Time-Barred Notice, No Evidence, MAT Higher – ITAT Quashes Reopening & Wipes Out ₹25 Cr Addition

Dharampal Satyapal Ltd. Vs ACIT (ITAT Delhi)

Assessee challenged reopening u/s 147 and an addition of ₹25.21 crore u/s 69A alleging unaccounted cash from “VAT evasion” by its consignee agents in Gujarat based on an FIR forwarded by the Investigation Wing. Tribunal not only examined merits but first struck down the reassessment itself on multiple strong legal grounds:

1. Reopening u/s 148 was TIME-BARRED

• Notice u/s 148 issued on 30.07.2022.
• For AY 2015-16, 6-year limit expired on 31.03.2022.
• As per first proviso to section 149(1), no notice can be issued after 6 years under the new regime.
• Earlier notice (30.06.2021) under old law was invalid since TOLA extension did not apply to AY 2015-16 (as held by SC in UOI vs Rajeev Bansal).

Therefore, reopening was barred by limitation.

 2. Failure to supply material with 148A(b) notice

• AO only provided “reasons” but not the underlying FIR, investigation report, or any evidence.
• Violates Supreme Court ruling in Ashish Agarwal, which mandates that all relied-upon material be shared.

Hence, 148A(b) notice & 148 notice invalid.

3. No tangible material – only assumptions based on FIR

• FIR is only preliminary information, not evidence.
• No independent enquiry by AO.
• VAT case pending before criminal courts – not final.

Reopening based on unverified allegations = invalid