Deepak Agarwal Vs DCIT (ITAT Delhi)
Mechanical Sanctions, Vague Reasons & Wrong Sections – ITAT Quashes All 4 Years of Assessments in One Stroke
This common order dealt with four different assessment years where Assessee was alleged to be engaged in providing accommodation entries, & additions were made as “commission income” or “unexplained income”. However, instead of going into the merits, the ITAT examined serious legal defects in jurisdiction & procedure, & quashed all four assessments in entirety.
AY 2013-14 & AY 2014-15 – Reopening u/s 147 quashed
Fatal defects found:
- No supply of approval u/s 151 along with reasons u/s 148(2) – Mandatory as per Delhi HC in Tia Enterprises, affirmed by SC.
- No supply of underlying material relied upon (Investigation Wing report, statements, FIR, etc.) – Violates law laid down in Saraswati Petrochem, Micro Marbles.
- Vague, non-specific, copy-paste reasons – no application of mind.
- In AY 2014-15 – Addition finally made (₹31.50L) < ₹50L threshold of section 149(1)(b) → reopening beyond 3 years barred by law.
- Reason for reopening (₹49.69 Cr) was completely different from actual addition made (commission income) → impermissible variation.
Result: Reassessments for 2013-14 & 2014-15 were held invalid & QUASHED.
AY 2018-19 – Assessment u/s 143(3) quashed
- AO added “commission income” of ₹1.91 Cr but never mentioned which deeming section (68/69/69A/69B/69C/69D) was invoked.
- ITAT relied on Jharkhand HC in Pasari Casting:
- “Each deeming section has different conditions & burden. Without mentioning the section, addition is illegal.”
Result: Assessment invalid – QUASHED.
AY 2021-22 – Assessment u/s 143(3) quashed
- Search was conducted on 17.11.2021 (post-1.4.2021). As per Finance Act 2021, all search cases must be assessed only u/s 148 r.w. Explanation 2 (deemed escapement).However, AO wrongly completed assessment u/s 143(3), a general provision.
- Further, PCIT approval dated 28.06.2022 was unsigned & only said “APPROVED” without reasons. Courts (Bombay HC in Saraswat Bank, Delhi HC in SBC Minerals, P&H HC in Prahlad Singh) hold that mechanical or unsigned approvals vitiate jurisdiction.
Result: Assessment u/s 143(3) held without jurisdiction – QUASHED.
Final Outcome
All four assessments were struck down on pure legal grounds:
