SUNIDHI SECURITIES & FINANCE LIMITED,MUMBAI V. DCIT 4(2)(1), MUMBAI

ITA 5938/MUM/2024

AI Insights

Sunidhi Securities & Finance Limited appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the reopening of their assessment by the Deputy Commissioner of Income Tax. The reopening was based on information from a search and survey operation indicating the assessee's involvement in booking bogus losses through transactions in penny stocks. The primary legal contention was the improper issuance of the notice under section 148 due to incorrect sanction under section 151. The tribunal, referencing the Supreme Court's decision in UOI v. Rajeev Bansal, held that the notice was invalid as it was not sanctioned by the appropriate authority, leading to the quashing of the reassessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772802 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2015-2016
• Other Referred Cases: UOI v. Rajeev Bansal [2024] 469 ITR 46 (SC), National Thermal Power Corporation vs. CIT (1999) 97 Taxmann.com 358/(1998) 229 ITR 383 (SC), DCIT vs. Lakhotia Transport Company Pvt. Ltd., ITA Nos. 1698 & 1699/KOL/2024, Ghanshyam K. Khabrani v. ACIT (2012) 346 ITR 443/20 taxmann.com 716 (Bom)(HC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: SHASHI BEKAL
• Keywords: Question of law; Accommodation entries; Reason to believe; Penny stocks; Bogus
• Section: 147; 148; 143(3); 234B; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SHRI. GIRISH AGRAWAL, AM ITA No. 5938/Mum/2024 (Assessment Year: 2015-16) Sunidhi Securities & Finance Limited 8th Floor, Unit-1, Kalpataru Inspire, Opp. Grand Hyatt Hotel, Santacruz (East), Mumbai – 400055 Vs. The Deputy Commissioner of Income Tax, 4(2)(1), Mumbai Room No. 642, Aaykar Bhavan, M. K. Road, Mumbai – 400020. PAN/GIR No. AADCS1657D (Appellant) : (Respondent) Assessee by : Shri. Shashi Bekal Respondent by : Shri. Pravin Salunkhe (SR. DR) Date of Hearing : 06.06.2025 Date of Pronouncement : 26.08.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2015-16. 2. The assessee has raised the following grounds of appeal: Grounds of Appeal: 1. The Ld. C.I.T. (Appeals) erred in confirming the action of D.C.I.T. of reopening the assessment merely based on reason to suspect and not reason to believe and is therefore bad in law. 2. The Ld. C.I.T. (Appeals) erred in confirming the action of D.C.I.T. treating the trading in Steel Exchange India Limited through recognized Stock Exchange as bogus trading loss. Printed from counselvise.com ITA No. 5938/Mum/2024 (A.Y. 2015-16) Sunidhi Securities & Finance Limited 2 3. The Ld. C.I.T. (Appeals) erred in confirming the action of D.C.I.T. making addition merely on a general observation without substantiating the facts and reason for making addition and without pinpointing the involvement of the Appellant in booking bogus loss. 4. The Ld. C.I.T. (Appeals) erred in confirming the addition made of Rs. 16,86,282/- 5. The Ld. C.I.T. (Appeals) erred in charging excess Interest u/s 234B of Rs. 9,42,564/-, while determining the tax liability & demand. 6. The Appellant reserves the right to add, to alter and to amplify the Grounds of Appeal. 3. The assessee has also raised additional grounds of appeal vide its application dated 28.01.2025 and the same is reproduced herein under: “7. On the facts and circumstances of the case and in law, the Ld. Assessing Officer (AO) has erred in the issuance of Notice under section 148 of the Income-tax Act, 1961 (Act) with an incorrect sanction under section 151 of the Act in light of the decision of the Hon'ble Supreme Court in the case of UOI v. Rajeev Bansal [2024] 469 ITR 46 (SC) hence the reassessment is bad in law. 8. On the facts and circumstances of the case and in law, the Ld. AO has erred in the issuance of Notice 148 of the Act in the absence of any live nexus between the assessee and the recorded reasons. 9. On the facts and circumstances of the case and in law, the Ld. AO has erred in the issuance of Notice 148 of the Act without coming to the conclusion that income chargeable to tax has escaped assessment. 10. The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.” 4. Upon hearing both sides, we deem it fit to admit the additional grounds raised by the assessee as it goes to the very root of the case and the same is in accordance with the proposition laid down by the Hon’ble Apex Court in the case of National Thermal Power Corporation vs. CIT (1999) 97 Taxmann.com 358/(1998) 229 ITR 383 (SC), where the additional grounds pertains to question of law arising from the facts which are already on record in the assessment proceedings. Printed from counselvise.com ITA No. 5938/Mum/2024 (A.Y. 2015-16) Sunidhi Securities & Finance Limited 3 5. Brief facts of the case are that the assessee company was engaged in the business of brokerage in shares, currency derivatives, WDM, Forex IPO broking, PMS and depository participant services. The assessee had filed its return of income dated 30.09.2015, declaring total income at Rs. 11,91,62,600/- and same was processed u/s. 143(1) of the Act. The assessee’s case was selected for scrutiny and assessment u/s. 143(3) was done, where the ld. AO vide order dated 28.12.2017, determined the total income at Rs. 12,28,72,992/- under the normal provisions and Rs. 17,78,20,642/- u/s. 115JB of the Act on the book profits. The assessee’s case was reopened vide notice u/s. 148 dated 31.03.2021, pursuant to the information received during the search and survey action conducted in the case of Shri Naresh Jain and his Associates who were engaged in providing accommodation entries in the form of long term capital gain (‘LTCG' for short)/losses on transaction in penny stocks to various beneficiaries across the country and that the assessee is alleged to be one of the beneficiary of such accommodation entries. The learned Assessing Officer (ld. A.O. for short) then passed the assessment order u/s. 147 r.w.s. 144B of the Act, dated 26.03.2022, determining total income at Rs. 12,45,59,272/-, thereby making an addition/disallowance of Rs. 16,86,282/- as bogus loss. 6. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 22.10.2024, dismissed the appeal filed by the assessee, thereby upholding the order of the ld. AO. 7. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). Printed from counselvise.com ITA No. 5938/Mum/2024 (A.Y. 2015-16) Sunidhi Securities & Finance Limited 4 8. The learned Authorised Representative (ld. AR for short) for the assessee commenced his arguments on the additional grounds raised by the assessee where notice u/s. 148 of the Act was challenged on the basis of incorrect sanction by the authority u/s. 151 of the Act. The ld. AR brought our attention to the notice u/s. 148 dated 31.03.2021, where it is said that the same was issued after obtaining necessary satisfaction of the PCIT, Mumbai – 4. The ld. AR contended that the impugned notice is not in accordance with the provision of Section 151, where the old provision of Section 151(2) of the Act would be applicable, in which case the sanctioning authority is the Joint Commissioner and not the PCIT. The ld. AR relied on the decision of the Hon’ble Apex Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC) and also the Tribunal decision in the case of DCIT vs. Lakhotia Transport Company Pvt. Ltd., ITA Nos. 1698 & 1699/KOL/2024. 9. The learned Departmental Representative (ld. DR for short) on the other hand controverted the said fact and stated that as the same falls under the old regime, the ld. PCIT was a sanctioning authority and that there was no infirmity in the sanction obtained for issuance of notice u/s. 148 as per the provisions of Section 151 of the Act. The ld. DR relied on the order of the lower authorities. 10. We have heard the rival submissions and perused the materials available on record. It is observed that for the year under consideration i.e., A.Y. 2015-16, the four years from the end of the relevant assessment year would expire on 31.03.2020 and the impugned notice u/s. 148 was issued on 31.03.2021, which was after prior approval of ld. PCIT as per Section 151 of the Act. Pursuant to the decision of the Hon'ble Apex Court in the Printed from counselvise.com ITA No. 5938/Mum/2024 (A.Y. 2015-16) Sunidhi Securities & Finance Limited 5 case of Rajeev Bansal (supra) it was held that the time limit of four years from the end of the assessment year falls between 20.03.2020 and 31.03.2021 for Section 151 of the Act and the specified authority as per Section 151(2) of the Act would be ld. JCIT for the purpose of seeking prior approval for issuance of reassessment notice u/s. 148 of the Act. 11. In the present case in hand, notice u/s. 148 was issued after obtaining sanction from ld. PCIT and not ld. JCIT as per the provisions of the Act. The ld. AR placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Ghanshyam K. Khabrani v. ACIT (2012) 346 ITR 443/20 taxmann.com 716 (Bom)(HC) wherein it was held that obtaining sanction of the Superior Officer instead of the Requisite Officer is held to be not a curable defect, where the legislature requires sanction of a particular authority for the purpose of reopening the assessment of the assessee. As it has been a settled proposition of law, we deem it fit to hold that the notice u/s. 148 is invalid and liable to be quashed for the above mentioned reason and the consequential assessment u/s. 147 is held to be null and void. We therefore allow ground no. 7 raised by the assessee. 12. As we have held the assessment to be null and void the other grounds of appeal raised by the assessee requires no further adjudication and is hereby rendered academic. 13. In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 26.08.2025 Sd/- Sd/- (GIRISH AGRAWAL) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Printed from counselvise.com ITA No. 5938/Mum/2024 (A.Y. 2015-16) Sunidhi Securities & Finance Limited 6 Mumbai; Dated: 26.08.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "