Zee Akaash News Pvt. Ltd. Vs ACIT/DCIT (ITAT Mumbai)
GST Intelligence Can Support Reopening, but an Undisclosed Investigation Report Cannot Sustain Disallowance Without Rebuttal
Background
The appeals concerned disallowance of depreciation on civil and interior works allegedly executed by Watkins Infrastructure Pvt. Ltd. (WIPL) for companies in the Zee group.
Information received from the GST investigation authorities alleged that WIPL issued fake invoices to facilitate irregular input tax credit. The Department identified entities transacting with WIPL through its Insight Portal and treated them as suspected beneficiaries.
In the lead case, Zee Akaash News Pvt. Ltd., transactions of approximately Rs. 5.07 crore related to office interiors, civil work, furniture and equipment. The expenditure was capitalised, and depreciation of Rs. 27,43,850 was claimed under section 32.
The Assessing Officer reopened the assessment and disallowed the depreciation. The CIT(A) upheld both the reopening and the disallowance. Similar depreciation claims of Rs. 17,72,341 for AY 2019-20 and Rs. 27,27,632 for AY 2022-23 were disallowed in the case of Zee Media Corporation Ltd.
Assessee’s Challenge to Reopening
The assessee argued that the reopening rested on borrowed satisfaction, since the AO had acted on information concerning WIPL without independently establishing that the assessee’s transactions were bogus.
It emphasised that the expenditure represented capital assets and improvements, supported by financial statements, asset details and tax audit records. Allegations concerning a supplier’s GST activities, according to the assessee, did not automatically establish escapement of income in its hands.
The assessee also contended that the underlying investigation report and adverse material had not been supplied.
Reopening Upheld on Prima Facie Material
The Tribunal rejected the challenge to reopening.
It found that the AO had followed the section 148A procedure, afforded an opportunity to respond, considered the assessee’s submissions and obtained the requisite approval before issuing the notice under section 148.
The Tribunal considered the intelligence concerning WIPL and the identified transactions to constitute prima facie tangible material warranting examination. It also noted that the AO had analysed the response and relevant financial information before proceeding.
Reliance was placed on authorities including Raymond Woollen Mills Ltd. v. ITO, concerning the preliminary nature of the enquiry at the reopening stage, and decisions recognising that information from investigation agencies can provide material for reopening.
The Tribunal thus distinguished between material sufficient to initiate reassessment and evidence sufficient to sustain the eventual disallowance.
Documentary Evidence and Supplier’s Non-Response
On merits, the assessee relied on invoices, e-way bills, bank statements, ledger accounts and capitalisation records to establish the transactions.
It argued that WIPL’s failure to respond to a notice under section 133(6) was beyond its control and could not independently justify denial of depreciation. Authorities cited included CIT v. Nikunj Eximp Enterprises Pvt. Ltd. and other Bombay High Court decisions concerning the evidentiary significance of a supplier’s non-appearance.
The Tribunal nevertheless held that the assessee had not fully discharged its onus in the circumstances. WIPL faced specific allegations of accommodation transactions, and its non-cooperation prevented the verification from reaching a logical conclusion.
The Tribunal considered that the assessee should produce the party for examination. Consequently, it did not accept the depreciation claims outright merely on the strength of invoices and banking records.
Investigation Report Had to Be Supplied
At the same time, the Tribunal accepted the assessee’s objection that the investigation report and relevant material, including statements, had not been shared for rebuttal.
It observed that the assessment substantially rested on that report. Such material could not be used adversely without giving the assessee an opportunity to examine and answer its contents.
This failure required fresh adjudication. The Tribunal set aside the appellate order on the depreciation issue and remitted it to the AO, directing that the investigation report be supplied and an adequate opportunity of hearing be provided.
The assessee was correspondingly directed to produce WIPL before the AO for examination of the genuineness of the transactions.
Decision
The reassessment challenges for AY 2019-20 were dismissed, while the depreciation issues in all three appeals were restored to the AO for de novo consideration.
Accordingly, the two AY 2019-20 appeals were partly allowed, and Zee Media Corporation Ltd.’s AY 2022-23 appeal was allowed for statistical purposes.
The section 234B ground in the lead appeal was not separately adjudicated at that stage because the principal disallowance had been remanded.
Author’s Comments
An investigation report can justify an enquiry; sustaining a disallowance requires an opportunity to answer the evidence used against the assessee. This distinction explains the different outcomes on reopening and depreciation.
The decision also demonstrates that invoices and payments through banking channels may require further support where the Department alleges that the underlying goods or services were never supplied. For civil and interior works, evidence of actual execution, existence and business use of the improvements can be particularly valuable.
However, the order should not be described as finally confirming bogus transactions or finally allowing depreciation. The Tribunal kept the reopening intact and restored the merits for verification, imposing obligations on both sides: disclosure of adverse material by the AO and production of the supplier by the assessee.
One further point deserves attention. Zee Media’s grounds included a section 151A objection concerning notices issued by the jurisdictional AO, but the order does not separately analyse that contention. Its dismissal of the reopening ground should therefore not be presented as a reasoned ruling on the wider faceless-jurisdiction controversy.
Cases Discussed
PCIT v. Shodiman Investments (P.) Ltd. (Bombay High Court; 422 ITR 337)
Raymond Woollen Mills Ltd. v. ITO (Supreme Court; (1999) 236 ITR 34)
Andaman Timber Industries v. CCE (Supreme Court; Civil Appeal No. 4228 of 2006)
Hrishikesh v. Pr. CIT (Bombay High Court; 175 taxmann.com 1062)
Patel Engineering Ltd. v. DCIT (Bombay High Court; 136 taxmann.com 115)
Paramount Communication (P.) Ltd. v. PCIT (Supreme Court; 2017, as referred to in the order)
Aaspas Multimedia Ltd. v. DCIT (Gujarat High Court; (2017) 83 taxmann.com 82)
Pratibha Finvest (P.) Ltd. v. ITO (Delhi High Court; (2013) 29 taxmann.com 420)
Pr. CIT v. Vaman International Pvt. Ltd. (Bombay High Court; ITA No. 1940 of 2017; 29 January 2020)
Ashok Rungta v. ITO (Bombay High Court; 474 ITR 160)
CIT v. Orchid Industries (P.) Ltd. (Bombay High Court; [2017] 397 ITR 136)
Tin Box Company v. CIT (Supreme Court; 249 ITR 216)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The above captioned appeals preferred by the assessee emanate from the orders of even date passed by the Learned Commissioner of Income-tax, Appeal, CIT(A)-48, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to the assessment orders passed u/s. 147 (ITA No. 6869/MUM/2025), u/s. 143(3) (ITA No. 6870/MUM/2025) and u/s. 143(3) r.w.s. 147 (ITA No. 6871/MUM/2025) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Years [A.Ys.] 2019-20 and 2022-23. Since the issues are common and interlinked and also the fact that the appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity. We take up the appeal for AY 2019-20 in the case of Zee Akaash P. Ltd. as the ‘Lead Case’. The decision rendered would apply mutatis mutandis to other appeals.
2. ITA No. 6869/MUM/2025 (A.Y. 2019-20)
1. Ground 1-Reassessment bad in law
1.1 On the facts and circumstances of the case the Learned Commissioner of Income-tax (Appeals) 48 (hereinafter referred to as the ‘Ld. CIT(A)’) erred in upholding the reassessment order passed by the Assistant/Deputy Commissioner of Income-tax Central Circle-2(4) (herein referred to as Assessing officer’ or ‘AO’) under Section 147 read with Section 143(3) of the Income-tax Act, 1961 (‘the Act’) dated 22 March 2024 which is untenable and contrary to the facts of the case, and therefore, liable to be quashed.
1.2 On the facts of the case and in law, the Ld. CIT(A) failed to appreciate that the notice issued under Section 148 of the Act by the Assessing Officer was without jurisdiction, as it was solely based on information received from a third party ie., the Regional Economic Intelligence Council (‘REIC’)/ Directorate General of Goods and Services Tax Intelligence (‘DGGI’) and was issued without any independent application of mind or further verification by the Assessing Officer. The absence of independent satisfaction or inquiry on the part of the AO renders the initiation of reassessment proceedings invalid.
2. Ground 2 – Disallowance of the depreciation Rs. 27,43,850/- claimed u/s 32 of the Act
2.1 in law and in the facts and circumstances of the present case, the Ld. CIT(A) erred in upholding the action of the AO in disallowing depreciation of Rs. 27,43,850/- claimed as per provisions of Section 32 of the Act in respect of civil and interior work carried out by Watkins Infrastructure Private Limited for the office premises of the appellant company.
2.2 On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the assessee had duly discharged its onus to prove the genuineness of the transaction with Watkins Infrastructure Private Limited.
3. Ground 3-Excess levy of interest u/s 234B of the Act amounting to Rs 4,79,400
3.1 In law and in the facts and circumstances of the present case, the Ld. CIT(A) erred in confirming the action of the AO in levying excess interest u/s 234B of the Act amounting to Rs 4,79,400 inspite of the fact that the appellant has paid advance tax more than 90 percent of the assessed income.
3. Brief stated facts are that the assessee company namely Zee Akaash News P.Ltd. is engaged in the business of Broadcasting of Satellite Television Channels. Survey u/s 133A of the Act was conducted in the Zee group on 04.01.2021.Itfiled its return of income declaring total income of Rs. 35,22,66,250/-which was subsequently revised u/s 139(5) of the Act but without any change in the total income. The case was reopened based on the information received from the Investigation wing, Kolkata in the case of one Watkins Infrastructure P.Ltd(WIPL) which was found to be indulging in issuance of fraudulent/fake GST invoices for passing irregular input credit to other business entities and for doing this they have also availed ITC against issue fake invoices issued by others. The transactions were alleged to be sham and sale proceeds were bogus in the hand of the recipients. Entities to whom WIPL had made sales were sorted out from the Insight Portal of the Department and identified as beneficiaries who made bogus purchases, and the name of the assessee appeared in that list for an aggregate transaction of Rs 5.07 cr. during the relevant year.
4. Ground no. 1 relates to reopening and consequent reassessment done by the AO. Notice under Section 148A(b) of the Act was issued on 02.03.2023 inter alia, alleging that income chargeable to tax had escaped assessment on the basis of information enclosed with the notice wherein it was, inter alia, alleged that the reopening was based on the above information. The AO initiated reassessment proceedings and directed the assessee to show cause as to why a notice under Section 148 of the Act should not be issued. The assessee, in response filed a submission objecting to the reassessment proceedings, inter alia, pointing out that the assessee made payments in the nature of interior/civil work of office premises and purchase of office equipment and furniture from WIPL and added the same to the block of assets and claimed depreciation of Rs. 27,43,850/- under Section 32 of the Act. The AO, vide order under Section 148A(d) of the Act, rejected the contentions of the assessee by holding that information was received from a credible agency and reopening was not based only on suspicion or surmise. Thereafter, the assessment was completed, and an order was framed u/s 147 of the Act assessing total income at Rs. 35,50,10,100/- after making disallowance of depreciation of Rs 27,43,850/-.
5. Aggrieved, the assessee filed an appeal before the ld. CIT(A) who confirmed the action of the AO. He relied on the findings of the AO to conclude that WIPL had low share capital and negligible profits compared to high turnover, which corroborated the information from about it being a shell entity. Accordingly, he held that the reasons recorded by the AO constituted valid grounds for reopening the assessment and upheld the validity of the reassessment proceedings.
6. In this regard, it is contended by the ld.AR orally as well vide written submission before us that for the year under consideration, the assessee had engaged WIPL for undertaking interior/civil work towards office premises, including acquisition of furniture and fixtures and made payments aggregating to Rs. 5.07 cr. As the aforesaid expenditure was capital in nature, it was capitalized under ‘Leasehold Improvements’ in the books. Further, as per the provisions of the Act, the same was included in the block of assets on which depreciation of Rs. 27,43,850/- was claimed u/s 32 of the Act. In support of the genuineness of the transaction, the assessee furnished certain documents, Audited financial statements, details to show additions made to the asset and the tax audit report etc. before the AO. It was also submitted that before initiating reassessment proceedings the AO had not carried out any independent inquiry.
6.1 The assessee submitted that the only basis for the AO to initiate reassessment proceedings in the hands of the assessee was that purported information was received from DGGI that WIPL was found to be indulging in issuance of fake GST invoices for passing on irregular input tax credit. It was alleged that WIPL had a very low share capital and also a very low profit before tax in comparison with revenue from operations. It was evident that the AO had simply proceeded on the basis of borrowed satisfaction without employing any independent application of mind. It was incumbent upon him to carry out some further investigation with respect to the said entity before embarking upon a roving and fishing inquiry by reopening the assessment of the assessee. The failure on his part to conduct any inquiry whatsoever vitiates the entire reassessment proceeding. Reliance was placed on upon the decision of hon’ble Bombay High Court in the case of Hrishikesh vs. Pr.CIT (175 taxmann.com 1062) and Shodiman Investment P. Ltd. (422 ITR 337) in this regard. It is settled position of law that no reopening of the assessment could be permitted on the basis of incorrect understanding of facts.
6.2 It was further argued that the AO failed to establish assessee’s involvement, any clear and direct nexus between the information and alleged escapement of income, or bring any independent corroborative evidence. The reassessment was, therefore based merely on suspicion that the assessee, having undertaken transactions with WIPL would be a beneficiary. It was also submitted that no reopening could be permitted without supplying the underlying material to the assessee as it was also not provided with the report, statement, findings or information relied upon by the AO having adverse comments against the assessee. In absence of information specifically suggesting escapement of income and establishing nexus, the reassessment is bad in law. In support of the same, reliance was placed on the decision of the Hon’ble Bombay High Court in the case of Patel Engineering Ltd. vs. DCIT (136 taxmann.com 115).
7. The ld.DR on the other hand relied on the orders of the authorities below stating that the reassessment proceedings were undertaken on the basis of information from a government authority emerging out of investigation conducted by them in respect of bogus claims of input credits for the purposes of GST. There was sufficient tangible material for taking recourse to such action.
8. On careful consideration, we find no infirmity in the action of the lower authorities. The AO had followed the due process as laid down in section 148A(a) and 148A(d) of the Act. Reopening was done after allowing the assessee opportunity of hearing and only after appreciation of the facts of the case and the submissions made, he issued notice u/s 148 of the Act after taking approval appropriate authority in terms of section 151 of the Act. It is evident from the order that the AO did confront the assessee with the information on which he undertook reassessment proceedings. There was prima facie material available for such action which is in harmony with the provisions of law and judicial decisions of various courts of law. The Hon’ble Supreme Court in the case of Paramount Communication (P.) Ltd. Vs PCIT 2017 dismissed the SLP of the assessee upholding the order of the High Court wherein it was held that information regarding bogus purchase by appellant received by DRI from CCE which was passed on to revenue authorities was ‘tangible material outside record’ to initiate valid reassessment proceedings. Similarly, the Hon’ble High Court of Gujarat in the case of Aaspas Multimedia Ltd. Vs DCIT (2017) 83 taxmann.com 82 (Guj) held that where reassessment was made on basis of information received from Pr.DIT (Investigation) that assessee was beneficiary of accommodation entries by way of share application provided by a third party, same was justified. The Hon’ble High Court of Delhi in the case of Pratibha Finvest (P) Ltd. Vs ITO (2013) 29 taxmann.com 420 (Delhi) held that the reopening of assessment on basis of investigation report in case of search on third parties revealing accommodation entries received by assessee, was justified. Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs Income-tax tax Officer [1999] 236 ITR 34 (SC) held that the Department can reopen a case on the basis of some prima facie material and sufficiency or considered at that stage. At the stage of issue of notice u/s 148 only question is whether there was relevant material on which a person could have formed a requisite belief, material conclusively reasonable proving escapement is not concerned at the time of reopening of assessment. The citations relied upon by the assesse are factually distinguishable as in the instant case, the AO after analysing the reply of the assessee and the financials of the company filed in response to notice u/s 148A(b) dated 02.03.2023 and 148(A(d) dated 28.03.2023,came to the conclusion that it was a fit case for reassessment as there was a prima facie case of reassessment based on tangible materials. In view of the legal position emerging from the cited decision above, and lack of any substance in the submissions of the assessee ground of appeal is dismissed.
9. Ground no.2 relates to the disallowance of depreciation of Rs. 27,43,850/- claimed u/s 32 of the Act. As stated earlier, the reopening was based on the information received from the GST authorities stating that one ‘WIPL’ who is claimed to have done certain civil work for the assessee, was involved in the issuance of passing irregular input tax credit to other business entities and availing input tax credit based on fake invoices issued by others. It was further alleged that WIPL had a very low share capital and showed very low profit before tax in comparison with revenue from operations. On this basis, it was concluded that the transactions made by it were sham transactions and the sales made by it were bogus sales. Entities to whom WIPL had made sales were sorted out from the Insight Portal of the Department and identified as beneficiaries who made bogus purchases, and the name of the assessee appeared in that list for an aggregate transaction of Rs 5,07,77,000/-. It pointed out that it made payments which were in the nature of interior/civil work of office premises and purchase of office equipment and furniture from WIPL which was added the same to the block of assets and claimed depreciation of Rs. 27,43,850/- under Section 32 of the Act. The AO proceeded to disallow the claim of depreciation based on the information received and after taking into account the reply of the assessee. He also observed that despite notice u/s 133(6) of the Act issued to WIPL for confirmation of the impugned transaction alongwith necessary evidences, there was no compliance. Action of the AO was upheld who inter alia remarked that in absence of necessary evidence establishing the acquisition and existence of the assets, no deprecation could be allowed as ownership remained to be proved.
10. With regard to the documentary evidence submitted by the assessee, such as invoices, e-way bills, bank statements, and ledger accounts, the ld.CIT(A) opined that the assessee was required to establish not merely the existence of invoices and the corresponding payments, but also the actual receipt of the goods or services. Further, he observed that the notice issued under Section 133(6) of the Income-tax Act for verification of the transactions with WIPL non complied. The assessee submitted the AO or the ld. CIT(A) had not criticised the documents furnished by the assessee nor have brought on record any documentary evidence to rebut the documents furnished by the assessee. In view thereof, no disallowance could be made of depreciation claimed by the assessee. Further, the acquisition made by the assessee related to furniture and fixture as well as interior work conducted by it. The AO could have conducted physical verification of the assets acquired by the assessee. He simply relied upon the purported report of GST authorities, a copy of which was not provided to the assessee.The observation of the lower authorities that WIPL had low share capital and negligible profits as compared to its turnover did not, by itself, establish that it was a shell entity or that the transactions entered into by the assessee were non-genuine.
10.1 Before us, the ld.AR has stated that it had furnished certain documentary evidences in support of its claim of acquisition of capital asset and claim of depreciation thereon i.e. ledger account of WIPL in the books of the assessee, invoices along with e-way bills issued by it, relevant extract of the bank statement of the assessee making the payment to WIPL, audited financial statements to show additions made to the asset and the tax audit report. It is submitted that the assessee had discharged its primary onus by filing such relevant details. The assessee also submitted that the mere fact that WIPL had a low share capital and a low profit before tax cannot be the conclusive criterion to allege that it is involved in fraudulent transactions. No addition could be made merely on the basis of suspicion. Also, no corroborative evidence had been furnished to show that the assessee was a beneficiary of such alleged bogus transactions. It was also submitted that the assessee had a turnover of Rs. 80.72 cr. and the expenses claimed by it and the deduction claimed by the assessee on the aforesaid transaction was only Rs.27.44 lakhs. It would be illogical to conclude that the assessee, having turnover in crores, would indulge in fraudulent activities for Inflating expenses having such minuscule impact. Further, non-furnishing of reply to notice under Section 133(6) of the Act could not be the reason to doubt the genuineness of the transaction. The assesse could not be penalised merely on the ground that WIPL had failed to reply to notice of the Act.
10.2 It was further pleaded that perusal of the invoices clearly demonstrated that the purchases made by the assessee comprised items such as glass partitions/walls, meeting tables, conference tables, chairs for the cafeteria, wooden cabinets, wooden flooring, tiles, sofa sets, anti-skid and waterproof flooring, etc. These were not purchases of ordinary trading commodities but were in the nature of capital assets/fixed-asset-related items acquired for use in the assessee’s premises. The aforesaid items were duly capitalised in the books of account under the head “Leasehold Improvements.” The assessee cannot exercise control over the third party and cannot be penalized for circumstances beyond its control. The assessee submitted that mere non-response by certain third party cannot, by itself, constitute a valid basis for making an addition / disallowance in the hands of the assessee. The disallowance made by the AO on account of circumstances beyond the control of the assesse was unjustified and unsustainable in law. Reliance was placed on CIT v. Nikunj Eximp Enterprises (P.) Ltd. [2015] 372 ITR 619 (Bom) wherein in respect of allegations of bogus purchases, the jurisdictional Bombay High Court has held that merely because the suppliers had not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the assessee. Reliance was also placed on Pr. CIT vs. Vaman International Pvt. Ltd. (ITA No. 1940 of 2017 dated January 29, 2020) (Bom), Ashok Rungta vs. ITO (474 ITR 160) (Bom) and CIT v. Orchid Industries (P.) Ltd. [2017] 397 ITR 136 (Bom).
10.3. It is pleaded that the assessee was also not provided the report, statement or findings relied upon by the AO, nor was an opportunity of cross-examination provided. Reliance is placed on M/s. Andaman Timber Industries v. CCE (Civil Appeal No. 4228 of 2006) (SC) and Tin Box Company v. CIT, 249 ITR 216 (SC). Addition without providing cross-examination is against the principles of natural justice.
Accordingly, it was submitted that the transaction with WIPL was legitimate and bonafide, the required documentary evidence had been furnished, and depreciation being a mandatory allowance, the claim of Rs. 27,43,850/- on acquisition of fixed assets was allowable to the assessee.
11. The ld.DR relied on the orders of the authorities below.
12. We have carefully perused the materials on record, heard rival submissions. It is apparent that the only issue of depreciation is linked with certain Investigation report finding of GST department in respect of WIPL which is stated to be bogus company engaged in the activity of providing accommodation entries. During the year, the assessee had made transactions of Rs 5.07 cr. with the said party. It was stated that the assessee had business transaction with the said concern for interior and civil work relating to its office. The entire sum was capitalised in the books of account on which depreciation as per law was claimed. The AO ignored the evidences submitted before him to prove the genuineness of the transaction. The appellate authority also did not give much credence to such evidences. It was further submitted that the AO made the addition based on the said Investigation report which was not supplied to it. The AO issued notice u/s 133(6) of the Act which was not complied by WIPL. The assessee could not be penalized for such inaction on its part.
12.1 We find that the AO in a bid to verify and investigate the genuineness on the impugned transaction issued notice u/s 133(6) to the said party which was not complied. Since the said party was held to be a bogus entry provider, it was incumbent on part of the AO to make investigation notwithstanding certain evidences submitted before him. As stated above, the volume of transactions amounted to Rs 5.07 cr. which was allegedly paper transactions. In such a situation, non compliance of the said concerns casts further doubts about the genuineness of the said transaction. The assessee having entered into such transaction cannot shy away from its responsibility once the said party non complied. Therefore, the genuineness of the said transaction could not be enquired into and the purported investigation could not reach a logical end due to such non-cooperation. The assessee having made the impugned transactions was expected to produce it for factual verification before the AO which it failed. Therefore, we are of the considered view that the assessee has failed to discharge its onus in this regard.
12.2 However, on the other hand, we find merits in the contentions of the assessee that the said Investigation report and other relevant materials including statements recorded were not shared with it for rebuttal. It is evident that entire assessment order is based on such report which could not be adversely used by the Department without affording the assessee an opportunity to examine its contents for rebuttal.
12.3 Considering the entirety of the facts and the circumstances of the case, the matter in hand requires proper adjudication. Accordingly, we set aside the appellate order and remit the entire matter is to the file of the AO for de novo consideration of the issue as per law with a direction to provide the investigation report to the assessee for necessary rebuttal by it. Needless to state, the assessee would be allowed adequate opportunity of hearing. On the other hand, the assessee is also directed to produce the said party before the AO for necessary examination of the genuineness of the transaction qua the allegations levelled against. In the result, the ground is allowed for statistical purposes.
13. In ground no.3, the assessee has contested charging of interest u/s 234B of the Act. However, as the main addition has been set aside and remitted to the AO for fresh adjudication, the ground being inconsequential, does not require any adjudication at this stage.
14. Consequently, the appeal is partly allowed.
15. ITA No. 6871/MUM/2025 (A.Y. 2019-20)
1. Ground 1- Reassessment bad in law
1.1 On the facts and circumstances of the case, the Learned Commissioner of Income-tax (Appeals)-48 (hereinafter referred to as the ‘Ld. CIT(A)’) erred in upholding the reassessment order passed by the Deputy Commissioner of Income-tax Central Circle -2(4) (herein referred to as Assessing officer or AO’) under Section 147 read with Section 143(3) of the Income-tax Act, 1961 (‘the Act’) dated 23 March 2024 which is untenable and contrary to the facts of the case, and therefore, liable to be quashed.
1.2 On the facts of the case and in law, the Ld. CIT(A) failed to appreciate that the notice issued under Section 148 of the Act by the Assessing Officer was without jurisdiction, as it was solely based on information received from a third party i.e., the Regional Economic Intelligence Council (‘REIC’)/ Directorate General of Goods and Services Tax Intelligence (‘DGGI’) and was issued without any independent application of mind or further verification by the Assessing Officer. The absence of independent satisfaction or inquiry on the part of the AO renders the initiation of reassessment proceedings invalid.
1.3 The Ld. CIT(A) erred in upholding the action of the Assessing Officer in initiating reassessment proceedings without adhering to the mandatory faceless assessment process under Section 151A of the Income Tax Act, 1961. Specifically, the notices under Section 148(b) and Section 148, as well as the orders issued under Section 148A, were issued by the Jurisdictional Assessing Officer (‘JAO’), instead of being automatically allocated through the National Faceless Assessment Centre (‘NFAC’). This failure to follow the prescribed procedure renders the reassessment proceedings invalid and, consequently, liable to be quashed.
2. Ground 2 Disallowance of the depreciation Rs. 17,72,341/- claimed u/s 32 of the Act
2.1 In law and in the facts and circumstances of the present case, the Ld. CIT(A) erred in upholding the action of the AO in disallowing depreciation of Rs. 17,72,341/- claimed as per provisions of Section 32 of the Act in respect of civil and interior work carried out by Watkins Infrastructure Private Limited for the office premises of the appellant company.
2.2 On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the assessee had duly discharged its onus to prove the genuineness of the transaction with Watkins Infrastructure Private Limited.
16. The assessee Zee Media Corporation Ltd., being part of the ZEE group, is engaged in the business of Broadcasting of Satellite Television Channels, i.e. news/ current affairs and regional language channels, and sale of television programs. It filed its return of income declaring the total income at Rs. 78,29,27,146/-. For the year under consideration, the assessee had appointed WIPL for undertaking interior/civil work towards office premises, and made payments aggregating to Rs. 3,54,46,814/-(including GST of Rs. 54,07,141/-). As the aforesaid expenditure was capital in nature, it was capitalised under ‘Leasehold Improvements’ in the books. Further, as per the provisions of the Act, the same was included in the block of assets on which depreciation of Rs. 17,72,341/ was claimed u/s 32 of the Act.
17. Subsequently, a notice under Section 148A(b) was issued by the AO on the basis of information received from the ‘GST authorities stating that WIPL was involved in the issuance of passing irregular input tax credit to other business entities and availing input tax credit based on fake invoices issued by others. It was further alleged that the transactions made by Watkins were sham transactions and the sales made by it were bogus sales. Entities to whom Watkins had made sales were sorted out from the insight portal and identified as beneficiaries who made bogus purchases, and the name of the assessee appeared in that list for an aggregate transaction of Rs 3,54,46,814/-. On this basis alone, the AO initiated reassessment proceedings and directed the assessee to show cause as to why a notice under Section 148 of the Act should not be issued. The AO initiated reassessment proceedings and finally disallowed the depreciation of Rs 17,72,341/- in respect of the above stated transaction. The addition made as well as reopening were upheld by the ld.CIT(A) in the subsequent appeal by the assessee.
18. The assessee in the ground no.1 has contested the validity of the reassessment proceeding stated to be based on borrowed reasons and on the basis of third party information.
19. Before us, the ld.AR has submitted that the contentions made orally as well as written submission made in appeal in the case of Zee Akaash News P.Ltd(supra) are equally applicable to the facts of the case, both on legal ground and merits as identical facts were involved.
20. We find that identical issue has already been adjudicated by us while dealing with appeal of the sister concern Zee Akaash News P.Ltd in its appeal in ITA No.6869/Mum/2025(supra) dealt with in the preceding paras where the ground has been dismissed on identical facts and the circumstances of the case. Accordingly, the said decision in para 8 above applies mutatis mutandis to the instant ground as well which is therefore, dismissed.
21. Ground no.2 relates to merits of the rejection of the claim of depreciation qua transaction worth Rs3,54,46,814/-with WIPL. The addition has been inter alia made on the ground that the WIPL did not comply with notice u/s 133(6) of the Act. Accordingly, the assessee did not discharge its onus of proving the genuineness of the transaction notwithstanding certain evidences furnished before the lower authorities.
22. We find that exactly similar facts have already been deal with by us in Zee Akaash News P.Ltd in its appeal in ITA No.6869/Mum/2025(supra) dealt with in the preceding paras where the ground has been allowed for statistical purposes on identical facts and the circumstances of the case. Accordingly, the said decision in para 12.3 above applies mutatis mutandis to the instant ground as well which is therefore, also set aside and remanded to the AO for de novo consideration and action as per law.
23. In the result, the appeal is partly allowed.
24. ITA No. 6870/MUM/2025 (A.Y. 2022-23)(ZEE MEDIA)
1. Disallowance of the depreciation Rs. 27,27,632/- claimed u/s 32 of the Act.
1.1 On the facts and circumstances of the case, the Learned Commissioner of Learned Commissioner of Income-tax (Appeals) 48 (hereinafter referred to as the ‘Ld. CIT(A)’) erred in upholding the action of the Assistant Commissioner of Income-tax Central Circle -2(4) (herein referred to as Assessing officer’ or ‘AO’) in disallowing depreciation of Rs. 27,27,632/- claimed as per provisions of Section 32 of the Act in respect of civil and interior work carried out by Watkins Infrastructure Private Limited for the office premises of the appellant company.
1.2 On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the assessee had duly discharged its onus to prove the genuineness of the transaction with Watkins Infrastructure Private Limited.
1.3 On the facts and circumstances of the case, Ld. CIT(A) erred in disallowing depreciation solely based on the non-response to the notice issued under Section 133(6) to M/s. Watkins Infrastructure Pvt. Ltd., especially when the assessee had already submitted sufficient evidence to establish the genuineness of the transaction.
25. We find that exactly similar facts have already been deal with by us in Zee Akaash News P.Ltd in its appeal in ITA No.6869/Mum/2025(supra) dealt with in the preceding paras where the ground has been allowed for statistical purposes on identical facts and the circumstances of the case.In the impugned assessment year also, the only issue of contention relates to disallowance of depreciation of Rs 27,27,632/-w.r.t. transactions worth Rs.3,00,39,673/- with alleged sham company by WIPL engaged in activity of providing accommodation entries.
26. Accordingly, the said decision in para 12.3 above applies mutatis mutandis to the instant ground as well which is therefore, also set aside and remanded to the AO for de novo consideration and action as per law.
27. In the result, the appeal of the assessee is allowed for statistical purposes.
28. To sum up, ITA No. 6869/Mum/2025 and ITA No. 6871/Mum/2025 are partly allowed while ITA No. 6870/Mum/2025 is allowed for statistical purposes.
Order pronounced in the open court on 07/10/2026.
