SAMEEP FABRICS PRIVATE LIMITED,AHMEDABAD V. DCIT CIRCLE 4 1 1 AHMEDABAD, AHMEDABAD

CO 2/AHD/2025

AI Insights

The case involves appeals by the Revenue against the orders of the Commissioner of Income-tax (Appeals), which had deleted a significant addition made by the Assessing Officer regarding alleged accommodation entries. The primary legal contention raised by the assessee in their Cross-objection was the invalidity of the notice issued under section 148 for reopening the assessment, due to the incorrect authority approving the notice. The tribunal's decision hinged on the interpretation and application of section 151 of the Income Tax Act, which governs the issuance of notices for reopening assessments beyond three years from the end of the relevant assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 789215 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 08-01-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHER SINGH; RAMESHWAR PRASAD MEENA
• Assessee Lawyers: GAURAV NAHTA; VIHAR SONI
• Keywords: Reassessment proceedings; Reopening of assessment; Accommodation entries
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 2018/Ahd/2024 & CO No. 2/Ahd/2025 (Assessment Year: 2017-18) & ITA No. 2019/Ahd/2024 & CO No. 3/Ahd/2025 (Assessment Year: 2018-19) The DCIT, Circle 4(1)(1), Ahmedabad Vs. Sameep Fabrics Pvt. Ltd., 151, Devraj Industrial Park, Nr. Kankaria Textiles, Pirana Piplaj Road, Ahmedabad-382405 [PAN : AAFCA 4848 N] (Appellant) .. (Respondent & Cross Objector) Assessee by : Shri Gaurav Nahta, AR & Shri Vihar Soni AR Revenue by: Shri Sher Singh, CIT-DR & Shri Rameshwar Prasad Meena, Sr DR Date of Hearing 13.11.2025 Date of Pronouncement 24.11.2025 O R D E R PER BENCH : These two appeals filed by the Revenue and the corresponding Cross-objections thereof filed by the assessee are directed against the respective orders of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"CIT(A)\" for short), both dated 23.09.2024, passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Years (AY) 2017-18 & 2018-19. 2. Since the issues involved in these appeals are identical, they were heard together and are being disposed of by way of this common order for the sake of convenience. 3. For the purpose of adjudication, we shall take ITA No.2018/Ahd/2024 for AY 2017-18 as lead case. Printed from counselvise.com ITA Nos. 2018 & 2019/Ahd/2024 & CO Nos. 2 & 3/Ahd/2025 DCIT Vs. Sameep Fabrics Pvt Ltd Asst. Year : 2017-18 & 2018-19 - 2– 4. The Revenue has raised following grounds of appeal :- “(a) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 89,30,844/ out of Rs 99,23,160/- made by AO on account of accommodation entries received from the entities M/s. Shakti Creations which are controlled by Shri Sanjay Tibrewal despite the fact that the assessee has failed to establish as to why these parties have taken recourse of M/s. Shakti Creations as a supposed mediator party for payment and the assessee has also failed to furnish documentary evidences like agreement/order, godown space/rent, transportation bills and transportation service for sale/purchase of goods etc. to establish the genuineness of transaction.” 5. The Cross-Objection raised by the Assessee are as follows:- “1. The notice u/s 148 of the Act dated 31-07-2022 and order u/s 148A(d) of the Act dated 30-07-2022 were issued after obtaining prior approval of PCIT, Ahmedabad- 3 which is not an appropriate specified authority by virtue of section 151 (ii) of the Income Tax Act und hence, the said notice issued u/s 148, order passed u/s 148A(d) of the Act and consequent assessment finalized u/s 147 of the Act were invalid and thus, are liable to be quashed. 2. The issuance of notice u/s 148 of the Act dated 31-07-2022 by the Jurisdictional Assessing Officer is in violation of provisions contained u/s 151A of the Act and the scheme notified therein and hence, the impugned proceeding u/s 148 of the Act is invalid in law and is liable to be quashed. Ld. CIT(A) (NFAC) has erred in law in not allowing the said ground of appeal. 3. Ld. CIT (A) (NFAC) has erred in confirming the addition to the extent of Rs. 9,92,316/- representing 10% of gross profit on sales transactions aggregating to Rs. 99,23,160/- entered into with 12 customers as mentioned in decisive para 5(b) of the impugned assessment order. The said addition has been confirmed by Ld. CIT(A) on assumption basis.” 6. We have heard the rival contentions and perused the material available on record. The primary issue raised by the assessee in its Cross-Objection pertains to the validity of notice issued u/s 148 of the Act for AY 2017-18 and AY 2018-19, wherein the wrong Sanctioning Authority has given approval for reopening of assessment beyond three years as specified in Section 151 of the Act. For better understanding, Section 151 is reproduced as follows: “Sanction for issue of notice. 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Printed from counselvise.com ITA Nos. 2018 & 2019/Ahd/2024 & CO Nos. 2 & 3/Ahd/2025 DCIT Vs. Sameep Fabrics Pvt Ltd Asst. Year : 2017-18 & 2018-19 - 3– Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.” 6.1 From the records, it is noted that: • The notice u/s 148 was issued on 31.07.2022 for AY 2017-18 and for AY 2018- 19 on 10.04.2022, which are clearly beyond three years period. • The 148 notices were issued after obtaining approval from the Principal Commissioner of Income-tax (PCIT), Ahmedabad-3. 6.2 As per clause (ii) of Section 151 of the Act, where more than three years have elapsed from the end of the relevant assessment year, the specified authority for issuance of notice u/s 148 must be the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, and not by the Principal Commissioner. In the present case, since three years had already lapsed from the end of AY 2017-18 on 31.03.2022, the approval granted by the Ld. PCIT is not in accordance with the statutory mandate. This fact has not been disputed by the Revenue. Therefore, the sanction accorded by PCIT to reopen the assessment is invalid in law, rendering the notice issued u/s 148 and all subsequent proceedings void ab initio. Accordingly, the reassessment proceedings initiated u/s 147 of the Act and the orders passed thereunder are treated as null and void. Printed from counselvise.com ITA Nos. 2018 & 2019/Ahd/2024 & CO Nos. 2 & 3/Ahd/2025 DCIT Vs. Sameep Fabrics Pvt Ltd Asst. Year : 2017-18 & 2018-19 - 4– 6.3 Since the very foundation of the assessment proceedings stands quashed, the issues raised by the Revenue on merits and grounds raised by the assessee on addition/disallowance become academic and are therefore not adjudicated. 7. In the result, the Cross-objections filed by the assessee are allowed, whereas the appeals filed by the Revenue are dismissed. The order is pronounced in the open Court on 24.11.2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 24/11/2025 **btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ……words processed by the Hon’ble VP on his PC on 13.11.2025…... 2. Date on which the typed draft is placed before the Dictating Member ………20.11.2025….. 3. Other Member………21.11.2025…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ………21.11.2025.………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement ……24.11.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S …….……24.11.2025…………. 7. Date on which the file goes to the Bench Clerk …24.11.2025… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "