Reassessment notice u/s 148 beyond 3 years invalid without approval from Principal Chief Commissioner/Chief Commissioner u/s 151(ii); Principal Commissioner approval insufficient, quashing proceedings ab initio.

ORDER PER RAVISH SOOD, JM:

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 06/06/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 05/03/2024 for the Assessment Year (AY) 2018-19. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:

1. Ignoring relevant judicial precedents The CIT(A) erred in distinguishing binding precedents such as GDR Finance & Leasing (P) Ltd. (Delhi HC) and G4S Secure Solutions (India) 1 (P) Ltd. (Delhi HC), WHARE additions based on incorrect INSIGHT/NMS data were quashed. The present case is on all fours with these decisions as the alleged excess deposit was purely the result of erroneous data

2. Violation of principles of natural justice The orders of the AO and CIT(A) suffer from violation of principles of natural justice, as adequate opportunity was not provided to verify and correct the erroneous data despite specific explanations being furnished, and the submissions made were disregarded without cogent reasoning

3. Perverse finding and irrelevant considerations The CIT(A)

wrongly relied on alleged inability to reconcile sales turnover to cash deposits, which is irrelevant to the present issue. The addition was not based on suppression of sales but on alleged excess deposits from flawed data; hence, such reasoning is perverse and unsustainable.

4. Erroneous reliance on incorrect third-party data The CIT(A) erred in law and on facts in upholding the addition of? 3,92,33,536/- u/s 69A based on incorrect and misreported data from the INSIGHT portal without independently verifying the correctness of such data with actual bank statements, which clearly showed cash deposits of only 721,12,97,847/-.

5. Failure to appreciate documentary evidence The CIT(A) erred in dismissing the appeal on the ground that reconciliation of sales turnover with bank deposits was not furnished, whereas the 5 issue under consideration was the correctness of cash deposit figures not the turnover. The turnover declared in ITR exceeded actual verified deposits, hence no adverse inference could be drawn.

6. Misapplication of Section 69A The CIT(A) failed to appreciate that for invoking Section 69A, the burden lies on the Revenue to establish the existence of unexplained "money" owned by the assessee. In the present case, the addition arose solely from misreported third-party data, not from any independent finding of unaccounted money.

7. The appellant craves leave to add, amend, OR modify the above grounds of appeal at the time of hearing.”

2. Also, the assessee has raised the following additional ground of appeal:

"In the facts and circumstances of the case, the reassessment notice u/s 148 dated 09.04.2022 for the AY 2018-19, issued beyond three years, without proper sanction u/s 151(ii), is bad in law, and hence the subsequent assessment proceedings are also equally bad in law."

3. The assessee, based on the aforesaid additional ground of appeal, has raised purely legal issues, which would not require looking any further beyond the facts available on record, therefore, we have no hesitation in admitting the same. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC).

4. Succinctly stated, the AO, based on specific information flagged as per the Risk Management Strategy by the CBDT,