RUPTEX MINERAL WATER PRIVATE LIMITED,NEW DELHI V. ITO, NEW DELHI

CO 210/DEL/2025

AI Insights

The case involves the Income Tax Officer, New Delhi, as the appellant, and Ruptex Mineral Water Private Limited, as the respondent, concerning the assessment year 2017-18. The core issue arose from a reassessment order where the assessee's income was allegedly understated due to bogus sales entries. The reassessment was challenged on procedural grounds, specifically the validity of the approval for reopening the assessment. The tribunal examined whether the proper authority had sanctioned the reassessment, as required by the amended provisions of Section 151 of the Income Tax Act, 1961, following the introduction of the new reassessment regime on April 1, 2021. The tribunal found that the approval was not obtained from the competent authority, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829576 (ITAT-NEW DELHI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: misc
• Appeal Filed On: 19-09-2025
• Other Referred Cases: Communist Party of India (Maxist) V. CIT(E), Sampartk Management Consultancy LLP v. DCIT, Curcle-5(2)(1) Noida, Upneet Singh Arneja Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: MAYANK PATAWARI; AKASH
• Keywords: Condonation of delay; Set aside; Reassessment proceedings; Period of limitation; Reopening of assessment; Accommodation entries; Competent authority; Bogus
• Section: 147; 148; 142(1); 68; 69C; 5(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘C’ NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3073/Del/2025 Assessment Year: 2017-18 Income Tax Officer, New Delhi. Vs. Ruptex Mineral Water Private Limited, K No. 799/1 Village Burari Jagatpur B.O. Jagatpur New Delhi. PIN: 1100 84, Delhi PAN :AABCR0261Q (Appellant) (Respondent) Cross-Objection No.210/Del/2025 (Arising out of ITA No.3073/Del/2025) Assessment Year: 2017-18 Ruptex Mineral Water Private Limited, K No. 799/1 Village Burari Jagatpur B.O. Jagatpur New Delhi. PIN: 1100 84 Vs. Income Tax Officer, New Delhi PAN : AABCR0261Q (Appellant) (Respondent) Department by Shri Shri Om Prakash, Sr. DR Assessee by Shri Mayank Patawari & Shri Akash Ojha, Advs. Date of hearing 04.11.2025 Date of pronouncement 14.01.2026 Printed from counselvise.com 2 ITA No. 3073/Del.2025 & CO No.210/Del/2025 ORDER PER VIMAL KUMAR, JUDICIAL MEMBER: The appeal filed by the Department of Revenue and Cross-Objections filed by the assessee are against order dated 10.03.2025 of Learned Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre (NFAC), Delhi (hereinafter referred as “the Ld. CIT(A)”) under Section 250 of the Income Tax Act, 1961 (hereinafter referred as “the Act”) arising out of Assessment Order dated 29.05.2023 of the Learned Assessing Officer/Assessment Unit (hereinafter referred as “the Ld. AO”) under Sections 147 read with section 144B of the Act for AY 2017-18. 2. Brief facts of the case are that the assessee filed return of income on 28.07.2017 declaring total income of Rs.60,96,993/-. A survey action was conducted on 27.04.2018 on M/s. Sarvroopey Vyapar Pvt. Ltd. at Sector 23 Dwarka and M/s. Shashi Sales & Marketing Pvt. L Astral Food Pvt Ltd & Rabik Exports Ltd. at G-10 Padma Tower, Rajendra Place, Delhi. Information in this case was received that during demonetization huge amount of cash was deposited in the accounts of entities. However, during the course of the survey and from post survey proceedings it was alleged that there were two main persons namely Smt. Rani Sharma and Shri Yash Pal Gupta, who were involved in providing accommodation entries of sale & purchase bills to various beneficiaries from many paper entities deposited in the bank accounts of these Printed from counselvise.com 3 ITA No. 3073/Del.2025 & CO No.210/Del/2025 entities. Initial, notice dated 27.04.2021 with approval of \"Range 19, Delhi\" was issued under Section 148 of the Act, however, the same was treated as a show cause notice under section 148A(b) of the Act by virtue of a letter dated 26.05.2022 issued to the assessee along with reasons for reopening of assessment which includes bogus sales amounting to Rs.4,11,56,500/-. The assessee, on 23.12.2021, filed objection to the reopening of the assessment u/s 147/148 and hence, notice issued u/s 148A(b) of the Act is bad in law and the same is liable to be dropped. An order under Section 148A(d) of the Act was passed on 30.07.2022, whereby the objections of the assessee was considered untenable by taking approval of Principal commissioner of Income tax-7, Delhi which is not in accordance with section 151(ii) of the Act. Notice under Section 148 of the Act was issued on 30.07.2022 whereby reassessment proceedings were initiated. Appellant has filed a Return of Income on 04.10.2022 declaring total Income as Nil. Accordingly, information was sought from the assessee vide notice dated 20.02.2023 issued under section 142(1) of the Act, wherein, assesse in response to same submitted copy of Balance Sheet, Profit & Loss Account, along with copy of notes/ schedules, copy of sale invoices, ledger confirmations, copy of bank statements, details regarding corresponding purchases made against alleged sales along with copy of purchase invoices. On completion of proceedings, Ld. AO vide order dated 29.05.2023 made addition of Rs.4,11,56,500/-. Printed from counselvise.com 4 ITA No. 3073/Del.2025 & CO No.210/Del/2025 3. Against order dated 29.05.2023 of Ld. AO, the appellant/assessee preferred appeal before the Ld. CIT(A) which was partly allowed vide order dated 10.03.2025. 4. Being aggrieved, the appellant/revenue preferred present appeal and assessee filed cross-objections. 5. In ITA No.3073/Del/2025, the Department of Revenue pleaded following grounds: “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition of Rs. 4,11,56,500/- to Rs.43,09,085/- U/s 68 of the Act, 1961 merely on the ground that the AO has not disputed the books of accounts whereas the AO has made the addition on account of beneficiaries of accommodation entries particularly. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.8,23,130/- made by AO u/s 69C without considering the fact that the assessee has incurred commission expenses to bogus entities. 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition without appreciating the fact that Smt. Rani Sharma and Sh. Yashpal Gupta in their statements recorded during survey on oath clearly admitted that the both alleged entities were amongst the several entities managed and controlled by them and their associates and these entities are merely used for providing accommodation entries. 4. The appellant craves to be allowed to add any fresh ground(s) of appeal and or deleted or amend any of the ground(s) of appeal.” 6. In Cross-objection No. 210/Del/2025, assessee pleaded following objections: Printed from counselvise.com 5 ITA No. 3073/Del.2025 & CO No.210/Del/2025 “1. That the Ld. CIT(A) has erred in law as well as on facts by restricting the addition to Rs. 43,09,085/-, without proper appreciation of the facts of the case. 2. That the Ld. AO has erred in law and on facts in computing the EBITDA without rejecting the books of account under section 145(3) of the Act, thereby rendering the computation arbitrary and unjustified. 3. That the respondent reserves the right to add, delete, amend, modify the grounds of cross objections”. 7. Learned Authorized Representative for assessee submitted that there is delay of 15 days in filing Cross-objections due time taken in engagement of a counsel. The explanation does not smack of mala fide as respondent-assessee has not gained anything by not filing cross-objection within the period of limitation. Therefore, delay of 15 days in filing cross-objection due to time taken in engagement of counsel is condoned. Application for condonation of delay of 15 days filing cross-objection is allowed. 8. Learned Authorized Representative for the Department of Revenue submitted that Ld. CIT(A) erred in restricting addition of Rs.4,11,56,500/- to Rs.43,09,085/- under Section 68 of the Act on the ground that Ld. AO has not disputed books of accounts whereas Ld. AO had made the addition on account of beneficiaries of accommodation entries. Ld. AO erred in deleting addition of Rs.8,23,130/- made by Ld. CIT(A) under Section 69C of the Act without considering the fact that the assessee has incurred commission expenses to bogus entities. 9. Learned Authorized Representative for the assessee submitted that the first notice under Section 148 of the Act was issued on 27.04.2021 for Printed from counselvise.com 6 ITA No. 3073/Del.2025 & CO No.210/Del/2025 assessment year 2017-18 at page 1 of the paper books. Notice dated 26.05.2022 under Section 148A(b) of the Act, page nos. 2-3 of paper books. Order dated 30.07.2022 under Section 148A(d) of the Act is at page no. 4.8 of paper books. Notice dated 30.07.2022 under Section 148 of the Act is at page no.9 of paper books. 9.1 The case of assessee relates to assessment year 2017-18 and notice dated 27.04.2021 was issued after a period of three years of relevant assessment years. The sanctioning authority should have been Principal Chief Commissioner of Income Tax or Principal Director General or Chief Commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. This issue is squarely covered by the Judgment of Hon'ble Jurisdictional High Court of Delhi in the case of Communist Party of India (Maxist) V. CIT(E) WP 9031/2023 dated 28.04.2024 and the case of Sampartk Management Consultancy LLP v. DCIT, Curcle-5(2)(1) Noida ITA No. 6025 & 6026/Del/2024 dated June 25, 2025. Reliance was placed on para 5 to 7 of order dated 27.08.2025 in ITA No. 1100/Del/2025 titled as “Upneet Singh Arneja Vs. ITO”. 10. On examination of record in light of above said rival contentions, it is crystal clear that notice dated 27.04.2021 under Section 148 of the Act was issued for assessment year 2017-18 at page no.1 of the paper books. After obtaining necessary satisfaction of the Range-19, Delhi. Notice dated 26.5.2022 Printed from counselvise.com 7 ITA No. 3073/Del.2025 & CO No.210/Del/2025 under Section 148A(d) of the Act at pages 2 and 3 of paper books. Notice dated 30.07.2022 under Section 148 of the Act was issued after obtaining prior approval of Ld. PCIT, Delhi accorded on 29.07.2022 (page no. 9 of the paper books). 11. A Co-ordinate Bench in ITA No.1100/Del/2025 titled as “Upneet Singh Arneja vs. ITO, Ward 45(1), New Delhi, order dated 27.08.2025 paras 5 to 7 has held as under: “5. Ld. Counsel for the assessee has raised the legal ground no.6 and stated that first notice u/s 148 was issued on 2805-2021for the A.Y. 2016- 17 under the old reassessment 5 tax regime, however due to the introduction of new reassessment tax regime from 01-04-2021 and in the compliance of the Hon’ble Supreme Court Order in the case of Ashish Agarwal notice u/s 148A(b) of the Act was issued on 18-05-2022 and consequent order under section 148A(d) of the Act on 28-07-2022 was issued. The case of the assessee relates to the A.Y. 2017-17 and the notice /order was issued on 28-07-2022 after a period of three years from the end of o relevant assessment Year, the sanctioning authority should have been Principal Chief Commissioner or Principal Director General or Chief commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. This issue is squarely covered by the Judgement of Hon’ble Jurisdictional Delhi High Court in the case of Communist Party of India (Maxist) V. CIT(Ex) WP 9031/2023 dated 28-04-2025 and the case of Sampark Management Consultancy LLP v. DCIT, Circle 5(2) (1) Noida ITA NO. 6025 & 6026 /Del/2024 dated June 25, 2025. In the case of Sampark Management Consultancy LLP v. DCIT, Circle -5(2) (1) Noida the Co-ordinate bench held as under: “3. We find that section 148 of the Act was substituted by the Finance Act, 2021 wet. 01.04.2021. Notice 14 of the Act as per the old provisions of section 148 of the Act applicable till 31.03.2021 should have been issued only upto 31.03.2021. The issue stands settled by the Hon'ble Supreme Court in Union of India vs Ashish Agarwal, 444 ITR 1 (SC) The assessee company was part of the litigations. The AO has issued notice u/s 148A(b) on 27.05.2022 Printed from counselvise.com 8 ITA No. 3073/Del.2025 & CO No.210/Del/2025 and on 28.07.2021 order was passed u/s 148A(d) and issued notice is 148 of the Act on the same date, i.e, on 28.07.2022 in AY 2016- 17 and while in AY 2017-18 on 27.07.2022 order was passed u/s 148A(d) and issued notice w/s 148 of the Act on 28.07.2022. This notice dated 28.07.2022 u/s 148 of the Act, available at page 14-15 of the paper book for AY 2016-17 and on pages 16-17 for PB for AY 2017-18, and same are shown to be issued after obtaining approval of Principal Commissioner of Income-tax, Noida. This approval is contrary to the provisions of section 151 of the Act as amended/substituted by the Finance Act, 2021 because, as per section 151 of the Act, if more than three years have lapsed from the end of the relevant assessment year, approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. In the present assessment years, notices u/s 148 have been issued on 28.07.2022 after expiry of three years from the end of relevant assessment years. Accordingly, sanction/ approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in Union of India vs. Rajeev Bansal, 2024 (10) TMI 264 SUPREME COURT) and various decisions. Thus, the approval is not sustainable under law. The grounds as raised deserves to be sustained. Consequently, the appeals of the assessee are allowed.” 6. The Ld. Sr. DR has relied the order of the lower authorities and submitted that the notice/ order was issued after taking the prior approval from the authority as per the directions of the Hon’ble Supreme Court in the case of Ashish Agarwal [2022] 444 ITR 1 SC. In the present case the notice was issued on 28-07-2022 for the A.Y. 2016-17 from the prior approval of the Pr. Commissioner, without, the approval of the authority specified u/s 151 of the Act. The notice was issued beyond the period of three years from the end of the relevant assessment year, thus in term of section 151(ii) of the Act the sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. Respectfully following the decision of the Hon’ble High Cort and the Coordinate Bench we allowed the appeal of the assessee and quashed the assessment order dated 20-04-2023. Printed from counselvise.com 9 ITA No. 3073/Del.2025 & CO No.210/Del/2025 7. We allowed the appeal of the assessee on legal ground the other grounds have become academic and keep them open for adjudication.” 12. In light of above material facts, by following the principles of judicial precedents, it is held that the reopening notice dated 27.04.2021 under Section 148 of the Act for assessment year 2017-18 is beyond period of three years from the end of assessment year. So, the approval/sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or Chief Commissioner but in present case, the same was obtained from the Principal Commissioner of Income Tax which is not competent authority. Therefore, impugned orders of Ld. CIT(A) and Ld. AO are set aside. 13. The findings on pure legal question have rendered adjudication of grounds of appeal of the Revenue and Cross-Objection filed by the assessee as academic. 14. In the result, the appeal filed by the Department of Revenue is dismissed and cross-objection filed by Assessee are allowed. Order pronounced in the open court on 14th January, 2026. Sd/- Sd/- (S RIFAUR RAHMAN) ACCOUNTANT MEMBER (VIMAL KUMAR) JUDICIAL MEMBER Dated: 14th January, 2026 Mohan Lal Printed from counselvise.com 10 ITA No. 3073/Del.2025 & CO No.210/Del/2025 Copy forwarded to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "