DEPUTY COMMISSIONER OF INCOME TAX, DELHI V. SBC MINERALS PRIVATE LIMITED, DELHI

ITA 3411/DEL/2024

AI Insights

The case involves SBC Minerals Pvt. Ltd., which was reassessed by the Deputy Commissioner of Income Tax (DCIT) for the assessment year 2015-16, leading to an appeal by the Revenue against the CIT(A)'s decision to quash the reassessment order. The reassessment was based on alleged bogus entries amounting to Rs. 3.00 Crores. The primary legal contention was the validity of the notice issued under Section 148 of the Income Tax Act, 1961, which was challenged on the grounds that it was not properly signed and issued within the statutory time limits. The Tribunal examined whether the notice was validly issued under the old or new provisions of the Act, considering the amendments made by the Finance Act, 2021.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 27039 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Other Referred Cases: Rajeev Bansal vs. Civil Appeal No 8629 of 2024, Ashish Aggarwal (2023) 1 SCC 617
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHARI SAHIL KUMAR BANSAL
• Assessee Lawyers: NAVNEET SINGH
• Keywords: Invalid notice; Accommodation entries; Bogus
• Section: 147; 148; 144; 143(3); 13; 69A

Judgement Text

" ITA No. 3411/Del/2024 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘G’ NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 3411/Del/2024 Assessment Year: 2015-16 DCIT, Delhi Vs. SBC Minerals Pvt. Ltd., F-4, Manish Chamber, LSC, Surajmal Vihar, Delhi PIN: 1100 29 PAN :AAICS1403L (Applicant) (Respondent) ORDER PER ANUBHAV SHARMA: JUDICIAL MEMBRE This appeal by the Revenue is directed against the order dated 24.05.2024 of the Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre (NFAC), Delhi Department by Shari Sahil Kumar Bansal, Sr. DR Assessee by Shri Navneet Singh, CA Date of hearing 06.02.2025 Date of pronouncement 21.02.2025 2 ITA No. 3411/Del/2024 [hereinafter referred to as “CIT(A)”] pertaining to assessment year 2015-16 and arises out of the assessment order dated 29.03.2022 under section 147 r.w.s.147 of the IT Act, 1961 [hereinafter referred as ‘the Act’]. 2. The grounds taken by the Revenue are as follows: “1. Whether in facts and circumstances of the case, Ld. CIT(A) was right in allowing appeal of the assessee and quashing the assessment order. 2. Whether in facts and circumstances of the case, Ld. CIT(A) is right in holding that the requirements u/s 151(ii)(a) of the Act were not fulfilled, while issuing reassessment notice u/s 148 of the Income-Tax Act, 1961 in this case.” 3. On hearing, Learned DR has questioned the impugned order of Ld. CIT(Appeals) on the basis that as assessee had delayed filing of the return that led to treating the same as invalid but also delayed the assessment, therefore, according to the Learned DR the impugned order of Ld. CIT(Appeals) holding that the notice under Section 148 of the Act, is tainted for not being in accordance with law is not sustainable. 4. However, what we observe from the order of that Ld. CIT(Appeals) is that the Appellant is a Private Limited Company 3 ITA No. 3411/Del/2024 engaged in business of Coal. The appellant filed its return of Income electronically showing total income of Rs. 13,18,15,770/- on 30/09/2015. Initially, the case was selected for scrutiny assessment and an order was passed u/s 143(3) of the Act on 26/12/2017. Subsequently, as per information flagged by the Directorate of Income Tax(Systems) as per risk profiling, it came to the knowledge of AO that the appellant was beneficiary of alleged accommodation/bogus entries of Rs. 3.00 Crores taken from entities controlled by one Mr. Himanshu Verma in whose case a search and search operation was conducted u/s 132(4) of the Act. The AO accordingly, issued notice u/s 147 of the Act dated 31/03/2021 requiring the appellant to file a return in response thereto within 30 days. The appellant filed the return in response to notice u/s 148 on 17/02/2022 after expiry of time allowed and the AO thus treated the return filed by the appellant as invalid on the ground that the same has not been filed within time allowed. While holding the said return to be invalid, the AO noted that appellant dragged the compliance on its part till the last moment. The re-assessment proceedings were getting time barred on 31.03.2022. The AO further noted that since the return was filed with much delay 4 ITA No. 3411/Del/2024 beyond time allowed, the system was not accepting the return and the AO was not able to verify the filing of return on system/portal since the same was filed recently. The appellant did not transmit copy of ITR-V to the AO, it simply asked for reasons of re-opening vide its letter dated 19.02.2022 which was provided by the AO to the appellant. The AO then proceeded to complete the assessment u/s 144 of the Act and added the sum of Rs. 3.00 Crores to the total income of the appellant u/s 69A of the Act holding the same to be unexplained money representing alleged accommodation/bogus entries taken by the appellant from entity(s) controlled by said Mr. Himanshu Verma. 5. The case of assessee was that the notice issued u/s 148 dated 31.03.2021 has been digitally signed only on 01.04.2021, hence notice dated 31.03.2021 remained unsigned on the date of issue and thus non-exist and hence has been issued after the expiry of 6(Six) years from the end of the relevant assessment year. Hence the assessment order passed on the basis of this time barred notice is bad in law and must be quashed. Further it was claimed that that the notice u/s 148 has been issued on 31.03.2021 i.e. after the expiry of 4 (four) years from the end of the relevant assessment year against the original 5 ITA No. 3411/Del/2024 assessment order which was completed u/s 143(3) on 26.12.2017 is time barred and void ab initio and order passed on the same must be quashed as there is nothing in the reasons recorded about the failure of the appellant to disclose any material facts necessary for its assessment at the time of original assessment. It was submitted that the appellant had disclosed fully and truly all material facts necessary for its assessment at the time of original assessment u/s 143(3) and the assessing officer had examined, verified and considered all the points, materials vouchers and books of accounts at the time of original assessment and passed the assessment order accordingly. The Id. A.O. had not given any maternal facts which have been not disclosed by the appellant at the time of original assessment. Even on passing the assessment order he was not able to point out the actual alleged accommodation entries with the name of the party and date of the transactions which clearly show that he had acted on very vague information without any detail and cogent material. 6. We find that NFAC has observed that in this case, the notice u/s 148 bears the date as 31/03/21 whereas, the notice is digitally signed by the AO on 01/04/2021. Vide Ground No. 2, the appellant contends 6 ITA No. 3411/Del/2024 that Notice u/s 148 was non-existent on the date of issue on 31/03/2021 as the same was digitally signed by the AO on 01-04-2021 and reassessment order passed on the basis of such notice is liable to be quashed. NFAC took note of the fact that whole scheme of re- assessment has been changed w.e.f. 01.04.2021 by The Finance Act 2021. NFAC examined the issue if the reopening notice in this case will be treated as having been issued on 31.03.2021 or on 01.04.2021. and observed that in case, the reopening Notice is found to have been issued on 31/03/2021, the old provisions of Section 147, Section 148, Section 149 and section 151 shall apply otherwise the new reassessment laws will apply. It was conclude that in this case, the AO has issued notice u/s 148 which is dated 31-03-2021 and the AO has not followed the procedure prescribed under new scheme of reassessment and thus the AO has issued the notice u/s 148 under the provisions of section 147, section 148, section 149 and section 151 as they stood before their substitution by Finance Act 2021 w.e.f. 01-04- 2021. It is to be noted that the AO has issued the re-opening notice u/s 151(2) of the Act as it stood prior to 01-04-2021 as is evident from the fact that no prior approval/satisfaction of Pr.CCIT or Pr. CIT has been 7 ITA No. 3411/Del/2024 obtained by the AO. Instead, necessary satisfaction of the Joint Commissioner of Income tax has been obtained. The AO has not passed any order u/s. 148A(d) with approval of specified authority. Thus, it is clear that the AO has completed the reassessment proceedings under old provisions of the Act. Since Section 149 of the Act 1961 requires notice to be issued by Income Tax Authority, therefore, in terms of sub Section (1) of Section 282 A it has to be signed by that authority and to be issued in paper form or communicated in electronic form by that authority in accordance with procedure prescribed. Thus, considering the provisions of Section 282 and 282 A of the Act, 1961 and the provisions of Section 13 of the Act, 2000 and meaning of the word \"issue\" NFAC concluded that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the dispatch of an electronic record occurs when it enters into computer resources 8 ITA No. 3411/Del/2024 outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall be the date and time of issuance of notice under section 148 read with Section 149 of the Act, 1961. In this case, it was observed from the copy of Notice u/s 148 filed by the assessee, that the Notice bears the date 31/03/2021 and the Digital Signature of AO shows the date 'Thursday April 1, 2021 2.27 PM' On the foot note of the said notice, following has been written: \"If digitally signed, the date of digital signature may be taken as date of document\". In view of the above discussion, NFAC concluded that the impugned notice u/s 148 of the Act shall be treated to have been issued on 01.04.2021 as the same has been digitally signed by the AO on 01-04-2021 and in no case, issue of notice can take place before signing of the same either electronically or otherwise. Thus, in this case, the reassessment notice was held to be issued on 01.04.2021 and accordingly, new provisions of making reassessment, Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter referred to as \"TOLA\"), ratio of Supreme Court Judgement and consequent 9 ITA No. 3411/Del/2024 CBDT Instruction No. 1/2022 dated 11.05.2022 are made applicable by the NFAC. 7. The aforesaid observations of NFAC are completely in accordance with law and require no interference. Hon’ble Supreme Court in case of Rajeev Bansal (Civil Appeal No 8629 of 2024 order dated 3/10/2024) has reiterated the earlier order dated in Ashish Aggarwal (2023) 1 SCC 617, and the following principle is applicable to the case in hand; “28.1. The impugned Section 148 notices issued to the respective assessees which were issued under unamended Section 148 of the IT Act, which were the subject- matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter.” 8. Ld. DR has failed to establish that the order of NFAC is in any way beyond the principles laid down by the Hon’ble Supreme Court in the aforesaid referred two cases. The question to be examined is not just about the competence of sanction giving authority u/s 151 of the Act, but the larger issue has been examined by the NFAC and rightly decided against the AO. Thus grounds raised, as raised, have no substance. The appeal of Revenue is dismissed. 10 ITA No. 3411/Del/2024 Order pronounced in the open court on 21 .02.2025. Sd/- sd/- (MANISH AGARWAL) (ANUBHAV SHARMA) ACCOUNTANT MEMBRE JUDICIAL MEMBER Dated: 21st February, 2025 Mohan Lal Copy forwarded to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "