SINGHAL FASTENERS COMPANY PRIVATE LIMITED,NEW DELHI V. ITO WARD - 23(4), NEW DELHI

ITA 1992/DEL/2020

AI Insights

The case involves M/s Singhal Fasteners Company Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-31 New Delhi, sustaining an addition of Rs.80,80,000 to the assessee's income for the assessment year 2006-07. The reassessment was based on information from the Investigation Wing regarding alleged accommodation entries. The Tribunal admitted an additional ground concerning the mechanical manner of the approval for reopening the case and found that the approval was not based on an independent application of mind, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827810 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 31-12-2020
• Other Referred Cases: National Thermal Power Corporation Ltd. vs. CIT, ITO vs. Virat Credit & Holdings Pvt. Ltd., CIT vs. Goyanka Lime & Chemical Ltd., Signature Hotels Pvt. Ltd. v. ITO, Chiranjiv Lal vs. ITO, Sh. Kishan Chand Madan v. Income Tax officer ward-68(1) New Delhi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Keywords: Reopening of assessment; Accommodation entries
• Section: 147; 148

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI BEFORE SH. S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SH. SUDHIR KUMAR, JUDICIAL MEMBER ITA No.1992/Del/2020 Assessment Year: 2006-07 M/s Singhal Fasteners Company Private Limited 67-68 Rampuri Govind Puri Kalkaji New Delhi-19 Pan No. AAACS1428H Vs ITO ward-8(4) New Delhi (APPELLANT) (RESPONDENT) Appellants by Shri Abhishek Mathur, CA Respondent by Ms. Harpreet Kaur Hansra, Sr. DR. Date of hearing: 06/01/2026 Date of Pronouncement: 09/01/2026 ORDER PER SUDHIR KUMAR, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-31 New Delhi, [hereinafter referred to as “CIT(A)”], vide order dated 27.10.2020 pertaining to A.Y. 2006-07 arising out of the assessment order dated 28-03-2014 passed by the Assessing Officer under Section 147/143(3) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’]. Printed from counselvise.com 2 2. The assessee filed the application to admit the additional ground in which he stated that various grounds were raised by the assessee in this appeal but inadvertently ground relating to the approval obtained by the ld. Assessing Officer to re-open the case of the assessee from the learned Addl. CIT Range-8 New Delhi in a manner mechanical manner has not been taken. This is a legal ground which can be taken at any stage. Reliance is placed the case of National Thermal Power Corporation Ltd. vs. CIT 229 ITR 383 (SC). Heard, because the additional ground raised by assessee is purely legal, therefore, we admit the additional ground for adjudication. The additional grounds raised by the assessee is follow: “That the Hon’ble Commissioner of Income Tax Appeals) while sustaining the addition of Rs.80,80,000/- have failed to appreciate the fact that the reasons have been recorded by the learned Assessing officer only on the basis of information received from Investigation Wing without any independent application of mind and that the approval have also been given by the Addl. CIT range -8 new Delhi in a mechanical manner.” 3. The brief facts of the case are that the assessee filed its return of income at Rs.4,83,598/- on 30-11-2006. The case was re-opened u/s 147 of the Act on the basis of the information received from DIT (Inv) New Delhi that the accommodation entries were received by the assessee, and notice u/s 148 of the Printed from counselvise.com 3 Act was served on the assessee on 10-12-2013.After considering the submission submitted by the assessee the Assessing officer completed the assessment after making the addition of Rs.80,80,000/-. 5. Aggrieved by the order of the AO the assessee filed the appeal before the Ld.CIT(A), who vide his order dated 27-10-2020 dismissed the appeal against which the assessee is in appeal before the Tribunal. 6. The Ld. AR has submitted that the ld. Assessing officer recorded the reason only on the basis of information received from Investigating wing without any independent application of mind and the approval was also granted by the Addl. CIT,. Range -8 New Delhi in a mechanical manner. Reliance is placed on the following decisions: (i) In the case of ITO vs. Virat Credit & Holdings Pvt. Ltd. ITA no. 89/Del/2012 the co-ordinate bench in para no 12 held that “ Apparently, from the approval recorded and words used that “Yes. I am satisfied” it has proved on record that the sanction is merely mechanical and Addl. CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s 148 of the Act.” Printed from counselvise.com 4 (ii) In the case of CIT vs. Goyanka Lime & Chemical Ltd. (2015) 64 taxmann.com 313 (SC) the Hon’ble Supreme Court examined the identical issue as to according the sanction for reopening the assessment u/s 148 of the Act by merely recording “Yes. I am satisfied” and held that re-opening on the basis of mechanical sanction is invalid. (iii) Signature Hotels Pvt. Ltd. v. ITO 338 ITR 0051 (Delhi) (iv) Chiranjiv Lal vs. ITO 54 ITR (Trib) -349 (Amritsar) (v) Sh. Kishan Chand Madan v. Income Tax officer ward-68(1) New Delhi ITA NO 2900/Del/2023 7. Ld. Authorized Representative of the Revenue relied upon the orders of the below authorities. She submitted that the approval was granted in a prescribed manner after perusing the material. She also submitted that there is no prescribed preforma to grant the approval. 8. We have heard the revival contention of the parties and gone through the material available on record. We find that in the instant case approval was granted in a mechanical manner, therefore following the decision of the Hon’ble Supreme Court and Coordinate Bench, we hold that the approval granted in this case is a mechanical approval and the re-assessment proceedings initiated based on such approval is bad in law. Therefore, we allowed the additional ground raised by the assessee and quash the reassessment accordingly. Because the Printed from counselvise.com 5 legal issue is adjudicated in favour of the assessee, the other issues need not to be adjudicated upon. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 09.01.2026. Sd/- Sd/- ( S. RIFAUR RAHMAN) ( SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER SR Bhatanaggar Date:- 09.01.2026 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(Appeals) ` 5.DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "