Surat Goods Transport Pvt. Ltd. Vs DCIT (ITAT Mumbai)
The assessee challenged reassessment initiated u/s 148 where addition of ₹5.04 lakh was made on interest paid on alleged bogus loan. The key issue was validity of sanction under section 151 since reopening notice dated 07.04.2022 was issued after three years from the end of AY 2018-19, requiring approval from the higher specified authority (PCCIT/CCIT). However, sanction was granted by PCIT, who lacked jurisdiction under section 151(ii).
Relying on Bombay High Court rulings including Vodafone Idea Ltd. and Siemens Financial Services Pvt. Ltd., ITAT held that approval by a non-specified authority renders reopening invalid. Consequently, notice u/s 148, order u/s 148A(d), and reassessment proceedings were quashed for want of valid jurisdiction.
Since reassessment itself was quashed on legal grounds, the addition relating to interest on alleged bogus loan and other merits became academic. Result: Assessee’s appeal allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is preferred by the assessee, directed against the order of Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi (in short “Ld. CIT(A)”, dated 23.10.2025, for the Assessment Year (AY) 2018-19, arises from the order passed by the Assessment Unit, Income Tax Department under section 147 of the Income Tax Act, 1961 (the Act) dated 13.02.2024. The grounds of appeal raised by the assessee are as under:
“ 1. On the facts and circumstances of the case, the CIT(A) erred in upholding the validity of the present reopening proceedings vide notice u/s 148 r.w.s. 148A of the Act along with the consequent re-assessment order passed u/s 144B r.w.s. 147 of the Act which is bad in law and void ab initio.
1.1. On the facts and circumstances of the case, the CIT(A) erred in uploading validity of the reopening notice u/s 148 r.w.s. 148A of the Act has been issued on the basis of the borrowed satisfaction of the DDIT whereby the statement of Shri Rajesh G. Mehta was recorded and used against the appellant. [Refer Bombay High Court in the case of Hari Darshan Exports Pvt. Ltd. vs. ACIT (456 ITR 542) and H.R. Mehta (387 ITR 561)]
1.2. On the facts and circumstances of the case, the CITI(A) erred in not holding that the reopening notice u/s 148 r.w.s. 148A of the Act has been issued without taking the proper approvals from the correct designated authority as per sec 151(2) of the Act, thereby rendering the entire reopening bad in law. [Refer Bombay High Court in the case of Siemens Financial Services Pvt. Ltd. (457 ITR 647) and Gayatri Pipes and Fittings Pvt. Ltd. vs. ITO (WP no. 17817 of 2022)]
1.3. On the facts and circumstances of the case, the CIT(A) erred in uploading that the re-assessment order u/s 1448 r.w.s. 147 of the Act is bad in law for reasons that copy of the statement of Rajesh G. Mehta was not provided nor an opportunity to cross examine was given to the appellant and the AO has totally erred in law to say that no useful purpose will be served by affording the cross examination and there by sidelining the judgment of the Apex Court in Andaman Timber Industries (civil appeal 4228 of 2006)
2. On the facts and circumstances of the case, without prejudice to the above grounds and strictly in the alternative, the Ld. CIT(A) legally erred in dismissing the appeal in limine even though the notice u/s 148 and consequent reassessment order u/s 1448 r.w.s. 147 of the Act for AY 17-18 was quashed by the Hon’ble Bombay High Court in WP(L) no. 15760 of 2024, which was the basis for the consequent reopening u/s 148 of the Act, reassessment order and additions made by the AO in the impugned AY 18-19. The rectification petition u/s 154 of the Act is pending and yet to be disposed of by the Ld. CIT(A) taking cognizance of the said Bombay High Court order applicable for AY 17-18.
3. On the facts of the circumstances of the case, the CIT(A) erred in upholding the action of the AO in making a disallowance of Rs.5,04,493 being interest paid on alleged bogus loan taken of Rs. 1,00,00,000 from Ms. Aneri Fincap Ltd., a registered NBFC company, which was taxed u/s 68 r.w.s. 115BBE of the Act in AY 2017-18.
3.1. On the facts of the circumstances of the case, the CIT(A) erred in not appreciating the fact that quantum issue of taxing of the unsecured loans u/s 68 r.w.s. 115BBE of the Act in AY 17-18 was already quashed by the Honble Bombay High Court. In such circumstances the interest so paid could not have been automatically disallowed.”
2. The brief facts of the case states that the assessee is engaged in rendering of transportation services. The return of income for the year under consideration was filed on 01.10.2018, declaring total income of Rs. 30,76,28,253/- under the normal provisions of the Act. Subsequently, the case of assessee was selected for scrutiny under section 143(3) of the Act and assessment came to be completed on 21.01.2021 without any addition, thereby accepting the return of income of the assessee. Further, reassessment proceedings were initiated against the assessee under section 148 of the Act and the order under section 148A(d) was passed on 07.04.2022. The reassessment proceedings are completed by the ld. AO, making an addition of Rs. 5,04,493/-, being interest on alleged bogus loan which was taken by the assessee in AY 2017-18. Aggrieved with such addition, the assessee preferred an appeal before the ld. CIT(A), who had dismissed the appeal of assessee, as the contention raised by assessee therein does not impress upon him.
