Shivam Ventures Ltd. Vs ACIT (ITAT Raipur)
SEO Title: Reassessment Beyond Four Years Without Disclosure Failure Quashed: ITAT Raipur
Summary: The Income Tax Appellate Tribunal, Raipur Bench, allowed the appeal of Shree Shivam Ventures Ltd. for Assessment Year 2009-10 and quashed the reassessment proceedings initiated through a notice under Section 148 dated 30 March 2015. The case came before the Tribunal following a remand by the jurisdictional High Court, which had condoned a delay of 161 days in filing the appeal. The assessee explained that the Commissioner of Income Tax (Appeals) had uploaded the appellate order dated 21 March 2022 on the ITBA portal without the assessee becoming aware of it. Referring to the Supreme Court’s decision in Vidya Shankar Jaiswal, the High Court adopted a justice-oriented approach, condoned the delay and directed the Tribunal to decide the appeal on merits. On remand, the assessee raised an additional jurisdictional ground challenging the reassessment because the original assessment under Section 143(3) had been completed on 21 December 2011, whereas the reopening notice was issued after four years from the end of the relevant assessment year. The assessee contended that the Assessing Officer had not recorded any failure to disclose fully and truly all material facts necessary for assessment, as required by the first proviso to Section 147 of the Income Tax Act.
The Tribunal examined the recorded reasons and the report furnished by the Assessing Officer through the departmental representative. Neither disclosed any allegation or evidence that the assessee had failed to furnish material facts fully and truly. The Tribunal relied on Hariom Ingots and Power Pvt. Ltd. Vs. Pr. CIT, (2022) 444 ITR 306 (Chhattisgarh), in which the jurisdictional High Court had held that reopening after four years requires the Assessing Officer to record the necessary disclosure failure. The Tribunal also considered its decision in Avanindra Nath Agrawal Vs. DCIT, ITA No.128/RPR/2025, dated 22 July 2025, which applied the statutory proviso and referred to the Supreme Court’s ruling in Union of India Vs. Rajeev Bansal on jurisdictional statutory requirements.
The Tribunal concluded that the reopening notice dated 30 March 2015 had been issued beyond four years without satisfying the mandatory condition prescribed in the first proviso to Section 147. Accordingly, the reassessment proceedings were held invalid, arbitrary and bad in law and were quashed. All consequential proceedings became non-est, and the grounds challenging the merits were treated as academic. The assessee’s appeal was allowed by the Tribunal comprising Judicial Member Partha Sarathi Chaudhury and Accountant Member Arun Khodpia, with the order pronounced on 24 July 2025.
Cases Discussed
- Vidya Shankar Jaiswal — Supreme Court order dated 31.01.2025, referred to in the jurisdictional High Court’s order for a justice-oriented and liberal approach to condonation of delay.
- Hariom Ingots and Power Pvt. Ltd. Vs. Pr. CIT — (2022) 444 ITR 306 (Chhattisgarh High Court). Relied upon for the requirement to record failure to disclose material facts before reopening an assessment after four years.
- Avanindra Nath Agrawal Vs. DCIT, Circle-1(1), Raipur — ITA No.128/RPR/2025, dated 22.07.2025 (ITAT Raipur). Followed on the invalidity of reassessment without compliance with the first proviso to Section 147.
- Union of India Vs. Rajeev Bansal — (2024) 469 ITR 46 (SC). Referred to through the quoted Tribunal decision on mandatory statutory requirements and jurisdiction.
- Dr. Premachandran Keezhoth Vs. Chancellor, Kannur University — Cited in the quoted Supreme Court passage concerning exercise of statutory powers by the designated authority.
- CIT Vs. Anjum M.H. Ghaswala — Cited concerning the requirement to exercise statutory powers in the prescribed manner.
- State of Uttar Pradesh Vs. Singhara Singh — Cited concerning compliance with the statutory method for exercising powers.
- Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench — Cited concerning statutory preconditions to jurisdiction.
- Superintendent of Taxes Vs. Onkarmal Nathmal Trust — Cited concerning non-waiver of jurisdictional statutory requirements.
- Dwarka Prasad Agrawal V. B.D. Agrawal — Cited concerning orders passed without jurisdiction and invalid consequential action.
- CIT Vs. Kelvinator of India Ltd. — Referred to concerning preconditions limiting the power of reassessment.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
PER PARTHA SARATHI CHAUDHURY, JM:
This is a remand matter from the Hon’ble Jurisdictional High Court from appeal preferred by the assessee u/s. 260A of the Income Tax Act, 1961 (for short ‘the Act’).
2. That at the first round of appeal, the Tribunal had not condoned the delay of 161 days in filing of the appeal before it. The Hon’ble Jurisdictional High Court answering the substantial question of law in favour of the assessee, held that since sufficient cause has been shown by the assessee-appellant regarding the delay of 161 days in filing appeal before the Tribunal, therefore, such delay is condoned. The relevant paras are extracted as follows:
“5. We have heard learned counsels for parties, considered their rival submissions and also perused the record of the case with utmost care and circumspection.
6. Admittedly, there is a delay of 161 days in filing the appeal before the ITAT and for which the assessee/appellant has assigned the reason that the Commissioner of Income-Tax (Appeals) had dismissed the appeal vide its order dated 21.03.2022 and uploaded the order on ITBA portal about which the appellant was not aware and he came to know about this development while filing Tax Audit Report for assessement year 2022-23 and, therefore, he could not prefer an appeal right in time and as soon as the appellant came to know about the order, the appeal was preferred.
7. The Supreme Court vide its Order dated 31.01.2025 passed in the matter of Vidya Shankar Jaiswal (supra) while setting aside the order of this Court rejecting the appeal on the ground of delay, has held that the High Court ought to have adopted justice oriented and liberal approach by condoning the delay.
8. In view of above and also for the reason shown by the assessee/appellant herein coupled with the fact that though the application of the appellant was supported by the affidavit, but the Revenue did not file any counter-affidavit controverting the reason assigned by the assessee and, as such, the delay of 161 days occurred in filing the appeal remained uncontroverted and also for the reason that the assessee was not aware of order passed by the Commissioner of Income-Tax (Appeals) as it was only uploaded on ITBA portal, therefore, the sufficient cause has been show by the assessee/appellant for the delay of 161 days occurred in filing the appeal. Accordingly, the delay of 161 days occurred in filing the appeal deserves to be and is hereby condoned. The substantial question of law is answered accordingly.
9. The matter is remitted back to the ITAT for deciding the appeal on merits, in accordance with law, at the earliest.
10. The appeal stands allowed to the extent indicated hereinabove, leaving the parties to bear their own costs.”
3. In this case, the assessee has filed both legal grounds as well as grounds on merits. The Ld. Counsel for the assessee submitted that he would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits shall become academic only. The additional ground of appeal raised by the assessee is extracted as follows:
“In the facts and circumstances of the case and in law, the initiation of re-assessment proceedings is illegal and without jurisdiction because the proceedings were initiated after expiry of four years from the end of relevant assessment year without recording satisfaction as mandated in the first proviso to Section 147 of the Income Tax Act, 1961.”
4. That as per the additional ground raised by the assessee, it says that reassessment proceedings is invalid and without jurisdiction since proceedings were initiated after expiry of four years from end of the relevant assessment year without recording any satisfaction as mandated in the “1st proviso” to Section 147 of the Act as was applicable to the case of the assessee for A.Y.2009-10. In this regard, the Ld. Counsel for the assessee demonstrated from the notice issued u/s. 148 of the Act, dated 30.03.2015 and therein it is mentioned that the assessment proceedings u/s. 143(3) of the Act was completed on 21.12.2011. Now when the assessment was completed on 21.12.2011 and the proceedings for reassessment through issuance of notice u/s. 148 of the Act started on 30.03.2015 the same was beyond four years time. That once it is admitted as emanated from the facts on record that such reassessment proceedings have been initiated beyond the period of four years the “1st proviso” to Section 147 of the Act gets triggered. The department must demonstrate that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. It was further submitted by the Ld. Counsel that in the entire body of the notice issued for reassessment and the reasons, there is no whisper about any failure on the part of the assessee for disclosing fully and truly all material facts. The A.O has not even mentioned in the “reasons to believe” that there is any failure on the part of the assessee to disclose fully and truly all material facts. That once the reopening has been initiated beyond the period of four years from the end of the relevant assessment year and that there is no failure on the part of the assessee to disclose fully and truly all material facts and no satisfaction to that effect is recorded by the A.O, in such scenario, notice u/s.148 of the Act and subsequent reassessment proceedings u/s.147/148 of the Act is arbitrary, bad in law and is liable to be quashed.
5. The Ld. Counsel for the assessee placed reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Hariom Ingots and Power Pvt. Ltd. Vs. Pr. CIT (2022) 444 ITR 306 (C.G.). In the said decision, the Hon’ble Jurisdictional High Court had held as follows:
“6…………. For issuance of notice under Section 148 of the I.T. Act, there should be tangible material and mandatory compliance of Section 147 of I.T. Act. Proceedings of reassessment has been initiated against company after lapse of 4 years of submission of return, which is not in dispute. Under first proviso to Section 147 of the I.T. Act, for starting the reassessment proceedings after lapse of 4 years, Assessing Officer has to record his conclusion that there was failure on the part of assessee in not disclosing fully and truly all material facts necessary for assessment of that particular assessment year, which is not appearing from the reading of the Annexure i.e. reasons for issuance of notice.
7. Considering the aforementioned facts and circumstances of the case, reason assigned for issuance of notice and provisions mentioned therein, in the opinion of this Court, there was no reason/ground available with Assessing Officer to issue notice under Section 148 of the I.T. Act. Issuance of notice under Section 148 of the I.T. Act to petitioner is not in accordance with the first proviso to Section 147 of the I.T. Act, therefore, it is not sustainable, which is liable to be quashed and it is hereby quashed.
8. The writ petition is accordingly allowed.”
6. In the aforesaid binding decision, it has been laid down by the Hon’ble Jurisdictional High Court that when reassessment proceedings are initiated after lapse of four years, in such case as per the “1st proviso” to Section 147 of the Act, the A.O has to record his satisfaction that there was failure on the part of assessee in not disclosing fully and truly all material facts necessary for assessment for that particular assessment year. That when there was no satisfaction available with the A.O with regard to the “1st proviso” to Section 147 of the Act, in such scenario, issuance of notice u/s. 148 of the Act itself is therefore not in accordance with the said provisions of the Act and thereby liable to be quashed. The said writ petition was allowed. In this regard, we also refer to Section 147 and “1st proviso” of the Act which reads as follows:
“147. Income escaping assessment.—If the Assessing Officer has reason to believe” that any income chargeable to tax has escaped assessment” for any assessment year, he may”, subject to the provisions of sections 148 to 153, assess or reassess” such” income “and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings” under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of section 143 or this ‘section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material fact necessary for his assessment, for that assessment year……”
7. Reverting to the facts of the present case, the assessment was completed u/s. 143(3) of the Act on 21.12.2011 for A.Y.2009-10 and the notice u/s.148 of the Act was issued on 30.03.2015 i.e. well beyond the period four years from the end of the relevant assessment year. That at the same time in the reasons recorded by the A.O and as mandated by the “1st proviso” to Section 147 of the Act, he was required to record his satisfaction regarding failure on the part of the assessee for disclosing fully and truly all material facts required for the assessment. However, in the reasons recorded, there is no whisper as to any such satisfaction nor the A.O has stated regarding any failure of the assessee in disclosing true and full facts.
8. The Ld. CIT-DR was asked to file a report from the concerned A.O with regard to the additional ground raised by the assessee. The Ld. CIT-DR had furnished the report before this bench. That on perusal of such report there is no iota of evidence and such report is absolutely silent regarding any failure on the part of the assessee disclosing fully and truly all material facts necessary for assessment.
9. Further, we find that ITAT, Raipur “DB” Bench in the case of the Avanindra Nath Agrawal Vs. DCIT, Circle-1(1), Raipur, ITA No. 128/RPR/2025, dated 22.07.2025 had dealt with the similar issue observing as follows:
“4. At the same time, the department has failed to bring on record any evidence suggesting any failure on the part of the assessee for disclosing truly and fully all material facts necessary for assessment. In this regard, the Ld. Sr. DR was directed to furnish report from the A.O and the said report was placed by her on record. The relevant submission of the A.O as per the said report is extracted as follows:
“(2) The reassessment proceedings have to be invoked within a span of 4 years however in the case of the assessee the same was reopened after 6 years.
As per old provisions of the Act, Notice u/s. 148 could be issued for 4 years from the end of A.Y. Further, Notice u/s. 148 could have been issued upto 6 years from the end of A.Y in cases where income escaping assessment is Rs.1 lakh or more.
Since, in the case of the assessee income escaping assessment for A.Y.2012-13 is Rs.61,65,450/- which is more than Rs.1 lakh therefore the case of the assessee was rightly reopened within 6 years by issuing notice u/s. 148 of the Act, dated 31.03.2019.”
As evident, it is admitted by the department that the case of the assessee was reopened after 6 years. It is also the contention of the A.O that notice u/s. 148 of the Act can be issued upto 6 years from end of the assessment year in cases where income escaping assessment is Rs.1 lakh or more and since in the case of the assessee income escaping assessment for A.Y.2012-13 is Rs.61,65,450/- which was more than Rs.1 lakh therefore, the case of the assessee was rightly reopened within 6 years by issuing notice u/s. 148 of the Act, dated 31.03.2019.
5. In this regard, let us refer to relevant provision of Section 147 of the Act which deals with the contended issue before us:
“147. Income escaping assessment.—If the Assessing Officer has reason to believe” that any income chargeable to tax has escaped assessment” for any assessment year, he may”, subject to the provisions of sections 148 to 153, assess or reassess” such” income “and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings” under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of section 143 or this ‘section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material fact necessary for his assessment, for that assessment year……”
6. That as evident as applicable to the assessment year in question i.e. A.Y.2012-13 wherein assessment has been completed for the relevant assessment year, no action shall be taken as per this provision after expiry of 4 years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material fact necessary for his assessment, for that assessment year. None of the limbs applies to the case of the assessee nor the revenue has able to place on record any evidence regarding any failure on the part of the assessee “to disclose truly and fully all material facts necessary for assessment.” At the same time, ground taken by the A.O justifying the reopening beyond the period of 6 years saying that whenever there is a case where income escaping assessment is Rs.1 lakhs or more, in such cases, notice u/s. 148 of the Act could have been issued upto 6 years from the end of the assessment year, however, no such limb emanates from the said proviso to Section 147 of the Act and therefore, this reason as stated by the A.O is not emanating from the statute, hence, the said observation is perverse and infructuous and does not contain legal validity. We find that the Hon’ble Supreme Court in its recent order passed in the case of Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) had, inter alia, observed that the order passed without jurisdiction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Elaborating further, the Hon’ble Apex Court had observed that any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment, therefore, any consequential order passed or action taken will be invalid and without jurisdiction. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under:
“xxxx xxxx xxxx xxxx xxxx
30. If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. (Dr. Premachandran Keezhoth Vs. Chancellor, Kannur University). Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner (CIT Vs. Anjum M.H. Ghaswala; State of Uttar Pradesh Vs. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid………….
xxxx xxxx xxxx xxxx xxxx
32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench). There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes Vs. Onkarmal Nathmal Trust). An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT Vs. Kelvinator of India Ltd.)”
Therefore, considering the facts that viz. (i) reopening was done beyond the period of 6 years; (ii) department has not proved any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment; (iii) the A.O has stated frivolous invalid ground justifying the action of the department, therefore, such reassessment proceedings initiated beyond the period of 6 years is invalid, void ab initio, hence quashed.
7. Since the reassessment is quashed thereafter all the other proceedings becomes non-est in the eyes of law. As the legal issue has been answered in favour of the assessee therefore the grounds on merits becomes academic only.
8. As per the aforesaid terms the grounds of appeal raised by the assessee stands allowed.
9. In the result, appeal of the assessee is allowed.”
10. That on examination of facts on record and as per the aforesaid judicial pronouncements, we are of the considered view that the reassessment proceedings initiated beyond the period of four years from the end of the relevant assessment year against the assessee by issuance of notice u/s.148 of the Act without compliance to Section 147 (1st proviso) is invalid, arbitrary and bad in law hence quashed.
11. Since the reassessment is quashed thereafter all the other proceedings becomes non-est in the eyes of law. As the legal issue has been answered in favour of the assessee therefore the grounds on merits becomes academic only.
12. As per the aforesaid terms the grounds of appeal raised by the assessee stands allowed.
13. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 24th day of July, 2025.
