Income Tax Appellate Tribunal - Delhi
Manoj Aggarwal,Delhi vs Pcit,Delhi-20, Vikas Bhawan Ip State ... on 28 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E': NEW DELHI
BEFORE
SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
AND
SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER
ITA No.2775/Del/2024. A.Y. 2016-17
Manoj Aggarwal PCIT,
25/47, Lane Number 16 Delhi-20
Viswas Nagar Shahdara,. Vs. Vikas Bhawan IP
Delhi-110032, State Delhi
PAN: AFYPA3349D
(Appellant) (Respondent)
Stay Application No. 02/Del/2025
(Arising out of ITA No.2775/Del/2024) A.Y. 2016-17
Manoj Aggarwal PCIT,
25/47, Lane Number 16 Delhi-20
Viswas Nagar Shahdara,. Vs. Vikas Bhawan IP
Delhi-110032, State Delhi
PAN: AFYPA3349D
(Appellant) (Respondent)
Appellant by Sh. Prateek Garg, Adv.
Respondent by Sh. Sanjeev Kumar Yadav, CIT
DR
Date of Hearing 09/02/2026
Date of Pronouncement 28/04/2026
1
ITA No.2775/Del/2024
Manoj Aggarwal
ORDER
PER RAJ KUMAR CHAUHAN (J.M.):
1. The appeal is directed against the order dated 31st March, 2024 passed by the Pr. Commissioner of income Tax, Delhi u/s 263 of the Income Tax Act, 1961 (in short 'the Act'), wherein the assessment order was held to be erroneous insofar as being prejudicial to the interests of the Revenue. Accordingly, the order dated 28.03.2022 passed u/s 147 r.w.s.
144B of the Act by the concerned Assessing Officer ('AO') was directed to be decided afresh after verification of the issues discussed therein.
2. Aggrieved by the impugned revisional order, the assessee is in appeal before us and has raised various ground as mentioned in form 36. Along with the appeal, a stay application has also been filed by the assessee, registered separately.
3. The facts in brief as culled out from the order of the authorities below are that the assessee/appellant is engaged in the wholesale trading of electrical and lighting products. For the A.Y. 2016-17, the appellant derived income from aforementioned business as well as rental income and return income was filed, declaring income of Rs. 3,20,460/-. He was issued notice u/s 148 of the Act dated 28.03.2021 and he has filed 2 ITA No.2775/Del/2024 Manoj Aggarwal return of income in response to the said notice on 06.01.2022 along with balance sheet, audit report etc. He has filed objections on 22.03.2022 to the issuance of notice u/s 148 of the Act. The assessment was completed u/s 143(3) r.w.s. 147 and 144B of the Act by assessing the income at Rs. 3,20,460/-. As per the assessment order, the Ld. AO had received information from Investigation Wing of the Department, that the assessee had made fictitious purchases of Rs. 4,10,43,686/- during the relevant year to A.Y. 2016-17 from various entities controlled by Sh. Mohit Garg and Sh. Rajeev Singh Kushwaha. Therefore, the AO has issued a notice dated 24.02.2024, and accordingly, the case was reopened for reassessment u/s 147 of the Act on the issue of "Cash Deposit" by issuing notice dated 28.03.2021. Subsequently, a notice u/s 142(1) along with questionnaire was issued on 23.12.2021. The assessee has submitted documents regarding issue and the same were accepted and the assessment was concluded of under Section 143/147 r.w.s. 144B of the Act.
4. The Ld. PCIT, Delhi issued a show cause notice u/s 263 of the Act on the ground that the AO has erred while passing the assessment order stating that the case was reopened on the issue 'cash deposit' whereas the case was reopened on the issue of 'fictitious purchase'. 3 ITA No.2775/Del/2024
Manoj Aggarwal Hence, the order passed by the AO was found to be erroneous so far as being prejudicial to the interest of the revenue and accordingly, the assessee was given opportunity to submit response along with documentary evidence on the said issue. The assessee filed objection to the issuance of the notice u/s 263 of the Act on 18.03.2024 stating that the assessee has raised objection to the notice u/s 148 and without deciding the objections, the assessment order was passed on an invalid notice u/s 148 of the Act. It was submitted that the reassessment proceeding was invalid and void and before passing the order u/s 263, Ld. PCIT has not examined the proceedings by the AO if the same were valid or not. The ld. PCIT has rejected the objections made by the assessee stating that no one should be allowed to benefit from their own wrongs. It was further observed that the objection of the assessee that draft order was not provided is not tenable.
5. The ld. PCIT was of the opinion that the draft order is required to be issued only when a variation is to be made to the income of the assessee and in this case, no variation was made by the AO to the declared income, hence, no draft assessment order was required to be passed. It was further observed that the AO has not made any queries to the issue of 'fictitious purchase' made by the Assessee. Accordingly, the 4 ITA No.2775/Del/2024 Manoj Aggarwal assessment order was set aside u/s 263 of the Act, and the necessary directions as mentioned above in the beginning were issued for passing a fresh assessment order.
6. We have heard the ld. AR on behalf of the assessee and Ld. DR for the Revenue. During the argument, at the very outset, the ld. AR has submitted that the assessee has made a prayer for admission of additional ground with regard to the non-issuance of mandatory notice u/s 143(2) of the Act after filing of the return by the assessee in pursuance of the notice u/s 148 of the Act. Along with prayer for admission of additional ground the following additional ground are raised extracted below as under:
"1. That the reassessment order passed under section 147 of the Income- tax Act, 1961 is bad in law and void ab initio, as no notice under section 143(2) of the Act was issued or served upon the appellant after the filing of return of income in response to notice under section 148, though the same was filed with delay.
2. That the omission to issue the mandatory notice under section 143(2) being a jurisdictional defect, the Assessing Officer did not acquire lawful jurisdiction to frame the reassessment under section 147, rendering the entire proceedings null and void.
3. That as the reassessment order itself is invalid and void ab initio, the consequent revisionary order passed by the learned Principal Commissioner of Income-tax under section 263 of the Act is also bad in law, without jurisdiction and liable to be quashed, since it seeks to revise a non est order which has no legal existence.5 ITA No.2775/Del/2024
Manoj Aggarwal
4. That the learned PCIT grossly erred in invoking powers under section 263 of the Act in respect of an assessment order which was itself null and void, thereby rendering the revisionary order unsustainable in law."
7. It was argued that since the legal ground goes to the root of the case and no factual adjudication is required or no new facts are required to be ascertained or examined, hence it is argued that in view of law laid down by Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), the additional ground making out a question of law arising from the facts on record and goes to the root of the assessment, therefore, needs to be considered, adjudicated and allowed.
8. We have considered the submissions with regard to the prayer for admission of additional grounds. In view of law laid down by Hon'ble Supreme Court in National Thermal Power company ltd. (supra), we are inclined to allow the additional grounds so raised for consideration of this Tribunal as the necessary facts in that regard are already on record and it is a purely legal question needs to be determined by us.
9. Ld. AR has submitted that it is an admitted fact that after filing of the return in pursuance of notice u/s 148 of the Act having been issued to the assessee, no notice u/s 143(2) of the Act has been issued before 6 ITA No.2775/Del/2024 Manoj Aggarwal completion of the reassessment which makes the assessment order void ab initio. In support of his argument, Ld. AR has relied upon the case of Hon'ble Delhi High Court in the case of PCIT vs. Silverline (2016) 383 ITR 455 (Del.) wherein it was held that "Order of reassessment cannot be passed without notice under section 143(2) of the I.T. Act. The jurisdictional error cannot be cured by Section 292BB of the I.T. Act". The assessee has further relied the case of ITAT Delhi in nITA No. 2269/Del/2017 reported as [2018] 171 taxlok.com (IT) 386 (ITAT- Delhi) order dated 10 December, 2018, wherein the similar issue was adjudicated in favour of the assessee by holding that invalid reassessment order cannot be revised by the Commissioner stating that since the reassessment order itself was bad in law, could not be revised under section 263 of the Act, therefore, the proceeding under section 263 of the Act were bad in law and liable to be quashed because no notice u/s 143(2) of the Act had been issued for completion of reassessment proceedings. The relevant portion of the order of Jurisdictional Tribunal wherein the order of Delhi High Court in PCIT vs. Silverline (2016) 383 ITR 455 (Del.) is relied and extracted below as under:
7 ITA No.2775/Del/2024
Manoj Aggarwal "6.1. The Hon'ble Delhi High Court in the case of Pr. CIT vs. Silverline (2016) 383 ITR 455 (Del.) held that "Order of reassessment cannot be passed without notice under section 143(2) of the I.T. Act. The jurisdictional error cannot be cured by Section 292BB of the 1.T. Act". It is, well settled Law that before passing the re-assessment order, A.O. shall have to prepare and serve notice upon assessee under section 143(2) of the IT Act. The Ld. Pr. CIT, however, observed that "no formal notice under section 143(2) have been issued to the assessee".
Therefore, these facts clearly show that before framing the reassessment order under sections 147/148 of the I.T. Act, no notice under section 143(2) have been prepared, issued and served upon the assessee. Therefore, re-assessment order is illegal, invalid and bad in law and is liable to be set aside. It is well settled Law that assessee can challenge the validity of the re-assessment proceedings in the collateral proceedings (relating to examination of validity of Order passed) under section 263 of the I.T. Act. We rely upon the Order of ITAT, Mumbai Bench in the case of Westlife Development Ltd., vs. PCIT 49 ITR (Tribu.) 406 in which it was held "allowing the appeal (i) that jurisdiction aspect of the Order passed in the primary proceedings can be examined in collateral proceedings also. Thus, the assessee could be permitted to challenge the validity of the Order passed under section 263 on the ground that the assessment order was non-est." Since the reassessment order itself is bad in law, therefore, Learned Counsel for the Assessee, rightly contended that the same cannot be revised under section 263 of the I.T. Act. Only valid re-assessment order can be revised under section 263 of the I.T. Act. On this ground itself the proceedings under section 263 of the I.T. Act are bad in law and liable to be quashed."
10. The assessee has further relied the case of Hon'ble Gujarat High Court in R/Tax Appeal No. 1374/2018 order dated 4th Feb 2019, Pr. Commissioner of income Tax-1 vs. Marck Biosciences Ltd. Similar issue is decided in favour of the assessee by quashing the order u/s 263 of the Act because reassessment order was passed without issuance of notice 8 ITA No.2775/Del/2024 Manoj Aggarwal u/s 143(2) of the Act wherein the Hon'ble High Court while following the judgment of the Hon'ble Apex Court in the case of CIT vs. Hotel Blue Moon, [2010] 188 taxman 113 (SC) was pleased to hold para 20 and 21 extracted below as under:
"20. In the facts of the present case also, if the contention of the appellant were to be accepted, it would amount to dispensing with the notice under section 143(2) of the Act in view of the fact that it is an admitted position that no such notice had been issued after the return of income was filed by the assessee. After the filing of the return of income, unless a notice under section 143(2) of the Act is issued to the assessee, he would have no means of knowing as to whether or not the Assessing Officer has accepted the return of income as filed by him. As held bythe Supreme Court in the above decision, omission to issue a notice under section 143(2) of the Act is not curable. a It procedural irregularity and is not is, therefore, mandatory to issue notice under section 143(2) of the Act.
21. At this juncture, reference may also be made to the contents of the Central Board of Direct Taxes Circular No.549 dated 31.10.1989, which finds reference in the decision of this Court in case of Dy. CIT v. Mahi Valley Hotels & Resorts (supra), which has been reproduced in paragraph 8.5 hereinabove. A perušal of the above circular indicates that if an assessee, after furnishing the return of income, does not receive a notice under section 143(2) of the Act from the Department within the prescribed period, then he can take it that the return filed by him has become final and no scrutiny proceedings could be started in respect of that return. This is the kind of significance that has been attached to a notice under section 143(2) of the Act by the Central Board of Direct Taxes itself."
11. It is argued by the Ld. AR that the impugned order has been passed by revising the invalid reassessment order which was passed without 9 ITA No.2775/Del/2024 Manoj Aggarwal issuing notice u/s 143(2) of the Act and as such the revisional order is also invalid and liable to be quashed.
12. The Ld. DR on the other hand supported the judgement of the PCIT but could submit nothing with regard to the submissions of the assessee on the additional ground and the legal precedents relied therein.
13. We have considered the rival submissions and examined the record. It is an admitted fact that before completing the reassessment proceeding/ reassessment order dated 28.03.2022, notice u/s 143(2) of the Act has not been issued. Therefore, as held by Hon'ble Apex Court in Hotel Blue Moon (supra) and by the Hon'ble Gujarat High Court in the case of R/Tax Appeal No. 1374/2018 (supra) and the jurisdictional Tribunal in ITA No. 2269/Del/2017 (supra), the reassessment order having been passed without issuing notice u/s 143(2) of the act is invalid and void ab initio. Since the revisional order has revised, an invalid order u/s 148/144B of the Act, the same is therefore held to be invalid and accordingly quashed. The additional ground raised by the assessee are accordingly adjudicated and decided in favour of the assessee. The appeal of the assessee is accordingly allowed. 10 ITA No.2775/Del/2024
Manoj Aggarwal
14. Since, the reassessment order dated 28.03.22 along with the revisional order under section 263 of the Act dated 31.03.2024 has been quashed and held invalid, the stay application moved by the assessee, in view of our decision in main appeal, wherein the revisional order alongwith original assessment order are quashed, the Stay Application No. 02/Del/2025 (Supra) has become infructuous and stands dismissed accordingly.
15. In the result the appeal of the assessee is allowed and stay Application stands dismissed.
Order pronounced in open Court on 28 th April, 2026.
Sd/- Sd/-
(S. RIFAUR RAHMAN) (RAJ KUMAR CHAUHAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Da t ed: 2 8 / 0 4/ 2 0 2 6
Bi n i ta , S r. P S
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT/PCIT
4. CIT(Appeals)
5. Sr.DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI
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