward 58(3), Vikas Bhawan I.P. Estate, New Delhi- 110002. Vs. B.C. Enterprises, c/o Dr. Kapil Goel Advocate, F-26/24 Sector 7, Rohini, Delhi-110085. PAN No: AAAFB7728A APPELLANT RESPONDENT C.O. No.:- 7/Del/2025 (Arising out of ITA No.- 4975/Del/2024) (Assessment Year- 2019) B.C. Enterprises, c/o Dr. Kapil Goel Advocate, F- 26/24 Sector 7, Rohini, Delhi-110085 Vs. Income Tax Officer, Ward 58(3), Vikas Bhawan I.P. Estate, New Delhi-110002. PAN No: AAAFB7728A APPELLANT RESPONDENT Assessee by : Dr. Kapil Goel, Adv. Revenue by : Shri Rajesh Kumar Dhanesta, SR. DR Date of Hearing : 29.04.2025 Date of Pronouncement : 30.05.2025 ITA No.- 4975/Del/2024 B. C. Enterprises. 2 ORDER PER SUDHIR PAREEK, JM ITA No. 4975/Del/2024 by the Revenue and Cross Objection No. 07/Del/2025 of the Assessee preferred against the order of the National Faceless Appeal Centre (NFAC), Delhi, in short “Ld. CIT(A)”, dated 30.08.2024 pertaining to A.Y. 2019-20. 1.1 The appeal and the cross objection were heard together and are being disposed of by this common order for the sake of convenience and brevity. 1.1. The Revenue has raised the 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.4,25,31,727/- to Rs.3,23,241/- 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. 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 0.76% of bogus purchases and sales whereas in 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.” ITA No.- 4975/Del/2024 B. C. Enterprises. 3 Grounds of Cross Objection: “1. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 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 dated 01.08.2022 (non supply of sanction u/s 151 along with notice us 148) 2. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being founded on invalid notice (SCN) u/s 148A(b)dated 24.02.2023 and invalid order u/s 148A(d) dated 24.03.2023 and consequential invalid jurisdictional notice u/s 148 dated 24.03.2023 and there is total non application of mind at all stages of proceedings. 3. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being made without requisite/valid sanction u/s 151 of 1961 Act. 1 4. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being without being passed with fleeting and changing basis/reasoning with every stage of the proceedings which vitiates the impugned reopening action w/s 148/148A of the Act 5. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being contrary to sec 151A/CBDT notification dated 29.03.2022 6. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 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 147/144B dated 29.03.2024 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. ITA No.- 4975/Del/2024 B. C. Enterprises. 4 8. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as there is serious and gross violation of principle of natural justice including lack of valid SCN u/s 144B of the Act and valid cross examination of revenue's witness. 1 9. That based on admitted and undisputed facts impugned assessment order passed w/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as ld. CIT-A ought to have deleted the total additions made in impugned assessment order.” 2. Facts of the case may be narrated as that the assessee has filed its return of income for the A.Y. 2019-20, on 31.10.2019 declaring total income of Rs. 3,51,740/-. As per the information received in the case of assessee in accordance with the Risk Management Strategy formulated by CBDT, on insight portal maintained by the Income Tax Department, under the head High risk CRIU/VRU cases, the assesse, M/s BC Enterprises, has carried out certain transactions during the financial year 2018-19, relevant to the assessment year 2019-20 and the case was selected for reassessment under Section 147 r.w.s. 148 of the Income Tax Act, 1961, (“the Act”, for short). In compliance with notice u/s 148, the assessee filed its return of income on 09.02.2024 declaring a total income of Rs. 3,51,740/-. The Assessment has been completed on a total income of Rs. 4,28,83,467/-, thereby making alleged addition in income aggregating to Rs. 4,25,31,727/-. ITA No.- 4975/Del/2024 B. C. Enterprises. 5 3. While framing the assessment order, Ld. AO had disallowed the purchases made by the assessee as unexplained / non-existent purchase of Rs. 4,22,78,376/- and added back under the head PGBP, and also treated the sales of Rs. 2,53,351/- made by the assessee as unexplained credits under section 68 of the Act. 3.1 The Learned AO relied upon information regarding transactions caried out by the assessee with alleged entry operators during financial year 2018-19, relevant to A.Y. 2019-20 as follows: Rs. 2,53,351/- (by Mr. Ashok Kumar Gupta through M/s Madanlal Madho Prashad) Rs. 4,22,78,376/- (by Mr. Ashok Kumar Gupta through M/s Kalki Trading Company) 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A), which is partly allowed vide order 30.08.2024, by restricting the addition from Rs. 4,25,31,727/- to Rs. 3,23,241/-. 5. Against the aforesaid order of the Learned CIT(A), both the Revenue and the assessee have preferred the present appeal and Cross-Objection respectively before the Tribunal. 6. We have heard the rival submissions and carefully scanned the material available on record. ITA No.- 4975/Del/2024 B. C. Enterprises. 6 7. At the outset, assessee/appellant filed cross objection with regarding reopening of the assessment u/s 148 of the Act and and others, so it expedient to take up first the cross objection of the assessee. 8. In the course of hearing, the Learned AR submitted that no any approval u/s 151 of the Act supplied to assessee alongwith notice u/s 148 of the Act and 148A(d) as mandate in CBDT guidelines dated 01-08-2022 and non supplying the same is fatal. It is also submitted that the assessee by way of reply sought for adverse material and cross examination but none of them was provided and same is fatal as held by the coordinate bench in assessee’s own case for AY 2018-19 dated 04-04-2025 to same effect of the judgement in the case of Multimetal Ltd v/s DCIT (DBCWP 9007/2022 dated 19-03-2025) .It is also submitted that the lack of cross examination being provided to assessee despite request is fatal. From the perusal of assessment order, it reveals that vide response dated 16-03-2023 and19-03-2023, placed request for opportunity of cross examination of Shri Ashok Gupta on whose statement, case was reopened for the assessment u/s 147 of the Act but desired cross examination couldn’t took place and the addition in question made on the basis of uncrossed ITA No.- 4975/Del/2024 B. C. Enterprises. 7 statement as mentioned above and when such a material issue raised before the Learned CIT(A) by way of appeal, it is observed that the Learned AO has made every efforts to provide cross examination but in our humble opinion there is vast difference between making efforts and making ensure. It is also submitted that the notice in question SCN u/s 148A(b) issued to assessee is quite vague lacking application of mind. 9. There is material substance in the submission advanced on behalf of the assessee that the Learned AO solely relied upon the statement of Shri Ashok Kumar Gupta recorded during search and held that Shri Ashok Kumar Gupta himself admitted that he was engaged in providing accommodation entries of non-genuine purchases and non-genuine sales to various parties. The Learned AR in support to above submissions, relied upon assessee’s own case for A.Y. 2018-19 in ITA 4972/Del/2024 in the case of ITO Delhi v/s B.C. Enterprises, order dated dated 04-04-2025 which is squarely identical with present case, relevant extract thereof as under: - “ 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 ITA No.- 4975/Del/2024 B. C. Enterprises. 8 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/s148A(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 section 148A beforessue 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 Id. CIT(A) while dismissing this plea of the assessee in para 5.4.3 of the order has observed that ITA No.- 4975/Del/2024 B. C. Enterprises. 9 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 in281 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 flow 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) ITA No.- 4975/Del/2024 B. C. Enterprises. 10 -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 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 Rajasthan 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.” 10. On the basis of foregoing fact situation, the judicial precedents mentioned hereinbefore, and by following the order of the coordinate bench in the assessee’s own case for A.Y. 2018, we find that the addition made without providing an opportunity for cross examination is invalid in the eyes of law and there is material substance in the plea of assessee that the Learned AO supposed to provide all the relied-upon materials and relevant information alongwith notice u/s 148A(b). 10.1 Accordingly, in view of the foregoing discussion, the impugned assessment order dated 29.03.2024 passed under Section 147/144B and the first appellate order dated 30.08.2024 are held to be invalid and bad in law, having been passed in ITA No.- 4975/Del/2024 B. C. Enterprises. 11 violation of statutory provisions and principles of natural justice. Consequently, the additions made therein are directed to be deleted. 11. As we have decided the legal issue in favour of the assessee, the remaining grounds of Cross Objection as well as grounds of appeal of the Revenue need not be adjudicated. 12. Consequently, the appeal filed by the Revenue is dismissed, and the cross objection filed by the assessee is allowed. Order pronounced in the open court on 30.05.2025 SD/- SD/- (SHAMIM YAHYA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30.05.2025 Pooja, Sr. PS/- Copy forwarded to: 1. Appellant 1. Respondent 2. CIT 3. CIT(Appeals) 4. DR: ITAT ASSISTANT REGISTRAR ITAT, Delhi "