SUDESH KUMAR SHARMA,GHAZIABAD V. ITO, WARD- 2(3), GHAZIABAD

ITA 2012/DEL/2018

AI Insights

The case involves Sudesh Kumar Sharma, the appellant, contesting the reassessment order passed by the Income Tax Officer (ITO), Ward 2(3), Ghaziabad, for the assessment year 2009-10. The primary contention was regarding the legality of the reassessment proceedings initiated by the AO, which the appellant argued were without proper jurisdiction and mechanical in nature. The Tribunal admitted additional legal grounds raised by the appellant, focusing on the procedural lapses in the initiation of reassessment under section 148 of the Income Tax Act. The Tribunal's decision was heavily influenced by precedents set by the Supreme Court and the Delhi High Court, particularly concerning the necessity of proper application of mind by the AO before initiating reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312900 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Other Referred Cases: National Thermal Power Ltd. Vs. CIT, Jute Corporation of India Ltd. vs. CIT, PCIT vs. RMG Polyvinyl (I) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: ROHIT TIWARI
• Keywords: Set aside; Reassessment proceedings; Accommodation entries
• Section: 147; 148; 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 2012/Del/2018 A.YR. : 2009-10 SUDESH KUMAR SHARMA, C/O MUKUT LAL SHARMA, VILL HARSAON, GHAZIABAD UTTAR PRADESH (PAN: ATPPS3067F) VS. ITO, WARD 2(3), GHAZIABAD (APPELLANT) (RESPONDENT) Appellant by : Sh. Rohit Tiwari, Adv. Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR. Date of hearing : 28.04.2025 Date of pronouncement : 30.04.2025 ORDER PER SHAMIM YAHYA, AM : This appeal by the assessee has been directed against the order of the Ld. CIT(A-2), Noida dated 31.01.2018 pertaining to assessment year 2009-10 on the following grounds of appeal:- 1. That on the facts and in the circumstances of the case and in law, the order passed by the Ld. CIT(A) is bad in law. 2 | P a g e 2. That on facts and circumstances of the case, Ld. CIT(A) grossly erred in considering deposits of Rs. 84,33,500/- as unexplained cash and added to the income of the appellant u/s. 69 of the Income Tax Act. That the appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal. 2. The Ld. Counsel for the assessee submits that assessee has filed additional legal grounds of appeal with a prayer to admit the additional grounds. He placed reliance on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Ltd. Vs. CIT (229 ITR 383 and Jute Corporation of India Ltd. vs. CIT 187 ITR 688 (SC). 3. Heard rival contentions. The assessee has raised the following additional grounds in the appeal: 3. That the reassessment proceedings initiated by the AO for AY 2009-10 are without jurisdiction and thus liable to be set aside: 3.1 The AO erred in initiating re-assessment proceedings without obtaining the proper approval of the prescribed statutory authority under the Income Tax Act and issuing notice u/s. 148 in a mechanical manner. 3.2 The AO erred in initiating reassessment proceedings without appreciating facts on record and issuing notice u/s. 148 without proper application of mind. 4. The additional grounds raised by the assessee are purely legal grounds and goes to the root of the matter, thus, respectfully following the decisions of the Hon’ble Supreme Court in the cases of NTPC Vs. CIT and 3 | P a g e Jute Corporation of India Ltd. Vs. CIT (supra) the additional grounds filed by the assessee are admitted. 5. At the outset, referring to the aforesaid additional grounds, Ld. Counsel for the assessee referred to Paper Book Page no. 21 which contained the copy of “Form for Recording Reasons for initiating proceedings u/s. 148 and for obtaining the approval of the Pr. Commissioner of Income Tax”. In the said Form at Colum No. 8, it has been mentioned as under : - 8 Whether assessment is proposed to be made for the first time. If the reply is in the affirmative, please state- a)Whether any voluntary return had already been filed and b) If so, the date of filing the said return - - - - 5.1 On perusing the Column No. 8, as aforesaid, it revealed that nothing was written against the Column No. 8 of the Reasons Recorded in the aforesaid Form. Hence, Ld. Counsel for the assessee submitted that this is a wrong information recorded in as much as he submitted that income tax return was duly filed, a copy of which is attached with the Paper Book at Page No. 12, thus, he submitted that there is no application of mind by the AO while recording the reasons and accordingly, the assessment is liable to be quashed on this account. In this regard, he referred the decision of the Hon’ble Delhi High Court in the case of PCIT vs. RMG Polyvinyl (I) Ltd. 4 | P a g e [2017] 83 taxmann.com 348 (Delhi) and drew our attention towards para no. 9 of the aforesaid decision, which reads as under:- “9. However, in neither of the above cases are the facts similar to those in the present case. The two glaring errors in the reasons in the present case are, in fact, unusual. What the AO might have done if he was aware, even at the stage of consideration of reopening of the assessment that a return had in fact been filed by the assessee and that the extent of the accommodation entries was to the tune of Rs. 78 lakhs and not Rs. 1.56 crore would be a matter of pure speculation at this stage. He may or may not have come to the same conclusion. But that is not the point. The question is of application of mind by the AO to the material available with him before deciding to reopen the assessment under section 147 of the Act.” 5.2 Referring to the above, Ld. Counsel for the assessee pleaded that that the issue involved in the instant appeal is squarely covered by the aforesaid decision of Hon’ble Delhi High Court in the case of PCIT vs. RMG Polyvinyl (I) Ltd. (Supra), hence, the assessment is liable to be quashed. 5.3 Per contra, Ld. DR relied upon the orders of the authorities below. He submitted that the return of income was duly recorded by the AO in the assessment order and that assessee is raising this ground for the first time. 6. Upon careful consideration, we find that in the reasons recorded, AO has not mentioned anything against the Column No. 8, although the return 5 | P a g e was duly filed, which shows the non-application of mind on the part of the AO. In this view of the matter, the aforesaid decision of the Hon’ble Delhi High Court in the case of PCIT vs. RMG Polyvinyl (I) Ltd. (Supra), is squarely applicable in the instant case and accordingly, on the basis of the aforesaid exposition of the Hon’ble Delhi High Court, we hold that there is a complete non-application of mind on the part of the AO, hence, assessment is not valid in the eye of law and therefore, the same is hereby quashed. Since we have already quashed the assessment, the other grounds need not be adjudicated, therefore, the same are treated as infructuous. 7. In the result, the assessee’s appeal stand allowed. Order pronounced on 30.04.2025. SD/- (SUDHIR PAREEK) SD/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "