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2025 Supreme(Online)(ITAT) 6438
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Yogesh Kumar, JM
Assessee – Appellant
Versus
Ld. CIT(A) – Respondent
ITA No. 1257/Del/2025 | ITA No. 1258/Del/2025
For the Appellants/Petitioners: Ld. Counsel
For the Respondents: Ld. Department's Representative
Reassessment under Section 147 requires clear nexus with tangible material; failure to dispose objections invalidates proceedings.
Headnote:(A) Income Tax Act - Sections 147 and 148 - Reassessment proceedings - Appellant challenged assessment resulting in addition of commission income, contending that reassessment based on borrowed satisfaction was invalid without tangible material - High Court reiterated necessity for independent inquiry to establish nexus between discrepancies and income escaping assessment. (Paras 7, 2, 18, 24, 27)
(B) Reopening of assessments - Assessee must be provided with reasons recorded for reopening - If objections raised are not dealt with, the assessment stands quashed. (Paras 10, 20, 27)
Facts of the case:
The Assessee, a private limited company, was reassessed under Section 147 leading to a substantial addition totaling Rs. 2.76 crore. The CIT(A) dismissed the appeal, leading to the current challenge.
Findings of Court:
The Court held that the A.O. failed to independently verify information leading to the reassessment, thus invalidating the addition made.
Issues: The core issues included whether the reassessment was justified based on adequate grounds and whether the absence of proper responses to objections violated legal principles.
Ratio Decidendi: The Court confirmed the necessity for concrete links between allegations and income escape for valid reassessment, rejecting mere suspicion as grounds.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. appeal filed against assessment order. (Para 1 , 2) |
| 2. facts of the case regarding income declaration. (Para 3 , 4 , 17) |
| 3. counsel's argument on assessment order. (Para 5 , 6 , 20) |
| 4. principles of reopening assessments under tax law. (Para 7) |
| 5. court observations on objections in reassessment. (Para 8 , 10 , 23) |
| 6. reassessment must meet legal standards. (Para 11 , 12 , 19) |
| 7. final determination and order for appeals. (Para 15) |
| 8. final conclusion allowing the appeals. (Para 16 , 28) |
| 9. grounds of appeal allowed with precedence cited. (Para 26 , 27) |
PER YOGESH KUMAR, U.S. JM:
The captioned Appeals are filed by the Assessee against the orders of Ld. Commissioner of Income Tax (Appeals)-3, Gurgaon, (Ld. CIT(A)’ for short), dated 23/01/2025 for the Assessment Year 2011-12 and 2012- 13 respectively.
2. The grounds of Appeal of Respective Appeals are as under:-
ITA No. 1257/Del/2025 (A.Y. 2011-12)
“1.0 That, on the facts and in the circumstances of the case, the disallowance, imposition of tax, and interest with reference thereto, as well as the quantification of taxable income and tax liability, are unjustified, erroneous, and unsustainable, and it is prayed that necessary directions be issued to the Learned Assessing Officer (Ld. AO) to grant appropriate relief in accordance with the law.
2.0 That, on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that the assessment completed u/s 147 r.w.s 143(3) was bad in law on various technical and jurisdictional grounds.
3.0 That, on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without appreciating the fact that recourse to section 147 of the Act would be unavailable in cases where the AO is empowered to proceed u/s 153C of the Act.
4.0 That, on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without appreciating the fact that there was no failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment for the year under consideration and hence assumption of jurisdiction u/s 147 by issuance of notice u/s 148 beyond the period of 4 years was invalid and as such, could not be sustained in law.
5.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. A.O without considering the fact that assumption of jurisdiction by issuing notice u/s 143(2) of the Act before supplying the reasons to believe to the appellant is bad in law.
6.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. A.O without considering the fact that reasons recorded u/s 148 of the Act do not meet the requirement of law hence completely vague and untenable.
6.1 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact, that the reasons to believe recorded by the Ld. AO for the initiation of reassessment proceedings u/s 147 of the Act was based on borrowed satisfaction and without application of mind.
6.2 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. A.O without considering the fact that the reasons u/s 148 were recorded merely on the basis of suspicion and assumptions/ presumptions derived from search conducted in case of M3M Group.
6.3 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact that the material which has been made the basis of recording reasons to believe for initiation of proceedings u/s 147 of the Act has never been supplied to the appellant.
7.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact that
