The Delhi High Court has held that the language “Yes, I am convinced it is a fit case for re-opening the assessment u/s 147 by issuing notice u/s 148” satisfies the mandate of Section 151A of the Income Tax Act for reopening the Income Tax assessment.
The bench of Justice V. Kameswar Rao and Justice Vinod Kumar have observed that the ITAT has clearly erred in not appreciating the language used by the Competent Authority while granting approval.
The Respondent/Assessee, incorporated on 28.08.1995, filed its income return for AY 2009-10 on 22.09.2009, declaring an income of Rs. 40,720/-, which was processed under Section 143(1) and not selected for scrutiny. Later, on 30.10.2010, the AO received information from the Director of Income Tax (Investigation-II) that a search revealed the Assessee had received accommodation entries. The Assessee claimed it had declared Rs. 25,00,000/- as share capital with share premium.
Under Section 148, the AO issued a notice on 28.03.2016 to reopen the assessment. The Assessee filed objections, which were disposed of the same day. The assessment order noted that the Assessee’s share capital/share premium increased from Rs. 1,07,74,000 to Rs. 1,32,85,562, including Rs. 11,562/- profits, allegedly due to accommodation entries of Rs. 25,00,000 from the S.K. Jain group.
It has been mentioned in the assessment order that S. K. Jain group had received cash on various dates from an intermediary by the name of one Single Sahab in lieu of the accommodation entry. The Appellant moved on the basis that the transactions were a form of introducing cash in the system in the form of bogus sales.
This cash was then transferred to different paper/shell companies floated by the S. K. Jain group through a complex trail of transactions to hide the actual source of funds. According to the Appellant this was the Respondent’s way of enhancing the reserve and surplus along with the capital account of a specific set of companies with the help of unexplained cash routed through shell companies. Once these companies’ funds were sufficiently enhanced accommodation entries were made through RTGS/Cheque in the shape of the share capital, share application money, share premium, sale/purchase of shares, unsecured loans, bogus expenses, etc., as per the specific requirements of the beneficiaries, which were provided to them in lieu of the cash receipt.
As per the Appellant, in this way the chain for providing accommodation entries was completed although these transactions were layered through three to four companies.
The ITAT held that the case of the Respondent/Assessee followed a similar pattern wherein the Appellant had merely stated that the case of the Respondent/Assessee was a fit case for reopening assessment without providing adequate reasons.
The court held that “Yes, I am satisfied”, the mandate of Section 151(1) of the Income Tax Act as far as the approval of the Additional CIT was concerned, stood fulfilled.
Case Details
Case Title: PCIT Versus M/S AGROHA FINCAP LTD.
Case No.: ITA 60/2024
Date: 06.10.2025
Counsel For Petitioner: Vipul Agrawal
Counsel For Respondent: Arvind Kumar
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