INTERLINK FOODS PRIVATE LIMITED,SOUTH DELHI V. DCIT, CIRCLE - 10(1), DELHI

CO 126/DEL/2025

AI Insights

The case involves appeals by the Revenue against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, and cross objections by the assessee, M/s. Interlink Foods Private Ltd., concerning the assessment years 2011-12, 2015-16, and 2016-17. The primary issues revolved around the validity of the reassessment proceedings initiated by the Assessing Officer (AO) based on information from the Investigation Wing, which was later found to be incorrect. The Tribunal examined whether the AO had the jurisdiction to reopen the assessments and whether the reasons recorded for such reopening were valid. The Tribunal concluded that the reopening was based on incorrect facts and that the necessary procedural requirements under section 151 of the Act were not met, leading to the quashing of the reassessment orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785704 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 19-08-2025
• Other Referred Cases: Mohinder Singh Gill v. Chief Election Commissioner, Prashant S. Joshi v. ITO, Hindustan Lever Ltd. v. R.B. Wadekar, Union of India and others vs. Rajiv Bansal, IBIBO Group Private Limited v. ACIT, Circle 10 (1) & Anr., Make My Trip India Private Limited v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi &Anr., Income Tax Officer Ward 1(2) Jaipur v. R.K. Build Creation Pvt Ltd, Communist Party of India (Marxist) v. Income Tax Department, Genpact India Holdings v. ACIT,Circle- 1(3)(1)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: GURDEV SINGH CHAWLA
• Keywords: Set aside; Unexplained cash credit; Period of limitation; Accommodation entries; Competent authority
• Section: 147; 148

Judgement Text

"9IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No.4669, 4670 & 4671/DEL/2024 (Assessment Years : 2011-12, 2015-16 & 2016-17) DCIT, Circle 10 (1), vs. M/s. Interlink Foods Private Ltd., New Delhi. G – 02 and G-29, Rasvilas Salcon, Saket District Centre, Delhi – 110 017. (PAN : AABCI8762K) CO Nos.126, 104 & 105/Del/2025 (in ITA No.4669, 4670 & 4671/DEL/2024) (Assessment Years : 2011-12, 2015-16 & 2016-17) M/s. Interlink Foods Private Ltd., vs. DCIT, Circle 10 (1), G – 02 and G-29, Rasvilas Salcon, New Delhi. Saket District Centre, Delhi – 110 017. (PAN : AABCI8762K) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Gurdev Singh Chawla, Advocate REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 18.09.2025 Date of Order : 29.10.2025 O R D E R PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. The Revenue has filed appeals against the order of ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“ld. CIT(A)”, for short] dated 07.08.2024 for AYs 2011-12, 2015-16 & Printed from counselvise.com 2 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 2016-17. The assessee has also filed cross objections in the aforesaid assessment years. 2. Since the issues are common and the appeals and cross objections are connected, hence the same are heard together and being disposed off by this common order. 3. First we proceed to hear the cross objections raised by the assessee. CO No.126/Del/2025 (AY 2011-12) 4. Brief facts of the case are, assessee company is engaged in the business of food processing during the year under consideration. Assessee filed its return of income for AY 2011-12 declaring total income of Rs.5,92,857/- on 30.11.2011. The case of the assessee was processed under section 143(1) of the Income-tax Act, 1961 (for short ‘the Act’). Subsequently, information received from Pr. CCIT, Delhi vide letter dated 27.03.2018 intimating that the Investigation Wing of the Department conducted a search on the residential premises of Surendra Kumar Jain on 14.09.2010 thereby it was found that assessee has taken accommodation entry of Rs.30,00,000/- from Surendra Kumar Jain, Director of M/s. RKG Finvest Pvt. Ltd.. Based on the above information, the AO recorded reasons for reopening of the assessment. The same is placed at page 201 of the paper book. 5. At the time of hearing, ld. AR of the assessee brought to our notice above Printed from counselvise.com 3 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 reasons recorded for issuing notice u/s 148 of the Act and subsequently assessee filed objections against the above reasons recorded by the AO and further he brought to our notice page 3 of the assessment order wherein AO himself records as, “it is pertaining to mention here that there was a typographical mistake at the time of recording the reasons for reopening of the case. Moreover, the transaction reported by the wing was squared up loan and since no assessment had been carried out before, there was no way before the AO to find out the exact nature of the transaction that was reported by the Wing” and further he observed that the assessee has taken accommodation entries from other entities based on which he has completed the issues making advantage on the basis of modified reasons during the assessment proceedings. He submitted that the reason recorded by the AO is factually incorrect and legally invalid. In this regard, he submitted that the entire foundation of the reopening was based on non-existent facts, i.e., receipt from Surender Kumar Jain or RKG Finvest Pvt. Ltd and once the factual premise is wrong, the reasons to believe cannot survive. He further submitted that the AO’s subsequent admission that she intended other names (Twinkle Mercantile Pvt. Ltd. and Shalini Holding Pvt. Ltd.) is a clear case of post-facto substitution and the law is well settled that reasons recorded cannot be changed, supplemented, or corrected later. In this regard, ld. AR relied on the Printed from counselvise.com 4 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 following judgments:  Mohinder Singh Gill v. Chief Election Commissioner (AIR 1978 SC 851)  Prashant S. Joshi v. ITO (324 ITR 154, Bombay HC)  Hindustan Lever Ltd. v. R.B. Wadekar (190 CTR 166, Bombay HC). 6. Hence, he submitted that the reassessment founded on incorrect reasons is void ab initio. Further with regard to reasons cannot be substituted or improved subsequently, he submitted that the AO’s explanation that “there was a typographical error” is untenable and the reasons recorded under Section 148 are jurisdictional facts, forming the sole basis for the assumption of power. He submitted that once recorded, they are immutable and the substitution of parties or the nature of transactions at the assessment stage amounts to a complete change of the basis and is contrary to law. Therefore, the entire proceedings stand vitiated for want of valid and subsisting reasons. 7. With regard to no addition can be sustained when based on incorrect reasons, ld. AR submitted that it is trite law that no addition can be made on an issue alien to the reasons recorded and the AO, having recorded reasons relating to Surender Kumar Jain and RKG Finvest Pvt. Ltd., could not have made additions with respect to Twinkle Mercantile Pvt. Ltd, Shalini Holding Pvt. Ltd., Lakshya Viniyog and share application money. Accordingly, he submitted that since the addition made pertains to entirely different parties and facts, it cannot be sustained. He further Printed from counselvise.com 5 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 submitted that even otherwise, no addition is warranted on merits as the alleged receipts from Twinkle Pvt. Ltd. and Shalini Pvt. Ltd. were business advances and not loan and the assessee produced confirmations, bank statements, and correspondence evidencing that these advances were received for a proposed business arrangement that did not fructify and were returned in the same financial year, leaving no balance outstanding as on 31.03.2011.Therefore, no income accrued or arose, nor any unexplained credit existed within the meaning of Section 68. This factual position is duly substantiated from the audited financials and reconciliation statements forming part of the Paper Book filed before the ITAT. 8. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 9. Considered the rival submissions and material placed on record. We observe that the case of the assessee was reopened by issue of notice under section 148 of the Act by recording the reasons as supplied by the Investigation Wing with the observation that the assessee has taken accommodation entry of Rs.30,00,000/- from Surendra Kumar Jain of M/s. RKG Finvest Pvt. Limited. After objections raised by the assessee, the AO in the assessment order agrees with the fact that the reasons recorded were a typographical mistake and he proceeded to complete the Printed from counselvise.com 6 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 assessment with the new reasons which were not the reasons recorded for reopening of the case. After considering the facts on record, we observe that the reasons cannot be substituted or improvised during the assessment proceedings. The AO gets the jurisdiction to reopen the assessment mainly on the basis of reasons recorded and subsequent approval of the competent authority to initiate the proceedings. We observe that the AO has taken the approval from Pr.CIT with the information received from the Investigation Wing which was wrong. The AO has not verified the reason forwarded by the Investigation Wing and proceeded to initiate the proceedings with the wrong reasons. The AO completed the assessment with the new issue and with the new reasons that assessee has taken loans from Twinkle Mercantile Pvt. Ltd. and Shalini Holding Pvt. Ltd.. Since the initiation of proceedings is void ab initio, the assessment completed u/s 147 is also bad in law. In the result, the assessment order is set aside. Accordingly, the cross objections for AY 2011-12 filed by the assessee is allowed. 10. Since the cross objections filed by the assessee is allowed, the Department’s appeal for AY 2011-12 is also dismissed as infructuous. CO No.104/Del/2025 (AY 2015-16) 11. At the time of hearing, ld. AR of the assessee submitted before us key dates as under:- Printed from counselvise.com 7 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 Dates Notice/Order 30.06.2021 Notice u/s 148 of the Act (old regime) 18.05.2022 Notice u/s 148A(b) of the Act 30.06.2022 Response filed by the assessee to notice issued under section 148A(b) of the Act 26.07.2022 Order u/s 148A(d) of the Act 26.07.2022 Notice u/s 148 of the Act 29.05.2022 Assessment order u/s 147 rws 144B of the Act 12. In this regard, ld. AR submitted that the impugned proceedings initiated by the assessee is barred by limitation in view of the decision of Hon’ble Supreme Court in the case of Union of India and others vs. Rajiv Bansal (2024) SSC Online SC 2693 wherein the Revenue conceded that for AY 2015-16, all 148 notice which is on or after 1st April 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. He placed on record relevant decision of Hon’ble Supreme Court and he brought to our notice relevant findings of Hon’ble Supreme Court as under :- “(e) The Finance Act, 2021 ((2021) 432 ITR (Stat) 52) substituted the old regime for reassessment with a new regime. The first proviso to section 149 does not expressly bar the application of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 applies to the entire Income-tax Act, including sections 149 and 151 of the new regime. Once the first proviso to section 149(1)(b) is read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Printed from counselvise.com 8 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 Assessment Year Within Years Expiry of Limitation read with TOLA for (2) (3) Within Six Years (4) Expiry of Limitation read with TOLA 2013-2014 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-2015 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-16 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-17 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-18 30.06.2021 30.06.2021 31.03.2024 TOLA not applicable (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.” 13. Ld. AR further placed reliance on orders rendered by the by jurisdictional High Court in the case of IBIBO Group Private Limited v. ACIT, Circle 10 (1) & Anr., W.P.(C) 17639/2022 at Page Nos. 1-3 of the case law compilation and Make My Trip India Private Limited v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi &Anr.’ At Page Nos. 13-18 of the case law compilation, wherein Hon’ble High Court had quashed the re-assessment proceedings on the basis of the concession of the Revenue in the case of Rajeev Bansal (Supra). In this regard, he brought to our notice relevant paragraph of the order in the case of Make My Trip India Private Limited v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi &Anr. which is reproduced below: Printed from counselvise.com 9 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 “11. In the present case, the impugned notice was issued on 27.07.2022 which is admittedly beyond the period of limitation as prescribed under Section 149(1) of the Act. And, TOLA is not applicable in respect of the said notice, as was conceded by the Revenue in the case of Union of India v. Rajeev Bansal: 2024 INSC 754 (supra). The impugned notice is liable to be set aside.” 14. Ld. AR further submitted that it is pertinent to mention that in the case of Income Tax Officer Ward 1(2) Jaipur v. R.K. Build Creation Pvt Ltd: Special Leave Petition (Civil) Diary No. 59625/2024 at Page Nos 7-8 of the case law compilation, the Hon’ble Supreme Court had dismissed the SLP arising from a similar decision rendered by the Hon’ble Rajasthan High Court in DBCWP No.14414/2022 and the . The said order is set out below :- “Delay condoned. Having regard to the concession made by the petitioner-Department in the case of Union of India vs. Rajeev Bansal, Civil Appeal no.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration. Hence, the Special Leave Petition is dismissed. Pending application(s), if any, shall stand disposed of.” 15. Further he placed reliance on various judgements rendered by Hon’ble High Courts and Tribunal as stated below: a. Pratishtha Garg v. ACIT, Central Circle 25 Delhi (Delhi High Court) at Page Nos. 4-6of the case law compilation. b. Income Tax Officer, Ward-62(1), New Delhi v. Girish Kumar Gupta (ITAT- Delhi) at Page Nos. 80-89of the case law compilation. c. Assistant Commissioner of Income Tax Circle 19 (1) & Ors. V Nehal Ashit Shah (Supreme Court) at Page Nos. 19-21of the case law compilation. 16. On the other hand, ld. DR of the Revenue relied on the AO’s report. Printed from counselvise.com 10 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 17. Considered the rival submissions and material placed on record. We observe that before Hon’ble Supreme Court, Revenue had conceded that for AY 2015-16, all the appeals have to be dropped as they will not fall for completion during the period prescribed under TOLA, 2020. Based on the findings of Hon’ble Supreme Court, we are inclined to agree with the submissions of ld. AR of the assessee. Accordingly, the cross objections for AY 2015-16 filed by the assessee is allowed. 18. Since the cross objections filed by the assessee is allowed, the Department’s appeal for AY 2015-16 is also dismissed as infructuous. CO No.105/Del/2025 (AY 2016-17) 19. Considered the rival submissions and the material placed on record. Ld. AR also submitted the brief synopsis. From the submissions and the synopsis we observe as under. 20. We observe that the present appeal is filed by Revenue assailing the order dated 07.08.2024 passed by National Faceless Appeal Centre (‘NFAC’) under Section 250 of the Income Tax, 1961 (‘the Act’) for AY 2016-17 in the case of the assessee and the Assessee had filed cross objection also. Ld. CIT (A) vide order dated 07.08.2024 passed under Section 250 of the Act decided the appeal in the favour of the assessee on merits. Further, we observe that the instant case is covered on the jurisdictional aspect i.e., no notice under section 148 of the Act can be issued for AY 2016-17 Printed from counselvise.com 11 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 as the same is issued without prior approval of the specified authority under the new regime in view of the judgement rendered by Hon’ble Supreme Court in the case of ‘Union of India and Others vs. Rajeev Bansal [2024 SCC OnLine SC 2693]’. 21. In this regard, we observe that the notice dated 30.06.2021 by the AO under section 148 of the Act is illegal, bad in law, and without jurisdiction as the same has been issued without taking the valid approval/satisfaction from the prescribed authority mentioned under Section 151 of the Act. Further, we observe that under Section 151 of the Act, it has been provided that no notice under Section 148 of the Act shall be issued unless the AO has obtained prior approval of the specified authority to issue such notice and the specified authority for the purpose of this section has been defined in Section 151 of the Act. Section 151 of the Act which deals with the sanction of the specified authority for the issue of notice states specified authority for the purposes of section 148 and section 148A will be Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year. For the sake of clarity, section 151 of the Act is reproduced below: Printed from counselvise.com 12 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 “151. Specified authority for the purposes of section 148 and section 148A shall be,— (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.” 22. Further we observe that since more than 3 years have elapsed while issuing notice for the year under consideration, i.e., AY 2016-17, hence, the alleged approval has to be obtained from PCCIT or PDGIT, and if there is no PCCIT or PDGIT, then from CCIT or DGIT under the provisions of Section 151(b) of the Act. From the bare perusal of the notice dated 30.06.2021 under Section 148 of the Act, we observe that it is apparent that the AO ought to have taken the approval from PCCIT when more than 3 years had already elapsed from the end of the assessment year, hence, the alleged approval is erroneous, illegal, and bad in law. Further, as is evident from the aforesaid provisions of Section 151 of the Act, the procedures prescribed thereunder are mandatory in nature and Assessing Officers are bound to follow the procedure in letter and spirit. 23. Further we observe that in the present case, the reopening notice under section 148 pertains to AY 2016-17 viz. more than 3 years have elapsed Printed from counselvise.com 13 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 from the end of the Assessment Year. Thus, the Assessing Officer was required to obtain the prior sanction of either the 'Principal Chief Commissioner' or 'Principal Director General'. However, we observe that in the facts of the present case, the approval has been obtained from the PCIT-4, Delhi. It is well settled that the failure of an assessing officer to obtain the previous sanction of the specified authority vitiates the entire proceedings and the notice cannot be regarded as valid. A Power which is conferred upon a particular authority has to be exercised by that authority only and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. We further observe that in the present case, as approval is not from the 'specified authority' in terms of section 151(ii) of the Act, the impugned notice is without jurisdiction, invalid, unlawful, and is liable to be quashed. In this regard, we find force from the decisions of Communist Party of India (Marxist) v. Income Tax Department [2025] 174 taxmann.com 925 (Delhi), wherein the Hon’ble Delhi High Court had referred to the earlier decisions including the decision rendered by the Bombay High Court in J M Financial & Investments Consultancy Services (P.) Ltd. v. ACIT [W.P. No. 1050 of 2020]; Siemens Financial Services (P.) Ltd. v. Dy. CIT [2023] 457 ITR 647 (Bom) and Vidyadhar Shetty v. Income Tax Officer, Ward 28(1)(1), Mumbai & Ors. [W.P. No. 10849 of 2024]; the Madras Printed from counselvise.com 14 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 High Court in Ramachandran Shivan v. ITO [W.P. No.8570 of 2023] and the Orissa High Court in Ambika Iron and Steel (P.) Ltd. v. Pr. CIT [2023] 452 ITR 285 (Ori.) and had noted that the question as to which is the specified authority whose approval is mandatory, would depend on whether the notice under Section 148 of the Act was issued within a period of three years from the end of the relevant assessment year or thereafter. We further find force from the order rendered by Hon’ble ITAT, Delhi in the case of Genpact India Holdings v. ACIT,Circle- 1(3)(1), ITA No. 1527/Del/2024. 24. Further, we observe that it is trite law, that grant of the sanction by the authority under Section 151 of the Act, is not a mechanical act on his part but it requires due application of mind to the reasons recorded before granting the sanction and this has been provided so as to safeguard against issue of reopening notice (which seek to disturb the settled position) to ensure that assessee is not troubled with reopening issues without satisfactory reasons. Therefore, it must pass muster of the Superior Officer in the context of Sections 147 and 148 of the Act, before it is issued to the party. 25. Accordingly, in view of our above findings, we observe that in the present case the relevant Assessment Year is AY 2016-17, and notice is issued beyond 3 years, hence, the approval from PCIT-4, Delhi is illegal Printed from counselvise.com 15 ITA No.4669, 4670 & 4671/DEL/2024 CO Nos.126, 104 & 105/Del/2025 and bad in law. Thus, in the present case, the mandatory and binding provision of erstwhile Section 151 of the Act has not been followed and the approval has not been taken from the appropriate authority. Thus, the notice issued without a valid approval is illegal, bad in law and without jurisdiction and we quash the assessment on this ground alone. Accordingly, the cross objections for AY 2016-17 filed by the assessee is allowed. 26. Since the cross objections filed by the assessee is allowed, the Department’s appeal for AY 2016-17 is also dismissed as infructuous. 27. To sum up : all the cross objections filed by the assessee are allowed and the appeals filed by the Revenue are dismissed. Order pronounced in the open court on this day 29th of October, 2025. Sd/- sd/- (YOGESH KUMAR U.S.) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29.10.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "