AI Insights
The case involves Nishit Shripal Bhandari, the appellant, who was assessed for the assessment year 2009-10. Initially, Bhandari filed a return declaring a total income of Rs.95,050. However, the case was reopened in 2016 based on information regarding accommodation entries of unsecured loans from the Gautam Jain/Sanjay Chaudhary group. The assessing officer added Rs.8,80,000 to Bhandari's income as unexplained, under section 68 of the Income Tax Act. Bhandari's appeal to the CIT(A) was unsuccessful, leading to the current appeal before the Tribunal. The primary legal issue was the validity of the reassessment notice under section 148, due to the lack of proper approval as mandated by section 151(1) of the Act.
Appeal details
Counselvise Citation
[2023] 102 COUNSELVISE.COM (IT) 1121 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-09-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
03-09-2023
Assessment Year
misc
Appeal Filed On
24-05-2023
Judgement Text
P a g e | 1 ITA No.1898/Mum/2023 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1898/Mum/2023 (A.Y. 2009-10) Nishit Shripal Bhandari 104, Parshva Kunj, Babulnath X Road-2, Babulnath, Near Jain Temple, Mumbai – 400 007 Vs. Income Tax Officer, Ward-19(2)(4) Matru Mandir, Tardeo, Mumbai – 400 007 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AENPB5326H Appellant .. Respondent [ Appellant by : Ketan Vajani Respondent by : Prakash Kishinchandani Date of Hearing 04.09.2023 Date of Pronouncement 26.09.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC, dated 28.03.2023 for A.Y. 2009- 10. 2. Fact in brief is that return of income declaring total income at Rs.95,050/- was filed on 27.07.2009. Thereafter, the case was reopened by issuing of notice u/s 148 of the Act on 09.03.2016 on the basis of information obtained from the DGIT(Investigation), P a g e | 2 ITA No.1898/Mum/2023 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) Mumbai, in respect of accommodation entries of unsecured loans provided by Shri Gautam Jain group /Sanjay Chaudhary group. The assessing officer stated that during the F.Y. 2008-09 the assessee has obtained accommodation entries to the tune of Rs.8,80,000/- from M/s Parshwnath Gems Pvt. Ltd. one of the concern of the above referred accommodation entry provider group. The assessing officer stated that assessee failed to prove the identity, creditworthiness and genuineness of the aforesaid loan transactions, therefore, the same was treated as unexplained amount u/s 68 of the Act and added to the total income of the assessee. 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). Before the ld. CIT(A) the assessee submitted that loan transactions were genuine after referring the loan confirmation letter, ITR acknowledgment of the lenders, bank statement highlighting the transactions. However, the ld. CIT(A) has not agreed with submission of the assessee and sustained the addition made by the assessing officer. 4. During the course of appellate proceedings before me at the outset the ld. Counsel submitted that reassessment made in the case of the assessee is invalid as assessing officer has not obtained the approval of Pr. CIT under subsection (1) of Sec. 151 of the Act prior to issue of notice u/s 148 of the Act as in the case of the assessee the reassessment has been made after the expiry of 4 years from the end of the relevant assessment year. The assessee has also referred the similar submission made before the ld. CIT(A). P a g e | 3 ITA No.1898/Mum/2023 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) On the other hand, the ld. D.R supported the order of lower authorities. 5. Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the case of the assessee was reopened u/s 147 of the Act by issuing of notice u/s 148 of the Act dated 09.03.2016 on the basis of information obtained from the DGIT(Investigation) Mumbai that assessee has taken accommodation entries from one of the concern of M/s Gautam Jain group/Sanjay Chaudhary group. On perusal of the assessment order it is noticed that assessment in the case of the assessee pertaining to assessment year 2009-10, was reopened on 09.03.2016 after expiry of 4 years from the end of the assessment year. As per provision of subsection (1) of Sec. 151 of the Act, the assessing officer has to obtain approval of Pr.CIT prior to issue of notice u/s 148 of the Act as in the case of the assessee the reassessment has been made after the expiry of 4 year from the end of the assessment year. However, I find that assessing officer has categorically mentioned at para 1 of the assessment order that the case was reopened u/s 147 of the Act by issuing of notice u/s 148 dated 09.03.2016 after recording reason and with the approval of the Joint Commissioner of Income Tax 19(2) Mumbai. In this regard, I have perused the provision of Sec. 151 of the Act dealing with sanction for issue of notice u/s 148 of the Act. Subsection (1) of Sec. 151 as amended by the Finance Act 2015 w.e.f 01.06.2015 clearly provides that no notice u/s 148 of the Act shall be issued by assessing officer after expiry of a period of 4 years from the end of the relevant assessment years, unless the Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner is satisfied, on the reason recorded by the assessing officer, that it is a fit case for the issue P a g e | 4 ITA No.1898/Mum/2023 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) of such notice. I have also perused the judicial pronouncements referred by the ld. Counsel in the case of Voltas Ltd. Vs. ACIT (2022) 154 taxman.com 127 (Bombay) held as under: “As per provision of section 151(1), sanction of Commissioner or Principal Commissioner is a pre-requisite for issuance of a reopening notice under section 148 after expiry of four years from end of relevant assessment year, therefore, impugned reopening notice issued with sanction of Additional Commissioner and not Principal Commissioner, being legally invalid, was liable to be set aside.” And Hon’ble High Court of Allahabad in the case of Reliable Finhold Ltd. Vs. Union of India (2015) 54 taxman.com 318 (Allahabad) wherein it is held as under: “Where original assessment was made under Section 143(3) issuance of notice u/s 148 after four years from the end of relevant assessment year without sanction of Commissioner was invalid.” And ITAT Mumbai benches in the case of Anil Jaggi Vs. ACIT, Circle 30(1) vide ITA No. 3049/Mum/2016 dated 20.12.2017 wherein it is held as under: “Failure on part of Assessing Officer to take sanction of appropriate authority contemplated under section 151(1) would go to very root of validity of assumption of jurisdiction by Assessing Officer.” In view of the above facts and finding the assessing officer has failed to obtain the approval of Pr. Commissioner of Income tax as provided in sub-section (1) of Sec. 151 of the Act, therefore, the 148 notice issued in the case of the assessee is quashed and set aside as invalid. Therefore, ground of appeal no. 1 of the assessee is allowed. 6. Since, I have quashed the notice issued and treated the assessment proceedings as invalid, therefore, ground no. 2 of the assssee is not required any adjudication and the same left open. P a g e | 5 ITA No.1898/Mum/2023 Nishit Shripal Bhandari Vs. ITO, Ward 19(2)(4) 7. In the result, the appeal of the assesse is allowed. Order pronounced in the open court on 26.09.2023 Sd/- (Amarjit Singh) Accountant Member Place: Mumbai Date 26.09.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.
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