SUKUMAR BUILDWELL PRIVATE LIMITED,NEW DELHI V. ITO, WARD-24(3), NEW DELHI

ITA 1943/DEL/2021

AI Insights

The case involves Sukumar Buildwell Pvt. Ltd, which appealed against the reassessment order for the assessment year 2008-09. The reassessment was based on information from the Investigation Wing regarding alleged accommodation entries provided by the company. The primary legal issue was the validity of the reassessment proceedings, particularly the approval process under section 151 of the Income-tax Act, 1961. The Tribunal examined whether the approval for reopening the assessment was obtained in accordance with legal requirements and found it to be mechanical and thus invalid.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34798 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Other Referred Cases: CIT Vs. S. Goyenka Lime and Chemicals Ltd, PCIT Vs. NC Cables Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: SHILPI JAIN
• Keywords: Reassessment proceedings; Depreciation; Accommodation entries; Competent authority
• Section: 147; 148; 143(3); 64

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ITA No. 1943/Del/2021 (Assessment Year: 2008-09) Sukumar Buildwell Pvt. Ltd, B-5/263, Sector-3, Rohini, New Delhi-85 Vs. Income Tax Officer, Ward-24(3), New Delhi (Appellant) (Respondent) PAN: AAICS7517H Assessee by : Ms. Shilpi Jain, CA Revenue by: Shri Om Parkash, Sr. DR Date of Hearing 08/01/2025 Date of pronouncement 08/01/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.1943/Del/2021 for AY 2008-09, arises out of the order of the Commissioner of Income Tax (Appeals)-31, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 263/17-18 dated 31.08.2018 against the order of assessment passed u/s 148 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 29.03.2016 by the Assessing Officer, ITO, Ward-24(3), New Delhi (hereinafter referred to as „ld. AO‟). 2. Though the assessee has raised several grounds, one of the grounds raised is challenging the validity of reassessment proceedings. The assessee has also raised additional grounds dated 22.04.2021 specifically stating that notice u/s 148 of the Act was issued without obtaining proper approval u/s 151 of the Act in the proper manner. This additional ground goes to the root ITA No. 1943/Del/2021 Sukumar Buildwell Pvt. Ltd Page | 2 of the matter and hence, we proceed to adjudicate the same first together with the regular legal grounds raised in the original ground of appeal. 3. We have heard the rival submissions and perused the materials available on record. The assessee is a private limited company and had filed its return of income originally for the AY 2008-09 on 02.09.2008 declaring income of Rs. 2,09,260/-. This return was duly processed u/s 143(3) of the Act on 29.07.2009. Later information was received from Investigation Wing, New Delhi vide letter dated 21.03.2012 and 12.03.2013 that there was search operation carried out in the case of Shri Surendra Kumar Jain group of cases by the Investigation Wing wherein, it revealed that the group was engaged in providing accommodation entries to various beneficiaries. Based on such information, the assessment of the assessee was sought to be reopened u/s 147 of the act and accordingly notice u/s 148 of the Act was sought to be reopened u/s 148 of the Act stood issued to the assessee on 31.03.2015 after taking approval of ld JCIT, Range-24, New Delhi in terms of Section 151 of the Act. 4. We find that the assessee in its paper book had enclosed the sanction accorded u/s 151 of the Act by the ld JCIT in the prescribed proforma in page 3 of the paper book. For the sake of convenience, the said proforma seeking approval for reopening the assessment is reproduced below:- “Form for recording the reasons for initiating proceedings u/s 148 of the IT Act, 1961 for obtaining the approval of the Joint Commissioner of Income, Tange-24, New Delhi 1 Name and address of the assessee M/s Sukumar Buildwell Private Limited; B-5/263, Sector -3, Rohini, New Delhi -110085 2. PAN AAICS7517H 3. Status Company 4. Circle/Ward Ward 24(3), New Delhi 5. Assessment year for which issue of 2008-09 notice u/s 148 is proposed 6. The Quantum of income which Rs. 16,00,000/- ITA No. 1943/Del/2021 Sukumar Buildwell Pvt. Ltd Page | 3 5. On perusal of the proforma seeking approval u/s 151 of the Act, we find that the ld JCIT had merely stated that he is satisfied that this is fit case for reopening. This sort of approval granted u/s 151 of the Act was held to be approval granted without application of mind and construed as mechanical by the Hon‟ble Madhya Pradesh High Court in the case of CIT Vs. S. Goyenka Lime and Chemicals Ltd reported in 56 taxmann.com 390 (MP HC). The Special Leave Petition (SLP) filed by the revenue against this decision was dismissed by the Hon'ble Supreme Court reported in 64 taxmann.com 313. Further, we find that the Hon‟ble Jurisdictional High has escaped assessment 7. Whether assessment is proposed to to made for the first time and if the reply is affirmative please state No (a) Whether any voluntary return had already been filed Yes (b) If so, date of filing the said return 02.09.2008 8. If the answer to the Cl No. 7 is in negative, Please state (a) the income originally assessed (b) Whether it is a case of under assessment, assessment at low rate, assessment which has been made subject to depreciation At Rs. Nil. No 9. Reasons of belief that income has escaped assessment Date:27.03.20'L4 As per Annexure 'A' (Rajeev Jain) Income Tax Officer Ward 24(3), New Delhi 10 Whether the joint Commissioner of Income Tax Range-24, is satisfied on the reason recorded by the ITO Ward 24(3), that it is a fit case for issue of notice u/s 148. Date:30/03/2015 Yes, I am satisfied that this is a fit case for issuing the notice u/s 148. (Vivek Sharma) Joint Commissioner of Income Tax Range-24, New Delhi ITA No. 1943/Del/2021 Sukumar Buildwell Pvt. Ltd Page | 4 court in the case of PCIT Vs. NC Cables Ltd reported in 391 ITR 11 (Del) had also held the same, wherein, the approving authority had merely stated “approved” in the proforma while granting approval in terms of section 151 of the Act. This approval was held by the Hon‟ble Jurisdictional High court to be a mechanical approval. The relevant observation of the Hon‟ble Jurisdictional High Court in this regard are reproduced herein:- “11. Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. 12. The substantial questions of law framed are answered in favour of the assessee and against the Revenue. The appeal is dismissed.” 6. Respectfully following the aforesaid decisions, we hold that the reopening has been made in the instant case by not taking approval u/s 151 of the Act from the competent authority in the manner known to law. Accordingly, the entire reassessment proceedings are hereby quashed. Hence, one of the additional legal grounds challenging the validity of assumption of jurisdiction u/s 147 of the Act is allowed in the above mentioned terms. 7. Since, the reassessment is quashed on invalid assumption of jurisdiction u/s 147 of the Act as stated above, the other legal grounds raised in the original grounds of appeal, other additional grounds raised by the assessee and other grounds raised on merits in the original grounds of appeal need not be gone into as adjudication of the same would become academic in nature. No opinion is rendered thereon and they are left open. ITA No. 1943/Del/2021 Sukumar Buildwell Pvt. Ltd Page | 5 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 08/01/2025. -Sd/- -Sd/- (MADHUMITA ROY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:08/01/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "