R B COMMODITIES PRIVATE LIMITED,DELHI V. DCIT CIRCLE 20(2), DELHI

ITA 3366/DEL/2023

AI Insights

The appeals ITA No. 3365/Del/2023 and ITA No. 3366/Del/2023 were filed by R.B. Agro Milling Pvt. Ltd. and R.B. Commodities Pvt. Ltd., respectively, against the orders passed by the CIT(A)-24, New Delhi, which confirmed the reassessment orders under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The reassessment was initiated based on information from the Investigating Wing, Delhi, alleging that income had escaped taxation. The Tribunal found that the reasons recorded for reassessment were a verbatim copy of the Investigation Wing report and lacked independent application of mind by the Assessing Officer. Furthermore, the approval for reopening the assessment was granted mechanically by the PCIT without proper deliberation, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312916 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Other Referred Cases: PCIT v. Meenakshi Overseas Pvt. Ltd., PCIT v. G & G Pharma India Ltd., Dhawan Creative Prints v. UOI, Sabh Infrastructure Ltd. V. ACIT, CIT, Jabalpur (MP) v. M/s S. Goyanka Lime and Chemical Ltd., PCIT v. M/s N.C. Cables Ltd., Vinod Kumar Solanki v. ACIT, Circle-61-1, Delhi & ors., Shri Hirachand Kanuga v. dCIT, Circle-1, Khadakpada, Kalyan (W), DCIT v. M/s Yaduka financial services Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Rejection of books of accounts; Bogus purchase; Reopening of assessment; Assessment record; Non compliance; Bogus
• Section: 147; 148; 143(3)

Judgement Text

"1 ITA Nos. 3365 & 3366/Del/2023 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 3365/DEL/2023 Assessment Year: 2012-13 R.B. Agro Milling Pvt. Ltd., 3958/2, Naya Bazar, Delhi-110006. PAN- AAECR 6013 P Vs DCIT, Circle-20(2), Delhi. APPELLANT RESPONDENT ITA No. 3366/DEL/2023 Assessment Year: 2012-13 R.B. Commodities Pvt. Ltd., 3958/2, Naya Bazar, Delhi-110006. PAN- AADCR 0538 C Vs DCIT, Circle-20(2), Delhi. APPELLANT RESPONDENT Assessee represented by Smt. Rano Jain, Advocate, Shri Pranshu Singhal, CA & Ms. Sakshi Rastogi, Adv. Department represented by Ms. Harpreet Kaur Hansra, Sr. DR Date of hearing 12.02.2025 Date of pronouncement 30.04.2025 O R D E R 2 ITA Nos. 3365 & 3366/Del/2023 PER Ms. MADHUMITA ROY, JM: The instant appeals, filed by different assessees of the same group, since involve common issues for adjudication, both the appeals were heard together and are being disposed of by a common order for the sake of convenience. 2. ITA No. 3335/Del/2023 for A.Y. 2012-13 in the case of R.B. Agro Milling Pvt. Ltd. is directed against order dated 29.09.2023 passed by the Ld. CIT(A)-24, New Delhi (DIN: ITBA/APL/M/250/2023-24/1056719406(1), arising out of the order dated 27.12.2019 passed by the Ld. DCIT, Circle-20(2), New Delhi under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 3. ITA No. 3336/Del/2023 for A.Y. 2012-13 in the case of R.B. Commodities Pvt. Ltd. is directed against order dated 29.09.2023 passed by the Ld. CIT(A)-24, New Delhi (DIN: ITBA/APL/S/91/2023-24/1056723101(1), arising out of the order dated 27.12.2019 passed by the Ld. DCIT, Circle-20(2), New Delhi under Section 143(3) read with Section 147 of the Act. 4. ITA No. 3335/Del/2023, in the case of R.B. Agro Milling Pvt. Ltd. is made the lead case and our finding therein shall follow mutatis mutandis in ITA No. 3336/Del/2023 in the case of R.B. Commodities Pvt. Ltd. 3 ITA Nos. 3365 & 3366/Del/2023 ITA No. 3335/Del/2023 (A.Y. 2012-13): 5. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case, the order passed by the ld. Commissioner of Income Tax (Appeals) [CIT(A)] is bad in law as well as on the facts of the case. 2. On the facts and circumstances of the case, Ld. CIT(A) has erred both on facts and in law in confirming the assessment order passed by the Assessing Officer [AO] without mentioning Document Identification Number (DIN) in the body of the assessment order which is a mandatory requirement as envisaged in Circular No. 19/2019 dated 14.08.2019 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the defective notice of demand issued u/s 156 of the Act without mentioning the Document Identification Number (DIN) which is a mandatory requirement as envisaged in Circular No. 19/2019 dated 14.08.2019 and hence, the income tax demand raised by issue of notice of demand is illegal, invalid and bad in law. 4. On the facts and circumstances of the case, Ld. CIT(A) has erred both on facts and in law in confirming the proceedings u/s 147 of the Income Tax Act, 1961 as the same was bad in the eyes of law as the procedure prescribed u/s 147 of the Act has not been complied with. 5. (i) On the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the reopening of the assessment proceedings u/s 147 of the Act without independent application of his mind. (ii) That the reasons to believe have been recorded placing reliance on the statement recorded of Mr. Anil Jindal who is not a director of the appellant company at the time of recording of statement during the course of survey. 6. (i) On the facts and circumstances of the case, the Id. CIT(A) has erred both on facts and in law in confirming the re-opening of the assessment proceedings u/s 147 of the Act despite the fact all material facts necessary for necessary for assessment under section 143(3) of the Act have been fully and truly disclosed. 4 ITA Nos. 3365 & 3366/Del/2023 (ii) That the aforesaid action has been taken without there being any whisper that the income has escaped due to the failure on part of the appellant to disclose fully and truly all material facts necessary for assessment as the same has been reopened after a period of four years from the end of relevant assessment year and the assessment has already been made under Section 143(3) of the Act. (iii) That the reasons to believe have been recorded without perusing the records of assessment proceedings originally concluded u/s 143(3) of the Act. 7. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the reopening of the assessment proceedings u/s 147 of the Act which is nothing but mere change of opinion. 8. On the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the re-opening of the assessment proceedings u/s 147 of the Act without obtaining necessary approval u/s 151 of the Act from the prescribed authority and that it was granted in a mechanical manner. 9. (i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the rejection of books of accounts of the appellant despite the same having kept as per law. (ii) That the books of accounts of the appellant have been rejected without requiring the appellant to produce the books of accounts during the course of assessment. 10. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition to the extent of Rs. 14,90,695/-on account of bogus purchases. 11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in confirming the said addition arbitrarily rejecting the material and evidences brought on record by the assessee to show that the purchases were made in regular course of the business and material so purchased was sold in the regular course of business. 5 ITA Nos. 3365 & 3366/Del/2023 12. (i) On the facts and circumstances of the case, the Ld. AO has erred both on facts and in law in making separate addition of Rs. 14,66,800/- being commission @ 1% of the alleged bogus purchases of Rs. 14,66,79,938/-. (ii) That the aforesaid addition has been made by the Ld. CIT(A) without issuing any show cause notice to the appellant. 13. That the appellant craves leave to add, alter or amend any of the grounds of appeal.” 6. Ground no. 1 is general and requires no adjudication. 7. In ground Nos. 2 & 3 though the assessee has raised the issue of assessment order having been passed without mentioning document identification number (DIN), however, has not been pressed. Therefore, ground Nos. 2 & 3 are dismissed as not pressed. 8. In ground Nos. 4 to 8 the assessee has challenged the initiation of proceedings under Section 147/148 of the Act due to non compliance of the statutory provision. It is the case of the assessee that assessment proceeding is a product of non-application of mind; the reasons recorded was only on the basis of the statement recorded of one Mr. Anil Jindal who was not a director of the appellant company at the time of recording of his statement during the course of survey. Further, that the allegation leveled against the assessee to this effect that all material facts necessary for assessment under Section 143(3) have not been fully and truly disclosed, is not sustainable in the eyes of law in view of the facts that during the course of assessment proceedings the entire details, as asked for, were 6 ITA Nos. 3365 & 3366/Del/2023 duly furnished before the Learned AO. Apart from that the reopening of assessment proceedings under Section 147 of the Act having been made without necessary approval under Section 151 of the Act renders the entire reassessment invalid as was another jurisdictional grounds raised by the assessee. Apart from these legal grounds, on merits, the assessment is also under challenge. At the threshold, as the legal grounds raised by the assessee, we would like to address the same before going into the merit of the matter. 9. The material facts leading to the case are that the assessee filed its return of income for A.Y. 2012-13 declaring total income at Rs. 41,27,357/- on 26.09.2012, assessment whereof was completed under Section 143(3) of the Act accepting the said return. Subsequently, on the basis of information received from the Investigating Wing, Delhi and upon analysis of the materials filed on record (as claimed to have been made), proceedings under Section 147 of the Act upon recording reasons was initiated that too upon prior approval of the CCIT-7, Delhi. The assessee in response to the notice issued under Section 148 of the Act filed a further return declaring the income at Rs. 41,27,360/- on 30.03.2019. On the request of the assessee, the reasons recorded by the Ld. AO were also duly furnished to the assessee. 7 ITA Nos. 3365 & 3366/Del/2023 10. The Ld. Counsel Ms. Rano Jain appearing for the assessee in this regard had drawn our attention to pages 52 to 66 of the paper book filed before us. It was submitted by her that on the basis of investigation report the case was reopened by the Ld. AO, a copy whereof is appearing at pages 828 onwards annexed to the paper book filed before us. It was contended by her that pages 56 to 64 of the reasons recorded by the Ld. AO is the verbatim copy of the Investigation Wing report appearing at pages 828 to 842 of the paper book. It was further submitted by her that while forming opinion that the Ld. AO has reasons to believe that the income has escaped from taxation, in the penultimate paragraph of the reasons so recorded, the Ld. AO categorically mentioned that the assessee has done a high value transaction and parallelly the ITR and assessment records revealed that no clarity on these huge amount of transaction was available on record. Such statement sought to justify that the ITR and assessment records of the assessee were duly in possession of the Ld. AO at the time of recording of reasons whereas the reply received by the assessee on the request made to the I.T. Department under RTI, speaks categorical admission that no such record was maintained in that office. Under these facts and circumstances of the matter, the Ld. Counsel for the assessee vehemently argued that there was sheer non-application of mind by the Ld. AO while recording reasons in the absence of original assessment records with him. In that view of the matter the entire proceedings is vitiated and deserves to be 8 ITA Nos. 3365 & 3366/Del/2023 quashed as also contended by her. In this regard she has relied upon the following judgments: - PCIT v. Meenakshi Overseas Pvt. Ltd. – ITA No. 692/2016 dated 26.05.2017 (Delhi High Court); - PCIT v. G & G Pharma India Ltd. ITA No. 545 of 2015 dated 08.10.2015 (Delhi High Court); - Dhawan Creative Prints v. UOI, dated 11.01.2018 (Delhi High Court) - Sabh Infrastructure Ltd. V. ACIT, W.P.(C) 1357/2016, [2017] 398 ITR 198 (Delhi High Court). 11. She has further raised a legal ground in favour of the assessee justifying her argument for quashing of the assessment proceedings. It was submitted by her that while giving sanction to issue notice under Section 148 of the Act by the Ld. PCIT, the said authority has recorded his satisfaction on 28.03.2019. In this regard she has drawn our attention to page 67 of the paper book filed before us which clearly reveals the fact of granting approval by the said PCIT solely on the basis of the reasons recorded. No deliberation has been made by the said statutory authority as to how the reasons so recorded is found to be acceptable to him for granting approval for reopening of assessment which further shows gross non-application of mind and, therefore, on that count too the reopening of assessment proceedings is invalid, void ab-initio and liable to be quashed as was the ultimate argument advanced by her. In this regard she has relied upon the following judgments: (i) CIT, Jabalpur (MP) v. M/s S. Goyanka Lime and Chemical Ltd.; 9 ITA Nos. 3365 & 3366/Del/2023 (ii) PCIT v. M/s N.C. Cables Ltd. - ITA 335/2015 (Delhi High Court); (iii) Vinod Kumar Solanki v. ACIT, Circle-61-1, Delhi & ors. (Delhi HC); (iv) Shri Hirachand Kanuga v. dCIT, Circle-1, Khadakpada, Kalyan (W), ITA Nos. 4261 & 4262/Mum/2012 (Mumbai ITAT); & (v) DCIT v. M/s Yaduka financial services Ltd. (ITA no. 1646/Kol/2017 (ITAT Kolkata). 12. On the other hand, the Ld. DR relied upon the orders passed by the authorities below. 13. We have heard the rival submissions made by the respective parties. We have also perused the relevant materials available on record. In order to adjudicate the legal issue the reasons so recorded by the Ld. AO for reopening of the assessment under Section 147/148 of the Act appearing at pages 50-56 of the paper book filed before us is reproduced as follows: 10 ITA Nos. 3365 & 3366/Del/2023 11 ITA Nos. 3365 & 3366/Del/2023 12 ITA Nos. 3365 & 3366/Del/2023 13 ITA Nos. 3365 & 3366/Del/2023 14 ITA Nos. 3365 & 3366/Del/2023 15 ITA Nos. 3365 & 3366/Del/2023 16 ITA Nos. 3365 & 3366/Del/2023 17 ITA Nos. 3365 & 3366/Del/2023 18 ITA Nos. 3365 & 3366/Del/2023 19 ITA Nos. 3365 & 3366/Del/2023 14. We have further perused the report of the Investigation Wing as annexed to the paper book filed by the assessee, appearing at pages 828 to 842 of the paper book. It appears that the reasons recorded by the Ld. AO is the replica of the observations made by the Investigation Wing dated 22.03.2019. Independent application of mind by the Ld. AO while recording reasons is, thus, totally absent. We also note that claiming the reasons so recorded by the Ld. AO was upon perusal of the ITR and assessment records of the assessee is found to be an incorrect statement keeping in view the reply of the RTI application dated 23.06.2022 appearing at page 919 dated 23.06.2022 of the paper book filed by the assessee. On this score the reason recorded since found to be non application of mind, the entire reassessment proceedings is vitiated and thus quashed. 15. Apart from the same the satisfaction recorded by the Ld. PCIT appearing at page 67 of the paper book has been considered by us. Mere perusal of the reasons recorded and expressing satisfaction without recording any observation as to how the Ld. PCIT has come to the level of satisfaction on the reasons recorded by Ld. AO that the assessee has failed to disclose fully and truly all material facts necessary for the assessment, the satisfaction is found to be a mechanical one and liable to be quashed. Thus on both the grounds raised by the assessee as narrated above are adjudicated in favour of the assessee. The order of assessment is, thus, quashed with the above observations. 20 ITA Nos. 3365 & 3366/Del/2023 16. Since the appeal is allowed on the legal grounds the other grounds raised by the assessee have become academic and no order needs to be passed. ITA No. 3366/Del/2023 (A.Yr. 2012-13): 17. Since the issue involved in this particular case is identical to the issue involved in ITA No. 3365/Del/2023, the order in favour of the assessee quashing the reassessment proceedings is applied mutatis mutandis in the instant case filed by the assessee. This appeal preferred by the assessee is also allowed upon quashing the reassessment proceedings. 18. In the result both the assessee’s appeals in ITA No. 3365/Del/2023 in the case of R.B. Agro Milling Pvt. Ltd. for A.Y. 2012-13 as well as ITA No. 3366/Del/2023 in the case of R.B. Commodities Pvt. Ltd. for A.Y. 2012-13 are allowed. Order pronounced in open court on 30.04.2025. Sd/- Sd/- (S. RIFAUR RAHMAN ) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30.04.2025. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 21 ITA Nos. 3365 & 3366/Del/2023 "