* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 31.05.2025 + ITA No. 529/2023 PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 .....Appellant versus M/S K.R. PULP AND PAPERS LTD. .....Respondent Advocates who appeared in this case For the Appellant : Mr. Sanjay Kumar, Ms. Monica Benjamin and Ms. Easha Kadian, Advocates.

For the Respondent : Mr. Gautam Jain and Mr. Manish Yadav, Advocates. CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

JUDGMENT

TEJAS KARIA, J

1. The Appellant [‗Revenue‘] has preferred the present appeal under Section 260A of the Income Tax Act, 1961 [‗the Act‘], inter alia, impugning an order dated 31.03.2022 [‗impugned order‘] passed by the learned Income Tax Appellate Tribunal [‗ITAT‘] in ITA No.5064/Del/2017 in respect of Assessment Year [‗AY‘] 2009-10.

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2. The Revenue had filed the aforementioned appeal against the order dated 22.05.2017 passed by the Commissioner of Income Tax (Appeals)-27, New Delhi [‗CIT(A)‘], whereby the Respondent‘s [‗Assessee‘] appeal against the Assessment Order dated 31.12.2016 passed by the Assessing Officer [‗AO‘] under Section 143(3) read with Section 147 of the Act, was allowed and the additions made by the AO under Section 68 of the Act were deleted.

FACTUAL MATRIX

3. The Assessee is a public limited company and is engaged in the manufacturing of kraft paper and brown paper usually used for packaging. The Assessee filed its return of income on 26.09.2009 declaring an income of ₹1,95,97,146/- for the Financial Year [‗FY‘] 2008-09 relevant to AY

2009-10.

4. The Assessee‘s return was selected for scrutiny and notices under Sections 143(2) and 142(1) of the Act were issued raising queries regarding deduction claimed by the Assessee under Section 80IA of the Act. The AO framed an assessment order dated 22.11.2011 determining the Assessee‘s income at ₹5,84,39,170/- instead of ₹1,95,97,146/- by disallowing the deduction of ₹3,88,42,085/- claimed under Section 80IA of the Act. However, the said deductions were thereafter allowed by the CIT(A) and the learned ITAT. Subsequently, on 29.03.2016, the case was reopened under Section 147 of the Act, and a notice under Section 148 of the Act was issued to the Assessee. In response, the Assessee, by the letter dated 31.03.2016, requested that the return originally filed on 26.09.2009 be treated as the return filed in response to the notice under Section 148 of the Act.

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5. Thereafter, statutory notices were issued under Sections 143(2) and 142(1) of the Act. Upon completion of the reassessment proceedings, the AO passed an order under Section 147 read with Section 143(3) of the Act on 31.12.2016, assessing the total income of the Assessee at ₹27,28,32,150/-. The reassessment included an addition of ₹25,32,35,000/- under Section 68 of the Act on account of unexplained share capital and share premium received by the Assessee during the previous year relevant to the AY.

6. The Assessee preferred an appeal before the CIT(A), challenging the validity of the reassessment proceedings as well as the addition made under Section 68 of the Act by the assessment order dated 31.12.2016. By order dated 22.05.2017, the CIT(A) deleted the addition and quashed the reassessment proceedings holding that the reasons recorded for reopening the assessment did not refer to any material, much less any incriminating material, found as a result of the search conducted in the group cases, or during post-search investigation, that could establish that the Assessee had received bogus share capital. The CIT(A) also found that the reasons recorded by the AO were general, vague, and not confronted to the Assessee, while further observing that the AO had mechanically relied upon the information from the Investigation Wing without independently applying his mind. On these grounds, the CIT(A) held that the assumption o