DCIT Vs Shiv Vegpro Private Limited (ITAT Jaipur)
Jaipur ITAT: Rajasthan HC Judgment Quashing Reassessment Attains Finality After Supreme Court Dismisses Revenue’s SLP-Dismissal on Delay Does Not Help Revenue
The Jaipur ITAT dismissed the Revenue’s appeal and upheld the CIT(A)’s decision quashing reassessment proceedings under Section 147, since the reassessment had already been quashed by the Rajasthan High Court in the assessee’s own case and the Revenue’s SLP against that judgment had subsequently been dismissed by the Supreme Court.
The AO had completed reassessment by making an addition of ₹6.39 crore under Section 68, treating certain sales transactions as non-genuine and in the nature of accommodation entries. The assessee simultaneously challenged the reassessment proceedings before the Rajasthan High Court. By order dated 25.11.2024, the High Court allowed the writ petition and quashed the assessment order. Following the jurisdictional High Court’s judgment, the CIT(A) allowed the assessee’s appeal.
Before the ITAT, the Revenue argued that it had challenged the High Court judgment by filing an SLP before the Supreme Court and, therefore, the CIT(A) should not have treated the High Court decision as conclusive. However, the assessee pointed out that the Supreme Court had already dismissed the Revenue’s SLP on 12.09.2025. The Department admitted the dismissal but argued that it was only on account of delay and not on merits.
The Tribunal rejected this contention. It held that once the Revenue’s SLP had been dismissed, the Rajasthan High Court judgment had attained finality and continued to hold the field. The fact that the SLP was dismissed on the ground of delay did not improve the Revenue’s case. The CIT(A) could not be faulted for following a binding judgment of the jurisdictional High Court rendered in the assessee’s own case.
Accordingly, the ITAT found no infirmity in the CIT(A)’s order, dismissed all grounds raised by the Revenue and consequently dismissed the Revenue’s appeal.
Key principle: A Revenue challenge does not dilute the binding effect of a jurisdictional High Court judgment. Once the SLP against that judgment is dismissed, the High Court ruling continues to govern the assessee’s case; the Revenue cannot avoid its application merely by contending that the SLP was dismissed on limitation rather than merits.
Cases Discussed
- Union of India vs. Ashish Agarwal (Supreme Court), 2022 SCC Online SC 543
- D.B. Civil Writ Petition No. 15350/2022 (Rajasthan High Court), dated 25.11.2024
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal by the Revenue is directed against the order of the learned Commissioner of Income Tax (Appeals) [hereinafter referred to as “the CIT(A)”] dated 31.08.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), for the Assessment Year 2016-17. The appeal before the CIT(A) arose out of the assessment order dated 26.05.2023 passed by the Assessing Officer (hereinafter referred to as “the AO”) under section 147 of the Act.
2. The grounds of appeal raised by the Revenue before us in the memorandum of appeal in Form No. 36 read as under:
“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC, has erred in law and on facts in quashing the assessment order passed under section 147 of the Act, without appreciating that the reassessment proceedings were validly initiated and completed after complying with the provisions of section 148A of the Act and the directions of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2022 SCC Online SC 543).
2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC, has erred in relying upon the judgment of the Hon’ble Rajasthan High Court in DBCWP No. 15350/2022 dated 25.11.2024 in the assessee’s own case, ignoring that the Department has not accepted the said decision and a Special Leave Petition (SLP) before the Honble Supreme Court has been recommended/initiated.
3. The appellant craves leave to add, amend, alter, OR withdraw any ground(s) of appeal at later stage. That the appellant craves to add, amend, alter OR modify any OR all the above grounds of appeal before OR at the time of hearing.”
3. Briefly stated, the facts of the case are that, for the year under consideration, the AO completed the assessment under section 147 of the Act by making an addition of Rs 6,39,25,000 under section 68 of the Act, treating certain sale transactions of the assessee as non-genuine and in the nature of accommodation entries. Aggrieved, the assessee preferred an appeal before the CIT(A). In the meanwhile, the assessee had also assailed the reassessment proceedings by way of a writ petition before the Hon’ble Rajasthan High Court.
4. The Hon’ble Rajasthan High Court, vide its order dated 25.11.2024 in D.B. Civil Writ Petition No. 15350/2022, was pleased to allow the writ petition and quash the assessment order passed by the AO. Taking due note of the said judgment, the CIT(A) allowed the appeal of the assessee. It is against this order of the CIT(A) that the Revenue is in appeal before us.
5. The learned Departmental Representative (hereinafter referred to as “the DR”) submitted that the Revenue had preferred a Special Leave Petition (hereinafter referred to as “the SLP”) in Diary No. 44023/2025 on 07.08.2025 before the Hon’ble Supreme Court against the aforesaid judgment of the Hon’ble Rajasthan High Court, and that, therefore, the CIT(A) ought not to have decided the appeal following the said judgment.
6. The learned Authorised Representative (hereinafter referred to as “the AR”) for the assessee, on the other hand, submitted that the Hon’ble Supreme Court has since dismissed the SLP filed by the Revenue vide its Order dated 12.09.2025. The learned DR fairly admitted the dismissal of the SLP, but contended that the same was dismissed only on the ground of delay and not on merits.
7. We have heard the rival submissions and perused the material available on record.
8. The short question arising for our consideration is whether the order of the CIT(A), which followed the judgment of the Hon’ble Rajasthan High Court in the assessee’s own case quashing the reassessment, calls for any interference. It is not in dispute that the said judgment of the Hon’ble Rajasthan High Court squarely governs the present controversy and that the Revenue’s challenge thereto by way of the SLP has been dismissed by the Hon’ble Supreme Court. Once the SLP has been dismissed, the judgment of the Hon’ble Rajasthan High Court has attained finality and continues to hold the field. The contention of the learned DR that the SLP was dismissed only on the ground of delay does not advance the case of the Revenue. In these circumstances, the CIT(A) cannot be faulted for having followed a binding judgment of the jurisdictional High Court rendered in the assessee’s own case.
9. In view of the foregoing, and respectfully following the judgment of the Hon’ble Rajasthan High Court dated 25.11.2024 in the assessee’s own case, which has attained finality, we find no infirmity in the order of the CIT(A). The grounds of appeal raised by the Revenue are accordingly dismissed.
10. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 07-08-2026
