Urvara Agro Private Limited Vs ITO (ITAT Delhi)
Summary: ITAT Delhi allowed the appeal of Urvara Agro Private Limited and quashed the reassessment for Assessment Year 2018-19, holding that the jurisdictional threshold for reopening was not satisfied where proceedings were initiated solely on the basis of an anonymous and unverified Tax Evasion Petition (TEP). The assessee had originally filed its return declaring total income of Rs.8,88,600/-. Before reassessment, the Assessing Officer issued notice under section 133(6) seeking information regarding investment in immovable property, to which the assessee responded with its computation of income, bank statements, memorandum of association, sale deed and vendor ledgers. Reassessment nevertheless resulted in an addition of Rs.42,62,151/- as unexplained investment under section 69B.
The Tribunal found that the reassessment had been initiated on an anonymous and unverified TEP received in the name of one of the assessee’s directors. The notice under section 148A(b) and order under section 148A(d) did not disclose even the nature of the alleged properties, their location, valuation, date or mode of acquisition or the alleged source of investment. The Tribunal held that such facts did not constitute information providing a live link for recording satisfaction of escapement of income. Where section 69B was invoked, there also had to be an indication that the assessee had actually spent an amount over and above what was recorded in its books.
The Tribunal relied upon Raj Birbal Vs. ACIT, W.P.(C) 11910/2018, where the Delhi High Court held that a TEP containing bald assertions, without supporting material, was insufficient to trigger reassessment. It further relied upon Pradyot K. Misra v. ACIT [2023] 157 taxmann.com 253 (Delhi), which held reassessment substantially founded on a TEP unsustainable where underlying material was not furnished and an effective opportunity to rebut it was not given. The Tribunal also referred to Shri Ashok Arora vs ITO, ITA No.1894/Del./2012, which in turn applied Chhugamal Rajpal vs. S.P. Chaliha and G & G Pharma Limited. Concluding that reassessment cannot rest on vague, unverified or borrowed information and that the Assessing Officer must possess tangible and credible material after independent application of mind, the Tribunal sustained grounds Nos.2 to 4, allowed the appeal and quashed the assessment order.
Cases Discussed
- Pradyot K. Misra v. ACIT [2023] 157 taxmann.com 253 (Delhi High Court) — Relied upon for the proposition that reassessment founded substantially on a Tax Evasion Petition, without furnishing the underlying material or providing an effective opportunity to rebut it, is unsustainable in law.
- Raj Birbal Vs. ACIT, W.P. (C) 11910/2018 (Delhi High Court) — Relied upon directly; held that where the Assessing Officer had no material apart from a TEP, bald assertions in the petition were insufficient for commencement of reassessment proceedings.
- Shri Ashok Arora vs ITO, ITA No.1894/Del./2012 (ITAT Delhi) — Relied upon as a coordinate Bench decision holding that reassessment initiated merely on the basis of a tax evasion petition, without the Assessing Officer independently satisfying himself regarding escapement of income, is bad in law.
- Chhugamal Rajpal vs. S.P. Chaliha [1971] 79 ITR 603 (Supreme Court) — Applied in the precedent quoted by the Tribunal for the requirement that reassessment jurisdiction cannot be assumed merely on unverified information without the Assessing Officer’s requisite independent satisfaction.
- Principal CIT Vs G & G Pharma India Ltd. [2016] 384 ITR 147 (Delhi High Court) — Applied through the coordinate Bench decision quoted by the Tribunal; independent application of mind before reopening is a basic jurisdictional requirement and cannot be supplied by a post-reopening exercise.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 02.02.2026 of the Ld. National Faceless Appeal Centre, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1085445372(1) arising out of the assessment order dated 28.03.2023 u/s 147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by NFAC Delhi for AY: 2018-19.
2. Heard and perused the records. The return of assesse was filed u/s 139 declaring total income of Rs.8,88,600/- and prior to the proceedings assessing officer had issued notice u/s 133(6) of the Act dated 11.03.2022 by which information was sought with regard to investment in immovable property by the assesse which was responded by letter dated 14.03.2022 along with documents including computation of income, bank statements, memorandum of association, sales deed and the ledger of vendor parties. Thereafter, re-assessment proceedings were initiated in which again aforesaid documentary evidences were filed but ld. AO was not satisfied and made an addition of Rs.42,62,151/- as unexplained investment u/s 69B of the Act which has been sustained by ld. CIT(A) for which assesse is in appeal and before us the foremost contention of ld. Counsel was that the assumption of jurisdiction u/s 148 of the Act is itself vitiated as on the basis of unverified Tax Evasion Petition (TEP) alleging transfer of certain immovable (Benami) properties in the name of assesse the case was reopened.
3. We find that at page No. 274 of the paper book copy of annexure attached to notice under clause (b) of Section 148A of the Act has been provided and if we examine the same we find that the reassessment proceedings have been solely initiated on the basis of anonymous and unverified TEP received in the name of one of the directors Vishwas Tripathi. As we consider the show cause notice u/s 148A(b) available at page No. 273-275 and the copy of order dated 30.03.2022 passed u/s 148A(d) of the Act available at page No. 266-268 of the paper book, it can be seen that not even there is a disclosure of nature of properties as to if the same were residential, commercial or agricultural and there no detail of location, valuation, date of acquisition, mode of acquisition or alleged source of investment coming up either from the information which is said to be “credible information” or any separate findings. In order under clause (d) of Section 148A of the Act it is observed by ld. AO that assesse had failed to explain the source of investment as out of small profit of the company invest was made and merely showing assets in its ITR does not make the transaction authentic, however, we find that what is the nature of asset itself is not reflected.
4. These facts and the content or information coming out of all these facts would not at all constitute information so as to justify allege that the same provide a live link to the reasons for recording a satisfaction of escapement of income to issue show cause notice u/s 148A(b) of the Act or the order passed u/s 148A(d) of the Act.
5. Though ld. DR has vehemently defended the proposition laid down by ld. Counsel on the basis that sale deed does not reflect all the facts so the reasons are sufficient. However, we are of the considered view that if the reopening is on the basis of anonymous and unverified TEP there should be some material gathered independently, specially if allegation is of the nature in the case of assesse that there was transfer of certain immovable (Benami) properties. And more so if the case of the department is that provisions of Section 69B are being invoked, which is part of the deeming provisions of the Act, then, there should also be an indication as to how assesse has in fact made an expenditure an amount over and above what is recorded in the books. However, there seems to be complete absence of vital facts.
6. In this context, the reliance of ld. Counsel for the appellant on the decision of Hon’ble Delhi High Court in Raj Birbal Vs. ACIT, W.P. (C) 11910/2018 squarely applies to the case of assesse wherein Hon’ble High Court has held as follows:
“17. As alluded to hereinabove, the AO had no material available with him for triggering the reassessment proceeding against the petitioner. The only material, if it can be called that, which was available with the AO, was the TEP. There were no documents available which could have formed the basis for initiating reassessment proceeding against the petitioner.
17. Bald assertions in the TEP that the petitioner had claimed bogus expenses towards salary and other heads, in our view, was not sufficient for commencement of the reassessment proceeding u/s 147 r.w.s148 of the Act.”
(Emphasis Supplied)
7. The aforesaid proposition stands authoritatively settled by the Hon’ble jurisdictional Delhi High Court in the matter of Pradyot K. Misra v. ACIT [2023] 157 taxmann.com 253 (Delhi), wherein the Hon’ble Court held that reassessment founded substantially on a TEP, without furnishing the underlying material to the Assessee or affording an effective opportunity to rebut the same, is unsustainable in law. Similar view has been reiterated by the co-ordinate bench in the matter of Shri Ashok Arora us ITO, ITA No.1894/Del./2012, relevant findings for which are as under:
“10. Now, adverting to the case at hand, in view of the law laid down by the Hon ble Supreme Court in Chhugamal Rajpal vs. S.P. Chaliha (supra) and Hon ble jurisdictional High Court in G & G Pharma Limited (supra) discussed in the preceding paras, we are of the considered view that initiation of the proceedings W/s 147 of the Act by the AO in this case on the basis of tax evasion petition are itself bad in law as the AO has not satisfied himself before initiating the proceedings that income of the Assessee has escaped assessment for the following reasons:-
(i) that AO has merely proceeded to initiate proceedings u/s 147 of the Act on the basis of tax evasion petition that the Assessee has provided loan of Rs.2,50,000/- and Rs.3,00,000/- to Mr. Deepak and Mr. Sanjay respectively;
(ii) that the AO has merely forwarded the intimation contained in the tax evasion petition to the Assessee without recording any reasons whatsoever;
(Emphasis Supplied)
8. Thus we are of considered view that the jurisdictional threshold prescribed by the statute remains wholly unmet and where the settled law is that reassessment proceedings cannot be initiated on the basis of vague, unverified or borrowed information and the Assessing Officer must possess tangible and credible material which, after applying his own mind independently suggests escapement of income in the hands of the Assessee, the reopening in case of assessee is not sustainable in law. In the light of aforesaid discussion we are inclined to sustain the ground No. 2 to 4. Accordingly, the appeal of assesse is allowed. The impugned assessment order is quashed.
Order pronounced in the open court on 25.09.2026
