M/S MAHAVIR TRADING CO (NOW KNOWN AS SHREE JAINA RICE AND ESTATES P LTD),DELHI V. ASSTT COMMISSIONER OF INCOME TAX, CIRCLE 22(2), DELHI, DELHI

ITA 3719/DEL/2025

AI Insights

The case involves M/s Mahavir Trading Co, which appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, concerning the assessment year 2013-14. The Assessing Officer had reopened the case under sections 147 and 148 of the Income Tax Act, 1961, due to non-filing of income tax returns by the assessee despite substantial financial transactions. The Tribunal found that the reassessment was based on incorrect facts, including the use of a wrong PAN and the assumption of jurisdiction over a non-existing entity post-dissolution of the partnership firm. The Tribunal noted the failure of the Assessing Officer to verify the facts adequately before initiating reassessment proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840134 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 04-06-2025
• Other Referred Cases: PCIT v. Maruti Suzuki India Ltd., Spice Entertainment Ltd. v. CST, CLSA India (P.) Ltd. v. DCIT, CIT v. Sony Mobile Communications India Private Limited, Parikh Marketing P Ltd vs PCIT, DLF Cyber City Developers Ltd vs ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA SINGH
• Assessee Lawyers: S K GUPTA
• Keywords: Set aside; Business income; Opportunity of being heard; Reassessment proceedings; Period of limitation; Reopening of assessment; TDS; Accommodation entries; Reason to believe; Time period of passing order; Scheme of amalgamation; Procedural lapse; FORM 26AS
• Section: 147; 148; 144; 143(3); 142(1); 43(5); 194C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES ‘F’: NEW DELHI. BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No. 3719/ DEL/2025 (Assessment Year : 2013-14) M/s Mahavir Trading Co Vs. ACIT (Now Known as Shree Jaina Rice Circle 22(2), And Estates Pvt. Ltd.), Delhi 5581, Lahori Gate, Naya Bazar, Delhi (PAN: AAIFM7522P) ASSESSEE BY : Shri. S K Gupta, CA REVENUE BY : Ms. Monika Singh, CIT-DR Date of Hearing : 07.01.2026 Date of Order : 25.02.2026 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to ‘ld. CIT(A)’) dated 19.05.2025 for AY 2013-14. 2. Brief facts of the case are, the Assessing Officer observed that based on the information available with the department that assessee is a firm having PAN No.AAIFM7522P has not filed its return of income for the assessment year 2013-14 which is evident from the e-filing history and the relevant Printed from counselvise.com 2 ITA No.3719/Del/2025 history is reproduced at page 1 of the assessment order. Based on the information available with the department, the Assessing Officer observed that:- a) As per Form 26AS assessee firm has earned contractual receipts of Rs.21,58,15,974/- during the year. b) Assessee firm deposited Cash in the its bank accounts of Rs 10,83,81,420/- & Rs. 10,73,30,000/- during the year. c) TDS of Rs. 101,554/- has been deducted against contractual payment to it. 3. The Assessing Officer noticed that, assessee has opted not to file its ITR despite of having substantial financial transactions therefore, the AO recorded his satisfaction to the reason that a sum of Rs. 21,58,15,974/- is chargeable to tax during the A.Y. 2013-14 has escaped assessment within the meaning of section 147 of the Income tax Act, 1961 (in short “Act”). Accordingly, after recording the above satisfaction and obtained necessary approval from the appropriate authority and initiated the proceedings u/s 147 of the Act. Following the issue of notice u/s 148 of the Act, several other notices were issued to the assessee u/s 142(1) and 144 of the Act. Since there was no response from the assessee, the Assessing Officer proceeded to make the additions as under:- Printed from counselvise.com 3 ITA No.3719/Del/2025 a) He estimated the net profit at the rate of 8% on contractual receipts of Rs.21,58,15,974/- and added Rs.1,72,65,278/- . b) Further added the investment made by the assessee in equity oriented scripts for trading of. Rs.10,88,00,000/-. c) Further added other source of income u/s 69A of the Act of Rs.10,83,81,420/- and added the interest to the extent of Rs.209,107/-. 4. Aggrieved with the above order, assessee preferred an appeal before NFAC Delhi and filed the detailed submissions before Ld. CIT(A) which is reproduced at page 2 to 16 of the impugned order. After considering the submissions of the assessee Ld. CIT(A) observed that, Assessing Officer has observed based on the information available with him that assessee has made different financial transactions but not filed the return of income for the relevant assessment year. Accordingly, the case of the assessee was reopened. He observed that before him assessee has submitted that the firm was dissolved in the relevant financial year and it was contended that the jurisdiction notice was not sent to the assessee. He observed that this evidence require verification by the Assessing Officer. After considering the assessment order, submissions of the assessee and various judicial decisions, he came to the conclusion that the assessment order was passed u/s 144 of the Act. After reproducing the Section 144 of the Act he came to the conclusion that Assessing Officer faced to the situation with a limitation or Printed from counselvise.com 4 ITA No.3719/Del/2025 inadequate information from the taxpayer. In such a situation, Assessing Officer has to make an assessment based on the available knowledge and resources. Before resorting to the best judgment assessment, the Assessing Officer must make reasonable efforts to obtain the necessary information. This includes sending notices to the taxpayer, providing sufficient response time and offering multiple opportunities to rectify discrepancies. Accordingly, he came to the conclusion that assessee must be given an opportunity to be heard before completion of assessment proceedings. By referring to the amendment made in Finance Act 2024, wherein power was given to the Ld. CIT(A) to remit the issue back to the Assessing Officer. He further, observed that Ld. CIT(A) may take report from the Assessing Officer after making further enquiry, before disposing of an appeal, however, in the case of best judgment assessment taxpayers remained non- responsive to the letters. Considering the peculiarities of the present case he remitted the issue back to the file of Assessing Officer to decide the issue on merits. 5. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal:- 1. The Ld. CIT(A) on the facts and circumstances of the case erred in upholding the validity of initiation of reassessment proceedings u/s 147/148 of IT Act on non-existing entity and consequently passing of assessment order passed u/s 147 rws 144 rws 144B of the Act also in the name of non-existing Printed from counselvise.com 5 ITA No.3719/Del/2025 entity which is void-ab-initio. 2. The impugned assessment is invalid and without jurisdiction as the said assessment is completed without complying with legal requirements of the provisions of section 147/148 of the Income Tax Act therefore such assessment is void ab initio and liable to be quashed. 3. The authorities below has erred both in law and circumstance of the case in initiating action u/s 147 of IT Act ignoring the fact that the proceedings have been initiated without application of independent mind on the material, if any, available. In view of the above defects in the compliances the resultant reassessment proceedings are required to be set aside. 4. The authorities below has erred both in law and circumstances of the case in initiating action u/s 147 of IT Act ignoring the fact that the proceedings have been initiated by mechanical approval accorded by approving authority and such approval vitiates the assessment. 5. On facts and in the circumstances of the case, the Ld CIT(A) has erred in law in upholding the impugned reassessment proceedings ignoring the fact that the jurisdictional notice u/s 148 was never served upon the appellant in compliance of sec 282A rwr 127 of IT rules 1962 and therefore, such proceedings without service of notice u/s 148 is invalid in law and void-ab- initio and without prejudice the notice u/s 148 under the unamended act issued after 31.03.2021 is invalid in view of decision of Monmohan Kohli. 6. On facts and circumstances of the case, the authorities below have erred both in law and in facts of the case in computing business income at Rs. 1,72,65,278/- by applying Estimated rate of 8% ignoring the submission of appellant. Printed from counselvise.com 6 ITA No.3719/Del/2025 7. On facts and circumstances of the case, the authorities below have erred both in law and in facts of the case in computing income at Rs. 10,88,000/- u/s 43(5) of IT Act on alleged trading in share/securities by applying ad-hoe rate of 1% ignoring the submission of appellant that no such transactions was ever done by it. 8. On facts and circumstances of the case, the authorities below have erred both in law and in facts of the case in making addition of Rs. 10,83,81,420/- u/s 69A rws 115BBE of IT Act treating the alleged cash deposits in bank accounts as unexplained money ignoring the submission of appellant and facts available on record. 9. On facts and circumstances of the case, the authorities below have erred both in law and in facts of the case in making addition of Rs.2,09,107/- u/s 56 of IT Act treating the alleged interest income appearing in Form 26AS in income of the appellant ignoring the submission of the appellant. 10. The appellant craves leave to add, DLEETE, modify / amend the above grounds of appeal with the permission of the Hon'ble appellate authority. 6. At the time of hearing, Ld. AR made following submissions:- Ground No 1: Assumption of jurisdiction u/s 147/148 based on the jurisdictional notice issued to a non-existing entity and completion of the reassessment on the same non-existing entity. The entity to whom notice u/s 148 was issued was a partnership firm existing until 27.02.2012 when the same was dissolved through a dissolution deed dated 27.02.2012 (PB 22-23) through which the business of the partnership was taken over by a company namely M/S Shree Jaina Rice Pvt. Ltd. w.e.f. 31.03.2012. A separate agreement dated 27.02.2012 was also executed between the above partnership and the said company (PB 23-24). The intimation of dissolution and takeover of business by the Company was duly Printed from counselvise.com 7 ITA No.3719/Del/2025 given to the Ld AO through letters dated 09.08.2012 (PB 21)and dated 30.05.2014(PB 20). From the foregoing details, the pertinent fact emerging is that the Ld AO was aware of the firm ceasing to in existence after dissolution / take over by the Company and the living entity relevant for proceedings qua the partnership firm, initiated after 01.04.2012 is the Company namely M/S Shree Jaina Rice Pvt Ltd and the assumption of jurisdiction by issuing notice u/s 148 after the said date to the erstwhile firm is not valid in law in view of the authorities discussed hereinafter:  The Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd. [TS-429-SC-2019] noted that the AO was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation.  In the case of Spice Entertainment Ltd. v. CST [TS-475-HC- 2011(DEL)], the High Court held that it was incumbent upon the income tax authorities to substitute the successor in place of the said person when the same was brought to knowledge of AO during assessment proceedings. Mere participation by the Appellant would be of no effect as there is no estoppel against law. Once it is found that assessment is framed in the name of non- existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act.  In the case of CLSA India (P.) Ltd. v. DCIT [TS-5148-HC- 2023(Bombay)-O], the High Court following the decision of Maruti Suzuki (supra) and Spice Entertainment (supra) held that once the AO is brought to the notice regarding the non-existence of entity the order of assessment would not be procedural defect but render it void. Further, the High Court also noted that the PAN in the name of non-existent entity had remained active does not create an exception in favour of the revenue to dilute in any manner the principles as held above.  In the case of CIT v. Sony Mobile Communications India Private Limited[TS-5067-HC-2023(Delhi)-O], wherein the AO was duly informed of the amalgamation that had taken place and was also furnished a copy of the scheme the High Court held that framing of order in the name of non-existing entity is not a mistake which can be corrected, by taking recourse to the powers available with the revenue under Section.292B of the Act.  In the case of Parikh Marketing P Ltd vs PCIT 2024 (4) TMI 20 (JHA), the Hon’ble Jharkhand High Court has quashed the reassessment proceedings on the identical reasons where notice u/s 148A was issued to erstwhile partnership firm after takeover of its business by a company. Printed from counselvise.com 8 ITA No.3719/Del/2025  In the case of DLF Cyber City Developers Ltd 34 ITR (Trib) 696 (ITAT Del) held that It is a settled law that the partnership firm and the company are separate juridical persons. Under the Income-tax Act also, they are assessed separately. Chapter IX of the Companies Act permits the conversion of the partnership firm into company and, on such conversion, the partnership firm ceases to exist and the company comes into existence. This incident has taken place on 1st March, 2006 and therefore, from 2nd March, 2006, DLF Cyber City firm is no more in existence. Notice under Section 148 was issued on 18th August, 2008, i.e., the date on which the partnership firm was not in existence. Thus, assessment in the hands of dead person would be clearly void. The above view was also upheld in the case of ACIT vs Neha Enterprises ITA No.3666/Mum/2015 dated 20.12.2017. Despite the above fact brought to knowledge of the assessing authority through objection dated 22.03.2022 (PB 17-19), still the mistake which is incurable, was perpetuated by passing of the order in the name of same non- existing entity. The above reassessment proceedings as well as reassessment order both are not sustainable in law and such defect is not curable even by taking recourse of sec 292B of IT Act as held in above decision of Parikh Marketing P Ltd (supra). As can be seen from the above judicial decisions, where the appellant has duly fulfilled its responsibility of informing the AO that partnership has ceased to exist and still the notice is issued in the name of non-existent entity then the defect cannot be cured as per the provisions of Section 292B of the Act and would make the entire proceedings as void-ab-initio and bad-in-law. Ground Nos.2 to 5 Invalid assumption of reassessment proceedings The validity of reassessment proceedings is challenged on the following reasons: 1. Non-Application of Mind and Assumption of Jurisdiction on Incorrect facts I.From the reason recorded (PB 10-11), it is evident that reassessment proceedings have been initiated for information of TDS deduction u/s 194A of IT Act on amount paid/credited/deposited to the appellant amounting to Rs.21,58,15,974/- as appearing in Form 26AS of the appellant. It may kindly be noted that the appellant’s PAN number given in the above reason is AAAPK2977L. The reopening based on the above reason shows that the Ld AO has picked wrong facts to initiate action against the appellant which gets supported from following facts: a. The PAN number of appellant is AAIFM7522P which is given in the reason recorded itself in para 1 and elsewhere in all the proceedings Printed from counselvise.com 9 ITA No.3719/Del/2025 conducted as fallout of above notice but the PAN number from which the transaction of Rs.21,58,15,974/- is taken different which is AAAPK2977L. Due to the above reason, the information forming basis for reassessment does not match with the Form 26AS (PB 25) where the only income given in Form 26AS is credit of interest of Rs.1,04,554/19 on which TDS of Rs.10,455/42 has been deducted u/s 194A of IT Act by HDFC Bank. b. In the reason recorded, there is mention of deduction of TDS u/s 194A being “Interest other than interest on securities” of Rs.21,58,15,974/- but Ld AO while completing the assessment found that the above information to the extent it pertains to deduction of TDS u/s 194A is not correct and Ld AO has found that it was in the nature of contractual receipts on which TDS obviously must have been deducted has been deducted u/s 194C of IT Act. II.In para 3.1 of reason recorded, there is mention of cash deposits aggregating Rs.10,73,30,000/- in banking company and Rs.10,83,81,420/- in saving bank account. The above information is also allegedly gathered from Form 26AS of the appellant but the Form 26AS (PB 25) does not show any such cash deposit/information. Moreover, during assessment proceedings, the Ld AO in the show cause notice dated 20.03.2022 (PB 13-16, relevant page 14 back in para 6(iv)) did not raise any query regarding the alleged cash deposit of Rs.10,73,30,000/- in banking company and has merely taken the deposit claimed to be made in saving account of Rs.10,83,81,420/-. The above information also is not correct as the appellant had no saving account by virtue the appellant being partnership firm is not authorized to open a saving bank account. III.The above facts clearly show that the initiation of reassessment proceedings is based on incorrect facts without the same being verified either from the bank or from the erstwhile firm or appellant prior to the action u/s 147. Such wrong facts relied by the JAO for assuming jurisdiction leads to invalidation of reassessment proceedings, specifically dealt by the following authorities:  Shamshad Khan vs ACIT 395 ITR 265 (Del);  Pr CIT vs M/S SNG Developers Ltd404 ITR 312 (Del) approved by Hon’ble Apex Court by dismissing SLP of revenue in SLP © 42379/2017 Dt: 09.02.2018;  M/s SynfoniaTradelinks P Ltd vs ITOW.P.(C) No.12544/2018 dt: 26.03.2021 (Del);  CIT vs Suren International Pvt Ltd 357 ITR 24 (Del);  Pr. CIT vs. RMG Polyvinyl (I) Ltd(2017) 396 ITR 5 (Del),  CIT vs., Atlas Cycle industries (1989) 180 ITR 319 (P&H); Printed from counselvise.com 10 ITA No.3719/Del/2025  Siemens Information System Ltd., vs. ACIT & Others (2007) 293 ITR 548 (Bom.);  Ankita A. Choksey vs. Income Tax Officer And Others (2019) 411 ITR 207 (Bon.);  DCIT vs M/s KLA Foods (India) Ltd and othrs ITA No.2846/Del/2015 dt: 08.04.2019, M/s SPJ Hotels P Ltd ITA No.2857/Del/2017, Karan Khurana vs ITO (2021) 92 ITR 114 (Del) (Trib), M/s Superior Buildwell P Ltd ITA No.3301/Del/2017 and Shree Balkrishan Aggarwal Glass Industries Ltd ITA No.5798/Del/2016 dt: 21.09.2020. IV.The Ld AO has not verified the facts to verify the correctness of information before triggering action u/s 147 of IT Act. The Hon’ble Delhi High Court in the case of Well Trans Logistics India Pvt. Ltd. Versus Addl. Commissioner of Income Tax & Ors 474 ITR 131 (Del) places emphasis on the duty of the AO to take further steps, make further enquiries and garner further material and if such material indicate that the income of the appellant has escaped assessment and then form a belief that the income of the appellant has escaped assessment. Reliance is also placed in Sh Rajiv Agarwal vs ACIT 395 ITR 0255 (Del) held that “even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Appellant has escaped assessment, form a belief that income of the Appellant has escaped assessment. There is non-application of mind by the AO could not be said to have reason to believe as to justify reopening of assessment.” V.The reason, therefore, are vague, opaque and non-communicative leaving the noticee clueless of the background of satisfaction in the reason that the transactions in question are being accommodation entries. In the case of Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. 395 ITR 677 (Del), it was held that reproduction of information without showing how the material referred in therein does not show application of mind by the AO in absence of any specific discussion on the material on the basis of which independent prima facie belief is reached that income has escaped assessment. To support the above proposition of law regarding non-application of mind by the AO on the reasons recorded, the reliance is placed on following decisions:  Pr. CIT vs. RMG Polyvinyl (I) Ltd., (2017) 396 ITR 5 (Del;  Pr. CIT v. G & G Pharma India Ltd 384 ITR 147 (Del.);  CIT vs Independent Media Pvt Ltd in ITA 108/2015 (Del);  Signature Hotels P. Ltd. Vs. ITO – [2011] 338 ITR 0051 (Del);  CIT Vs. SFIL Stock Broking Ltd. 325 ITR 285 (Del);  Sarthak Securities Co. P. Ltd. Vs. ITO 329 ITR 110 (Del); Printed from counselvise.com 11 ITA No.3719/Del/2025  CIT Vs. Supreme Polypropolene (P) Ltd.ITA No.266/2011 (Del);  CIT vs. Multiplex Trading & Industrial Co. Ltd 378 ITR 351 (Del.);  Hindustan Lever Ltd. Reported in [2004] 137 TAXMAN 479 (BOM.);  CIT vs. Greenworld Corporation 314 ITR 81 (SC);  M/s Synfonia Tradelinks P Ltd vs ITO W.P.(C) No.12544/2018 dt: 26.03.2021 (Del) 2. Validity of the reassessment order in absence of any addition based on the reason recorded for reopening of assessment. From the reason recorded (PB 10-11), it is evident that although the Ld AO has discussed number of issues in para 3 but the reopening of assessment has been made based on the TDS information as per Form 26AS u/s 194A of IT Act for the income allegedly earned by the appellant in the form of interest for Rs.21,58,15,974/- and other issues although discussed in the reasons don’t form part of reason for reopening as Ld AO has recorded a reason to belief that income of Rs.21,58,15,974/- has escaped assessment and other issues dealt in para 3 of the reason have not found to be justifying reopening of assessment and approval was accorded by the PCIT, Delhi for the above income escaping assessment and not the income discussed in para 3 therein. The validity of reassessment order can be tested with reference to the additions made in the order of assessment comparing the same for which reopening was initiated by the Ld AO. The assessing authority has not made any addition for interest income of Rs.21,58,15,974/- in the assessment order and the addition has been made on the different income which is stated to be contractual receipts on which profit is assessed at 8%. It is therefore a case where no addition based on reason has been made and if that be the case the Ld AO loses jurisdiction to make addition on other grounds unless a fresh reopening is done based on such other ground. In these circumstances, the resultant reassessment proceedings are required to be quashed in view of decision of jurisdictional Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs. CIT (2011) 336 ITR 136(Del) and Pr CIT vs Mideast Integrated Steels Ltd ITA No.1482/2018 (Del) dated 10.09.2024. Further, reliance is placed in decisions of CIT vs Jet Airways (I) Ltd. reported at (2011) 331 ITR 236 (Bom.), CIT vs Narayan Securities Pvt. Ltd (Del) ITA No. 40/2009 (Del), CIT Vs Cheil Communications India Pvt Ltd ITA 578/2012 dated 17.04.2013, CIT Vs Monarch Education Society387 ITR 416 (Del), CIT vs. Shri Ram Singh 306 ITR 343 (Raj.), CIT v. Software Consultants341 ITR 240 (Delhi) and Jeet Singh vs ITO ITA No..3068/Del/2017 dt: 24.06.2021. 3. Mechanical Approval u/s 151 of IT Act Printed from counselvise.com 12 ITA No.3719/Del/2025 The remarks of the Ld Pr CIT (Approved/I am Satisfied-----) while granting sanction u/s 151 (PB 10) shows the granting sanction was mechanical and ritualistic. Had either of the authorities being alive to the above anomalies in the reason, such anomalies could have been rectified not forming part of the reason. Such a sanction by the appropriate authority which does not demonstrate the due application of mind is invalid and not sustainable. Reliance is placed on the decisions of Capital Broadways P Ltd vs ITO2024(10) TMI (Del), PCIT vs Pioneer Town Planners (P) Ltd 465 ITR 356 (Del), Pr. CIT vs. N. C. Cables Ltd ITA 335/2015 dated11.01.2017 (Del), Chhugamal Rajpalv. S P Chaliha 5 (1971) 1 SCC 453 approved in UOI vs Rajiv Bansal 469 ITR 46 (SC) in para 31 therein, Sanjay Kumar Versus ACIT &Anr 458 ITR 548 (Del), Pr CIT vs MDLR Hotels P Ltd ITA Nos.593/2023 dated 30.07.2024 (Del), SBC Minerals vs ACIT 475 ITR 360 (Del), Dy CIT vs Sandeep Bajaj and Ors ITA No.2993/Del/2023 and Naveen Kumar Gupta vs ITO ITA No.592/Del/2020. 4. Non-Service of Jurisdictional Notice u/s 148 The common grievance of the appellant projected in the above grounds is the non-service of the jurisdictional notice issued u/s 148 of IT Act through the JAO assumed jurisdiction to reopen the assessment. From the perusal of screenshot of e-proceeding portal (PB 1), it is evident that the appellant was not served with any notices u/s 148 and also notices u/s 142(1) (PB 3) on email id as no email id is mentioned on which such notices were served. The above notices were also not served through physical mode too. The only notice which was sent through email is the show cause notice dated 20.03.2022 (PB 12-16). The appellant came to be aware of the reassessment proceedings when a notice dt: 14.03.2022 (PB 51) was physically served on old premise of non-existing firm through on 19.03.2022. The appellant through registered email id i.e. [e-mail] was also served a show cause notice u/s 144 dt: 20.03.2022 for the first time since the initiation of reassessment proceedings. It is interesting to note that in the above show cause notice there is mention of service of notice u/s 148 dt: 31.03.2021 on the above email id i.e. [e-mail] and the subsequent notices dt: 28.11.2021, 25.12.2021 and 03.03.2022. This fact is not correct as from the notices downloaded from e-proceeding portal of the department wherein the above notices dt: 31.03.2021 (PB 1-2) and 28.11.2021 (PB 3-4) issued by the jurisdictional AO have not been sent on the email id of the appellant although these notices have been appearing on e-proceeding portal. It is therefore emphasised that the jurisdictional notice u/s 148 has not been served on appellant company either through physical and email mode in accordance with Printed from counselvise.com 13 ITA No.3719/Del/2025 the procedure laid down u/s 282, 282A read with rule 127 of Income Tax Rules. The issue of service of such notice upon the appellant u/s 148 of the Act is a jurisdictional requirement which must be mandatorily complied with and the AO cannot be complete the reassessment without service of the notice u/s 148 of the Act. The reliance was placed on the judgment of the Hon ble Delhi High Court in the case of Pr. CIT Vs Atlanta Capital Pvt. Ltd. in ITA Nos. 6650 & 6651/2015, order dated 21.09.2015. The reliance is also placed on the following case laws:  Haryana Acrylic Mfg. CO. Vs CIT (2009) 308 ITR 38 (Del.);  Pr. CIT Vs Jagat Takies Distributers (2017) 398 ITR 13 (Del.);  CIT Vs Pradeep Kumar Gupta (2008) 303 ITR 95 (Del.) The judgment of Hon’ble Delhi High Court in Chetan Gupta 382 ITR 613 has emphasized the significance of the service of the notice u/s 148 on the appellant provided the notice is issued within the prescribed time u/s 148. But the issue of the notice at the correct address is the mandate of section 148 which cannot be violated and such violation of law vitiates the consequent assessment. The participation by the appellant in the assessment proceedings will not debar the appellant to raise the issue of non-service of the jurisdictional notice in appeal in view of the provisions of sec 292BB taking into account the objections of non-service raised before the AO. The above proposition is supported by the judgment of Chetan Gupta (supra) in para 46(vii). Further, the judgment in the case of Mayavati 321 ITR 349 (Del) relied on by the Ld CIT (AO does not lay down the proposition that the issue of notice at wrong address could satisfy the ingredients of section 148. The said judgment merely confirms the position of law that the notice need be issued with the prescribed time although service thereof may take place subsequently. Here the AO by issuing notice at the wrong address has not complied with the 282(1)(a) which requires issue of notice served by post on the last known address. The reliance is also placed on N Narayan Chetty Vs ITO 35 ITR388 (SC) wherein it was held that if no valid notice is issued within limitation period the reassessment is bad in law. Without prejudice to above, from the above discussion, it may kindly be appreciated that if the date when the appellant came to be aware of issue of notice u/s 148 in terms of the decision of jurisdictional Delhi High Court in the case of Suman Jeet Agarwal vs. ITO (2022) 143 taxmann.com 11(Delhi) dealt in co-ordinate Bench decision in case of Nitin Jain ITA No.1775/Del/2024, since such notice is deemed to be issued on thedate on which notice was first viewed by appellant on E-filing portal was to be construed as date of issuance of notice. The Hon’ble Court in the above case in para 31.6 also held that if such date of issuance is determined to be on or after 01st April, 2021, the Notices will be construed as notices issued Printed from counselvise.com 14 ITA No.3719/Del/2025 under section 148A (b) of the Act of 1961 in accordance with judgment in Ashish Agarwal 444 ITR 1 (SC).Thus, relying on the above decision, the issue date of notice u/s 148 would be construed to be the date when the appellant came to be aware of such notice after 01.04.2021 and the department was under obligation to comply with the direction of Hon’ble Supreme Court in Ashish Agarwal case (supra). Interestingly, the impugned assessment has been completed on the basis of the notice originally issued without converting the same as per dictates of the Hon’ble Apex Court to be proceedings u/s 148A of IT Act. The date on which notice was first viewed by appellant on E-filing portal was to be construed as date of issuance of notice. The Hon’ble Court in the above case in para 31.6 also held that if such date of issuance is determined to be on or after 01st April, 2021, the Notices will be construed as notices issued under section 148A (b) of the Act of 1961 in accordance with judgment in Ashish Agarwal 444 ITR 1 (SC).Thus, relying on the above decision, the issue date of notice u/s 148 would be construed to be the date when the appellant came to be aware of such notice after 01.04.2021 and the department was under obligation to comply with the direction of Hon’ble Supreme Court in Ashish Agarwal case (supra).Interestingly, the impugned assessment has been completed on the basis of the notice originally issued without converting the same as per dictates of the Hon’ble Apex Court to be proceedings u/s 148A of IT Act.The date on which notice was first viewed by appellant on E-filing portal was to be construed as date of issuance of notice. The Hon’ble Court in the above case in para 31.6 also held that if such date of issuance is determined to be on or after 01st April, 2021, the Notices will be construed as notices issued under section 148A (b) of the Act of 1961 in accordance with judgment in Ashish Agarwal 444 ITR 1 (SC).Thus, relying on the above decision, the issue date of notice u/s 148 would be construed to be the date when the appellant came to be aware of such notice after 01.04.2021 and the department was under obligation to comply with the direction of Hon’ble Supreme Court in Ashish Agarwal case (supra). Interestingly, the impugned assessment has been completed on the basis of the notice originally issued without converting the same as per dictates of the Hon’ble Apex Court to be proceedings u/s 148A of IT Act. 5. Non-Disposal of Objection to Assumption to Jurisdiction u/s 147 of IT Act The appellant came to be aware of the initiation of reassessment proceeding through physical service of notice dt: 14.03.2022 (PB 51) and immediately thereafter the appellant took action to file objection against the initiation of reassessment proceeding on 23.03.2023 (PB 26 & 17-19), the date of compliance of show cause notice u/s 144 (PB 12-16). The impugned assessment order has been passed under section 147 rws 144 rws 144B of IT Printed from counselvise.com 15 ITA No.3719/Del/2025 Act without disposal of objections by passing a speaking order by AA and therefore, such order is illegal and invalid. Non-disposal of the objections by passing a speaking order by the Ld. AA is a clear violation of the directions of the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs ITO (2003) 259 ITR (SC). In the case of Ferrous Infrastructure (P) Ltd. V DCIT [2015] 63 taxmann.com 201(Delhi) and CIT v Tupperware India p Ltd [2016] 284 CTR 68(Delhi), the assessment order was quashed on the ground of non-disposal of objections of the appellant. In the case of Nimitaya Hotel & Resorts Ltd. [2019]109 taxmann.com 185(Delhi-Trib.) and M/s Sunrise PropbuildPvt. Ltd. vs ACIT2025 (11) TMI 1906 - ITAT DELHIalso, the ratio of the above mentioned two decisions was followed. Further, reliance is placed in the case of Jayanthi Natarajan (Ms.) v. ACIT (2018) 401 ITR 215 (Mad) (HC). Ground No.11 On addition of Rs.1,72,65,278/- The basis of above addition is the information available in Form 26AS of departmental portal of the appellant having PAN: AAAPK2977L which belongs to an Individual as the fourth letter being “P” as mentioned in para 2 of reason recorded. As stated above, the above PAN does not pertain to appellant and therefore the data available in said Form 26AS belongs to otherAppellant having PAN: AAAPK2977L. The perusal of Form 26AS (PB 25) which will show that no contractual receipts are appearing therein. The appellant has replied to above show cause notice on 23.03.2022 (PB 27-29) which has not been considered by the AA while passing the impugned order.Therefore, the addition of above income based on some other PAN is invalid and bad in law being based on no material relevant to the appellant relied on. The department is under obligation to prove that the appellant has earned this income and in absence of such obligation being discharged, the addition in question being not upheld. Reliance is placed in the case of CIT Vs. Pradeep Kumar Gupta207 CTR Del 115 (Del)in which it was held that when section 147 and 148 of the Act was resorted to, the AO must first discharge the burden of showing that income had escaped assessment and it was only thereafter that the appellant had to provide all the answers. Ground No.12 On addition of Rs.10,88,000/- u/s 43(5) of IT Act. In this connection, it is categorically submitted that neither erstwhile firm nor the existing appellant has never maintained any demat/trading account with any broker in any manner during the year under consideration and therefore question of either of them doing any intraday trading or other trading in equity-oriented scripts, as alleged in the captioned notice does not arise. No details of broker, nature of the scripts or date of purchase/sale/settlement is not mentioned in the said notice which shows that there is no specific information to justify such addition which is proposed to be made @ 1% of total turnover of Rs.10,88,00,000/-. The appellant has replied to above show cause notice Printed from counselvise.com 16 ITA No.3719/Del/2025 on 23.03.2022 (PB 27-29) which has not been considered by the AA while passing the impugned order. In view of the decision of Hon’ble Delhi High Court in the case CIT Vs. Pradeep Kumar Gupta (supra), this addition does not survive in the absence of any material or evidence shared by the department, the appellant indeed has done the above transaction. Ground No.13 On addition of Rs.10,83,81,420/- The above addition has been made on account alleged cash deposit in the saving bank account in HDFC Bank. Details of particulars of Branch, Account Number was not given neither in the show cause notice nor in the impugned order wherein above cash was deposited. It is categorically denied that neither erstwhile firm nor the existing appellant has any saving account in any bank. It is also pertinent to note that the business entities are not allowed to open saving bank accounts i.e. partnership firm and companies. It is therefore appearing the above deposits pertains to appellant having PAN: AAAPK2977L which belongs to an Individual as the fourth letter being “P” as mentioned in para 2 of reason recorded (PB 10-11). Hence, this information and its source need be revisited and correct facts be kindly brought on record. No addition be made on the basis of incorrect data belonging to some other appellant. The appellant has replied to above show cause notice on 23.03.2022 (PB 27-29) which has not been considered by the AA while passing the impugned order. Besides above, your kind attention is invited to decision of Hon’ble Apex Court in the case of DN Singh vs CIT TS-252-SC-2023 dt: 16.05.2023 wherein it was held that for pre- requisite for invoking the provision of sec 69A is existence of some cash/money found which is not unaccounted for in the books of account. But in the present case neither of the two conditions are satisfied. In the present case, no cash or money is found unaccounted. Without prejudice, the credits in the bank accounts, which is made out to be the case by the Ld AA, cannot be treated to be unexplained money in terms of sec 69A. Ground No.14 Addition of Rs.2,09,107/- u/s 56 of IT Act It appears that the interest income has been taken from the Form 26AS of the entity having the saving bank accounts. The erstwhile firm form 26AS(PB 25) shows interest income of Rs.1,04,554/- which has been duly accounted in the existing appellant company in its audited balance sheet for AY 2013-14 (PB 31-49).Kindly refer note No.18 : “Short Term Loans and Advances” (PB 45 back) of appellant where the amount of TDS deducted in the name of Mahavir Trading Company is duly reflected and interest income received by the existing company on fixed deposit are shown in P&L Account in Note Nos.20 “Other Income” therein (PB 46). It is also noted that as explained above, there cannot be saving accounts in business entities in the form of partnership firm and companies. Therefore, no addition be kindly made.The appellant has replied to above show cause notice on 23.03.2022 Printed from counselvise.com 17 ITA No.3719/Del/2025 (PB 27-29) which has not been considered by the AA while passing the impugned order. 7. On the other hand, Ld. DR brought to our notice Form No.26AS for the relevant assessment year, wherein it is clear that, the partnership firm is still in existence and assessee is continued to utilize the Banking Services. The relevant Form 26AS is placed at page 25 of the paper book filed by the assessee and she submitted that since the PAN number as well as bank account is still in existence the claim of the assessee cannot be accepted, that the Firm is closed and non-existence. Further submitted that the decision of Maruti Suzuki (Supra) is distinguishable to the facts on record. Accordingly, relied on the detailed findings of the lower authorities. 8. Considered the rival submissions and material placed on record, we observed from the submissions made by the Ld. AR that the partnership firm was dissolved on 27.02.2012 and he brought to our notice page 22 of the paper book to show that the partnership firm existed in the name and style of M/s Mahavir Trading Company was transferred to a Private Limited Company incorporated under the Companies Act 1956 with the name of M/s Shree Jaina Rice Pvt. Ltd. Further he submitted that the business was continued in the Private Limited Company, all the assets and liabilities are already absorbed in the Transferee Company. Further, he submitted that the intimation of dissolution and takeover of the business was duly informed to Printed from counselvise.com 18 ITA No.3719/Del/2025 the Assessing Officer through letter dated 09.08.2012 and dated 30.05.2014. He placed a copy of the above said letters at page 20 and 21 of the paper book. We noticed that same is placed on record with the acknowledgment of the department dated 12th June 2014. Before us Ld. AR tried to present the case on the basis that Assessing Officer was aware of the fact that the firm under consideration is ceased to in existence after dissolution and taken over by the Company. Therefore, the Firm is already non-existent and assumption u/s 148 after the said date of the Transferor Firm is not in existence, in this regard he relied on the decisions of Maruti Suzuki India Ltd (Supra), Spice Entertainment Ltd. (Supra), CLSA India Pvt. Ltd. (Supra) and Sony Mobile Communications India Private Limited (Supra). 9. After considering the detailed submissions made before us, we observed from the Form 26AS that the firm is still existent in the name of the assessee and also the PAN is still in existence, we noticed that the Form 26AS was printed on 23rd March 2022 that means the PAN was still in existence on the date of passing of the assessment order. Therefore, even though the partnership firm was dissolved we noticed that the assessee has still utilized the above PAN to make certain deposits in the Bank account. It is not clear, why the assessee has kept the PAN alive and uses the same. 10. On merit Ld. AR of the assessee brought to our notice Pg.10 of the paper book to highlight that the PAN number mentioned in the reasons recorded Printed from counselvise.com 19 ITA No.3719/Del/2025 for reopening the case in which the PAN number mentioned as ‘AAAPK2977L’. whereas the actual PAN number of the assessee is a ‘AAIFM7522P’, he submitted that wrong PAN number was used to get the approval. Further, he brought to our notice page 28 of the paper book which is response letter filed by the assessee to the Assessing Officer on 23.03.2022, wherein assessee has demonstrated the cash deposits made in the bank in HDFC Bank wherein the relevant PAN applied belongs to individual not to the firm or the Company. It was prayed that the above PAN belongs to some other person not to the assessee, therefore, on merit also the issues is in favour of the assessee. He further submitted that the Section 148 notice was issued to the assessee after the expiry of 8 years. 11. After considering the above facts on record, we observed that the transaction note by the Assessing Officer relates to certain transactions of some other person by mistake, the Assessing Officer has initiated the proceeding u/s 147 of the Act. Further we noticed that, as per the Form 26AS dated 23rd March 2022 there are certain transactions wherein TDS was deducted u/s 194A of the Act. No doubt, the facts in record are in favour of the assessee. 12. However, we are inclined to remit the issue to the file of Assessing Officer with the limited direction to verify the details in Form 26AS wherein there are certain income was disclosed and whether the assessee has declared the same either in their return of income or in the book of account maintained in Printed from counselvise.com 20 ITA No.3719/Del/2025 the case of Private Limited Company. Since the Assessing Officer and Ld. DR not substantiate the fact that the information available with the Assessing Officer is belongs to the assessee or to the individual whose PAN Number was utilised to initiate the proceedings. It is settled position of law that the Assessing Officer cannot initiate proceedings with the wrong reasons or with wrong appreciation of facts. Further, the proceedings cannot be initiated in the case of the assessee after the expiry of eight years without recording the failure on the part of the assessee on the issue of information declared in the ROI or information submitted prior to conclusion of assessment u/s 143(3) of the Act. 13. Therefore, we direct the Assessing Officer to verify only to the extent of information available in Form 26AS whether the income declared in Form 26AS are already declared by the assessee and if found correct the same may be allowed in the favour of assessee as per law. 14. In the result, the appeal filed by the assessee is allowed with above terms. Order pronounced in the open court on this day of 25th February 2026 Sd/- Sd/- (SUDHIR KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: .02.2026 *Mittali Sr. PS Printed from counselvise.com 21 ITA No.3719/Del/2025 Copy forwarded to: 1. Appellant 2. Assessee 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "