SUNIL GAUR,DELHI V. ITO, WARD - 2, REWARI

ITA 4819/DEL/2024

AI Insights

The case involves an appeal by Sunil Gaur against the order of the Commissioner of Income-tax Appeals/National Faceless Appeal Centre, which confirmed the addition of Rs.17,89,800 to the assessee's income for the Assessment Year 2018-19. The addition was based on alleged bogus purchases from Hanuman Enterprises. The primary legal issues revolved around the validity of the notice issued under section 148 of the Income Tax Act, 1961, and the jurisdictional authority that issued the notice. The Tribunal's decision highlighted procedural lapses in the issuance of the notice and incorrect jurisdiction assignment, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314411 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Other Referred Cases: NTPC, Limited vs. CIT, Suman Jeet Agarwal v. ITO, Sapna Rastogi v ITO, Prashant Pitti v ACIT, The Abhinandan Cooperative Group Housing Ltd v ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: AMIT GOEL
• Keywords: Reassessment proceedings; Unexplained expenditure; Bogus purchase; Bogus
• Section: 147; 148; 142(1); 69C; 37; 37(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No.4819/DEL/2024 (Assessment Year: 2018-19) Sunil Gaur, vs. ITO, Ward 2, NA SKG Construction Co., Rewari. Opp. Panchayat Bhawan, Narnaul – 123 001 (Haryana). (PAN : AEDPG4615A) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Amit Goel, Advocate Shri Pranav Yadav, Advocate REVENUE BY : Shri Sahil Kumar Bansal, Sr. DR Date of Hearing : 20.02.2025 Date of Order : 07.05.2025 ORDER PER S.RIFAUR RAHMAN,ACCOUNTANT MEMBER : 1. This appeal filed by the assessee is against the order of ld. Commissioner of Income-tax Appeals/National Faceless Appeal Centre (NFAC), Delhi(hereinafter referred to ‘ld. CIT (A)’) dated 21.08.2024for Assessment Year 2018-19 raising following grounds of appeal :- “1. On the facts and circumstance of the case and in law, the notice u/s 148 issued in this case is bad-in-law, illegal, without jurisdiction and barred by limitation and, therefore, the said notice u/s 148 along with assessment order passed on the foundation of such notice are liable to be quashed. 2 ITA No.4819/DEL/2024 2 On the facts and circumstances of the case and in law, the reassessment proceedings initiated are contrary to the provisions of law including the specific provisions of section 147 to section 151 A of Income Tax Act, 1961 and therefore, the reassessment proceeding initiated along with assessment order passed are liable to be quashed. I 3 On the facts circumstances of the case and in law, the CIT (A) erred confirming in addition made by the Ld. AO of Rs.17,89,800/- on account of purchase made from Hanuman Enterprises. 4. On the facts circumstances of the case and in law, the CIT (A) erred in changing the section / head of income from section 69C to section 37(1) of the Act. 5. On the facts and circumstances of the case and in law, the order passed by the CIT(A) is contrary to provisions of section 251 of the Act and therefore the addition made/confirmed is liable to be deleted.” 2. The assessee has filed the additional grounds which read as under :- “1. On the facts of the case and in law, the notice u/s 148 issued in this case, is bad-in-law, without jurisdiction and barred by limitation and, therefore, the said notice and assessment order passed is liable to be quashed. 2. On the facts and circumstances of the case and in law, the reassessment proceedings initiated are contrary to the provisions of law including the specific provisions of section 147 to section 151A of Income Tax Act, 1961 and therefore, the reassessment proceeding initiated along with assessment order passed are liable to be quashed.” 3. Considered the rival submissions and material placed on record by both the parties. We observed that the issues raised by the assessee in 3 ITA No.4819/DEL/2024 additional grounds go to the root of the matter challenging the jurisdictional issue. In the light of Hon’ble Supreme Court in the case of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC), we are inclined to admit the additional grounds and take up the same for adjudication herein below. 4. Brief facts of the case are, the case of the assessee was reopened on the basis of information flagged as per Risk Management Strategy formulated by the CBDT through ITBA. As per the specific information, it was observed that the assessee has made bogus purchases of Rs.17,79,800/- from M/s. Hanuman Enterprises during the year under consideration. Accordingly, notice u/s 148 of the Income-tax Act, 1961 (for short ‘the Act’) was issued along with the order u/s 148A(d)(1) which was duly served upon the assessee. In response, assessee stated that the return filed u/s 139(1) may be treated as filed in response to notice u/s 148 of the Act. 5. Thereafter, Assessing Officer issued notice u/s 142(1) of the Act on 17.10.2022 and asked the assessee to submit the documentary evidence and justification of the assessee on the points mentioned in page 3 to 5 of his order. In response, no reply was submitted by the assessee. Accordingly, the Assessing Officer issued further notices u/s 142(1) of the Act on 17.11.2022 and 15.02.2023 for furnishing the complete reply 4 ITA No.4819/DEL/2024 along with supporting documentary evidences. In response, assessee has furnished his reply along with documents of purchase bills, transportation bills, sale details, ledger of Hanuman Enterprises, Bank Statement, sample of sale bills, computation of income and GST 3B. 6. Assessing Officer after carefully perusing the reply and documents submitted by the assessee found the same not acceptable and issued show cause notice dated 09.03.2023 and the assessee replied the same. 7. After going through the submissions and documents submitted by the assessee, Assessing Officer observed that since the assessee has failed to furnish any documentary evidence for placing of order, term and condition for supply of goods, bids offer by Hanuman Enterprises, transportation e-way bills, date of receipts of goods etc., hence, he observed that it is evident that assessee has purchased goods from M/s. Hanuman Enterprises which is a paper entity and involved only issue of fake invoices/bills for accommodating to the purchaser. Accordingly, he observed that goods purchased by the assessee amounting to Rs.17,89,800/- is a fictitious transaction made for the purpose of avoiding payment of taxes and treated the amount of Rs.17,89,800/- being unexplained expenditure in the books of assessee for the year under consideration and the same is being added in the total income of the assessee under section 69C of the Act to be taxed u/s 115BBE. 5 ITA No.4819/DEL/2024 Accordingly, he completed the assessment under section 147 r.w.s. 144B of the Act on total income of Rs.95,26,480/- by adding the aforesaid amount of Rs.17,89,800/-. 8. Aggrieved assessee preferred an appeal before the ld. CIT (A) by filing grounds of appeal and detailed submissions. Ld. CIT (A) after going through the detailed submissions of the assessee confirmed the addition. 9. Aggrieved assessee is in appeal before us. 10. At the time of hearing, ld. AR of the assessee filed written submissions which are reproduced below :- “1. Ground No.1 to 3 Provision of Section 149(1) are as under: - Time limit for notice No notice under section 148 shall be issued for the relevant assessment year, a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of i) an asset; 6 ITA No.4819/DEL/2024 ii) expenditure in respect of a transaction or in relation to an event or occasion; or iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: 1.1 As per aforesaid provisions, it is evident that if three years has elapsed from the end of the relevant assessment year, notice u/s 148 can not be issued unless the alleged escaped income amounts to or is likely to amounts to Rs. 50 lakh or more. 1.2 In the present case, the assessment year involved is A. Y. 2018-19 and the period of three years from the end of the relevant assessment year elapsed on 31.03.2022. Thus, notice u/s 148 for A.Y. 2018-19 cannot be issued after 31.03.2022 unless, there is alleged income escaping assessment amounting to Rs.50 lakh or more. 1.3 In the present case the notice u/s 148 is, though, dated 3l.03.2022, but the same has been issued on April 2, 2022. (Refer Page no. 14 of PB). As is evident from the send notice, it has been digitally signed on Saturday, April 2, 2022 and thus, the issue of notice u/s 148 cannot be prior to April 2, 2022. 1.4 The issue is no more res integra. The Hon'ble Delhi High Court in the case of Suman Jeet Agarwal v. ITO (2022)449 ITR 517 (Del)has held that where the date of notice u/s 148 was dated 31stMarch but it was digitally signed on 1st April or thereafter, the notice can be said to have been issued only on the date of affixation of digital signature. 1.5 In the aforesaid background, the notice u/s 148 in this case have been issued on 2nd April 2022 i.e. after the expiry of 3 years from the end of the relevant assessment year. However, the requirement of clause (b) of sub-section (1) of section 149 viz the alleged income escaping assessment to be Rs. 50 Lakh or more has not been fulfilled. The alleged income escaping assessment in this case is only Rs.17,79,800/-. Thus, notice u/s 148 issued in this case is without jurisdiction and barred by limitation. Accordingly, the 7 ITA No.4819/DEL/2024 reassessment proceeding initiated and the consequential assessment order passed on the foundation of such notice are liable to be quashed. 2. There is yet another reason because of which, the notice U/S 148 in this case is bad-in-law and without jurisdiction as it is contrary to CBDT instruction no. 1/2011 dated 31.01.2011. The appellant has filed return of income declaring income ofRs.77,36,684/-. As per the said instruction, the jurisdiction over the case of the appellant was with ACIT, Circle whereas the notice u/s 148 has been issued by ITO, ward. Thus, the notice issued is without jurisdiction. Reliance in this regard is placed on the decision of Delhi Bench of ITAT in the case of Sapna Rastogi v ITO (ITA NO 617/Del/2024). 3. Ground No.3 Even otherwise on merits, the AO has erred in making the addition of Rs.17,89,800/- and CIT(A) erred in confirming the same. The purchases made by the appellant were during the ordinary course of business and genuine. The appellant has duly submitted the following evidences before the AO as well as CIT(A):- - Copy of Tax Invoice/ Bill issued by the party - Transporter Receipts - Copy of account of the party - Copy of bank statement reflecting payment by banking channels The Assessing Officer/CIT(A) has made/ confirmed the addition without pointing out any discrepancy in the above documentary evidences. The addition has been made/confirmed merely on the basis of conjecture and surmises without bringing on record any evidence. 4. Ground No.4 & 5 The AO has made addition ofRs.17,89,800/- u/s 69C of the Act. The CIT(A) has charged the section of addition to section 37 of the Act. The action of the CIT(A) is erroneous and without jurisdiction. The CIT(A) has not even given any show cause notice 8 ITA No.4819/DEL/2024 for making addition u/s 37 of the Act. The action of CIT(A) is contrary to provision of section 251 of the Act. Reliance in this regard is placed on the following: - - Prashant Pitti v ACIT (ITA NO 3032/Del12022), decision dated 07.02.2024 - The Abhinandan Cooperative Group Housing Ltd v ITO (ITA NO 1850/De//2023), decision dated 18.12.2024 In view of the above, it is prayed to your honour to allow the appeal.” 11. On the other hand, ld. DR of the Revenue relied on the orders of the authorities below. 12. Considered the rival submissions and material placed on record. We heard the issues relating to the additional ground and proceed to adjudicate the same here. It is fact on record that the notice u/s 148 dated 31.03.22 was actually issued on 02.04.2022, it is evident from the digital signature recorded on the face of the notice, which is placed on record. As held in the case of Suman Jeet Agarwal (supra), the Hon’ble Delhi High Court held that the date on which digitally signed has to be considered. In the given case, the notice was digitally signed only on 02.04.2022. Therefore, the relevant provisions as per amended with effect from 01.04.2022 are applicable. Therefore, the relevant provisions as applicable are, as per section 149(1)(b), no notice u/s 148 shall be issued, if three years have elapsed from the end of relevant AY unless the AO has in his possession books of account or other documents or evidence 9 ITA No.4819/DEL/2024 which reveal that the income chargeable to tax, represented in the form of as asset, expenditure or an entries which has escaped assessment amounts to or likely to amount fifty lakh rupee or more. 13. We observed that in the given case, the escaped assessment amount is only Rs.17.80 lakhs. Therefore, the notice issued u/s 148 is without jurisdiction. Further it is brought to our notice that as per the declared income in the return of income filed for the year under consideration is Rs.77.36 lakhs and as per the CBDT instruction no 1/2011 dated 31.03.2011, the jurisdiction lies only with the ACIT whereas the notice and assessment was completed by the ITO. Even on this count, the notice issued is beyond the jurisdiction of the present assessing officer. Therefore, we are inclined to allow the additional ground raised by the assessee. 14. We have not adjudicated the other issues raised by the assessee and accordingly, other grounds are kept open at this stage. 15. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 7th day of May, 2025. Sd/- sd/- (YOGESH KUMAR U.S.) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07.05.2025 TS 10 ITA No.4819/DEL/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "