Reassessment Set 10
[Section 148 to 151 (from 01-01-2025 till 30-06-2025)]
91
"Non-supply of Reopening Reasons Vitiates Jurisdiction: Toor and Sons HUF Case"
DCIT v. Toor and Sons HUF [2025 (2) TMI 239 - GAUHATI HIGH COURT]
(i) Issue decided by the Court:
Whether the Assessing Officer (AO) was justified in reopening the assessment under Section 147 of the Income Tax Act based on a sale deed executed by the assessee-HUF for the A.Y. 2014–15, and whether such reopening was done with proper satisfaction and legal compliance.
(ii) Facts relating to the issue:
The assessee, Toor and Sons HUF, had executed a sale deed in F.Y. 2013–14. Based on this transaction, the AO initiated reopening proceedings under Section 147 without supplying the "reasons to believe" to the assessee and passed a reassessment order. The CIT(A) quashed the reassessment order citing lack of jurisdictional compliance. The Revenue challenged this before the ITAT and subsequently the High Court.
(iii) Arguments of the appellant (Revenue) in brief:
The Revenue contended that the AO had valid reasons to reopen the assessment based on a sale transaction that escaped assessment.
It argued that procedural lapses, if any, do not nullify the AO’s satisfaction regarding escapement of income.
(iv) Arguments of the respondent (assessee) in brief:
The assessee argued that the reopening was done without furnishing the reasons recorded to the assessee.
The mandatory requirement under Section 148A (and in the pre-2021 regime, judicial principles) for supplying reasons was violated, making the reassessment invalid.
(v) Decision of the Court:
The High Court dismissed the Revenue’s appeal and upheld the ITAT’s decision to quash the reassessment. It held that non-supply of reasons recorded before reopening vitiates the jurisdiction of the AO to proceed under Section 147.
(vi) Reasoning given by the Court for its decision:
The Court emphasized that the principles of natural justice require that the assessee be given the recorded reasons before the reassessment.
It relied on settled judicial precedents (GKN Driveshafts) stating that non-supply of reasons is a jurisdictional defect.
It held that procedural compliance is not a mere formality but a jurisdictional necessity.
(vii) Circumstances where this judgement can be applied:
Reopening of assessments without supplying recorded reasons to the assessee.
Assessments under Section 147/148 where procedural lapses occur.
Situations involving violation of principles of natural justice in reassessment proceedings.
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92
“Jurisdictional Supremacy of Section 153C over Section 147 in Third-Party Search Cases”
DCIT v. Sh. Kailash Chand Hirawat” [2025 (2) TMI 291 - ITAT Jaipur]
(i) Issue Decided by the Court
Whether assessment proceedings initiated under Section 147/148 were valid when incriminating material had been seized during a search, requiring action under Section 153C of the Income Tax Act, 1961.
(ii) Facts Relating to the Issue
A search under Section 132 was conducted on the Ramesh Manihar Group.
Seizures included 18 pen drives containing voluminous data indicating unaccounted cash loans.
Material suggested that the assessee, Sh. Kailash Chand Hirawat, had received and earned interest on such loans.
Based on this, the AO issued notice under Section 148 for reassessment instead of proceeding under Section 153C.
CIT(A) held that the notice under Section 148 was invalid and that Section 153C was the appropriate recourse, relying on the Rajasthan High Court ruling in Shyam Sunder Khandelwal.
(iii) Arguments of the Appellant in Brief (Department)
Material received during search operations showed unaccounted loans and interest income.
Assessment was justified under Section 147/148 based on derived conclusions from the seized material.
(iv) Arguments of the Defendant in Brief (Assessee)
The seized material pertained to the assessee, and thus proceedings should be under Section 153C, not Section 147.
The procedure followed was not in accordance with law and violated mandatory jurisdictional requirements.
(v) Decision of the Court
The ITAT dismissed the department’s appeal as infructuous, affirming the CIT(A)’s view that proceedings should have been under Section 153C and not Section 147.
(vi) Reasoning Given by the Court
The court noted that the material triggering the assessment belonged to or related to the assessee but was seized during a search on another person.
In such cases, the only lawful course is under Section 153C.
Section 153A–153C, being special provisions for search cases, override the general reassessment provisions of Section 147–148.
The department's issuance of a subsequent notice under Section 153C implied acknowledgment of the procedural lapse.
(vii) Full Citation of the Judgement Relied Upon
Shyam Sunder Khandelwal v. Assistant Commissioner of Income Tax, [2024 (4) TMI 196 – Rajasthan High Court].
(viii) Circumstances Where This Judgement Can Be Applied
In cases where incriminating material concerning a third party is seized during a search.
When reassessment proceedings are erroneously initiated under Section 147 despite conditions warranting action under Section 153C.
To challenge jurisdiction and procedural compliance in reassessment based on third-party search data.
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92
“Invalid Reopening Due to Improper Sanction Under Section 151(ii) Post Finance Act, 2021”
Abdul Saeed Issak Mulla vs. INT Tax Ward 3(2)(1), Mumbai” [2025 (2) TMI 444 - ITAT Mumbai]
(i) Issue Decided by the Court:
Whether the reassessment proceedings initiated under Section 147 of the Income Tax Act were valid in law, considering the requirement under Section 151(ii) for prior approval from the correct specified authority after three years from the end of the relevant assessment year had elapsed.
(ii) Facts Relating to the Issue:
The assessee, a non-resident Indian, had filed his return for AY 2017–18 declaring an income of ₹80. Based on information received from police seizure (₹7.35 lakhs in old denomination notes allegedly belonging to the assessee), a notice under Section 148 was issued after three years from the end of the assessment year. The Assessing Officer obtained approval from the Principal Commissioner (PCIT-27, Mumbai), whereas, under the amended Section 151(ii), approval should have come from a higher authority (e.g., Principal Chief Commissioner).
(iii) Arguments of the Appellant in Brief:
Notice under Section 148 and reassessment proceedings are invalid due to lack of proper approval from the competent authority as per Section 151(ii).
The AO lacked jurisdiction over the non-resident assessee.
No information existed under Explanation 1 to Section 148 to justify reopening.
The order was passed beyond the time limits set by Section 153, relying on the Shelf Drilling case.
(iv) Arguments of the Defendant in Brief:
The Department supported the validity of the reassessment proceedings.
It argued that the reopening followed the procedure as per Ashish Agarwal and had proper approval from PCIT-27.
(v) Decision of the Court:
The Tribunal allowed the appeal of the assessee and quashed the notice under Section 148 and the reassessment order under Section 147 on the ground that approval from the correct specified authority as per Section 151(ii) of the new regime was not obtained.
(vi) Reasoning Given by the Court:
As three years had elapsed since AY 2017–18, the new regime under Section 151(ii) required prior approval from the Principal Chief Commissioner or equivalent authority, not from PCIT.
Citing Rajeev Bansal and Ashish Agarwal, the Tribunal noted that while the Supreme Court had waived approvals under Section 148A(a) and 148A(b), the approval under Section 148A(d) and 148 was still mandatory.
Non-compliance with this requirement vitiates the jurisdiction of the AO.
Hence, the notice under Section 148 was declared invalid, and the reassessment proceedings were quashed.
(vii) Full Citation of the Judgement Relied Upon by the Court:
Union of India v. Rajeev Bansal – 2024 (10) TMI 264 – SC
Union of India v. Ashish Agarwal – 2022 (5) TMI 240 – SC
NTPC v. CIT – 1996 (12) TMI 7 – SC
Shelf Drilling Ron Tappmeyer Ltd. v. ACIT – 2023 (8) TMI 460 – Bombay HC
(viii) Circumstances Where this Judgement Can Be Applied:
When notice under Section 148 is issued after three years from the end of the assessment year.
When approval is not obtained from the correct specified authority under Section 151(ii).
Where reopening is done under the Ashish Agarwal directions post 01.04.2021.
When jurisdictional lapses or procedural irregularities under Section 148/148A/151 exist.
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93
"Invalid Reassessment for Want of Proper Sanction under Section 151”
M/s Arthbharti Nagari Sahakari Patsanstha Maryadit v. ITO 2025 (2) TMI 495 - ITAT Pune
(i) Issue Decided by the Court
Whether the reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961 are valid when the approval under Section 151 was obtained from the wrong authority, and whether the notice under Section 148 and order under Section 148A(d) are liable to be quashed.
(ii) Facts Relating to the Issue
The assessee, a Co-operative Credit Society, did not file its return for AY 2018–19. Based on information about significant cash deposits, the AO initiated proceedings under Section 148A. An order under Section 148A(d) and notice under Section 148 were issued on 06.04.2022 with the approval of the Principal Commissioner of Income Tax (PCIT). The assessee challenged the legality of this approval since it was beyond three years from the end of the assessment year, which, under Section 151(ii), required sanction from the Principal Chief Commissioner (PCCIT) and not the PCIT.
(iii) Arguments of the Appellant in Brief
The approval for reassessment beyond three years from the end of AY 2018–19 was taken from an authority not competent under Section 151(ii).
The notices were issued by the jurisdictional AO instead of the Faceless AO, violating Section 151A.
The reassessment was initiated on one issue but concluded with disallowance under Section 80P, which was not the reason for reopening.
No disposal of objections was made before passing the reassessment order.
(iv) Arguments of the Respondent (Revenue) in Brief
The notice under Section 148A(b) was issued within the three-year period with approval from the PCIT, which is valid.
Only one approval authority is needed for the entire proceeding related to one assessment year.
The assessment order and the approval followed legal requirements; hence, the proceedings were valid.
(v) Decision of the Court
The ITAT Pune held that since the approval for order under Section 148A(d) was granted by the PCIT beyond the period of three years from the end of AY 2018–19, it was not valid under Section 151(ii). Accordingly, the reassessment order and the notice under Section 148 were quashed. Other grounds were not adjudicated as the appeal succeeded on legal grounds.
(vi) Reasoning Given by the Court for its Decision
Section 151(ii) clearly requires that if more than three years have passed from the end of the relevant AY, the approval must be from the Principal Chief Commissioner of Income Tax.
The court relied on the precedent set in Holiday Developers Pvt. Ltd. [2024 (8) TMI 286 - Bombay HC], which held that improper sanction renders the reassessment invalid.
Since the facts of the assessee's case were identical (same AY and timing of notice), the Tribunal followed the principle of judicial discipline.
(vii) Full Citation of the Judgment Relied Upon by the Court
Holiday Developers Pvt. Ltd. v. ITO [2024 (8) TMI 286 - Bombay HC]
Siemens Financial Services Pvt. Ltd. v. DCIT [2023 (9) TMI 552 - Bombay HC]
Hexaware Technologies Ltd. v. ACIT [2024 (5) TMI 302 - Bombay HC]
UOI v. Rajeev Bansal [2024 (10) TMI 264 - SC]
M/s S.V. Jadhav v. ITO [2024 (5) TMI 106 - Bombay HC]
(viii) Circumstances Where This Judgment Can Be Applied
When reassessment is initiated after 3 years from the end of the relevant AY.
If approval under Section 151 is obtained from PCIT instead of the PCCIT in such a case.
When there is jurisdictional or procedural irregularity under Section 148A or 148.
For challenging reassessment notices and orders passed under faceless or centralized schemes.
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94
Tangible Material & Year-Specific Evidence Are Prerequisites for Reassessment
HARVINDER SINGH v. PCIT 2025 (2) TMI 711 - DELHI HIGH COURT
(i) Issue decided by the Court:
The Delhi High Court examined the validity of the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961 for AY 2019-20. Specifically, the issue was whether the Assessing Officer (AO) had valid “reasons to believe” that income had escaped assessment for the said year, and whether the invocation of Sections 148A(b) and 148 was legally sustainable.
(ii) Facts relating to the issue:
The AO issued a notice under Section 148A(b) based on information from the Insight Portal, alleging unexplained investment of ₹2.5 crores in immovable property by the petitioner. In response, the petitioner denied any such transaction during AY 2019–20. Despite lack of clear evidence linking the investment to that year, the AO proceeded to pass an order under Section 148A(d) and issued a reassessment notice under Section 148.
(iii) Arguments of the appellant (petitioner) in brief:
The petitioner denied making any investment in immovable property during AY 2019-20.
Allegations were vague and lacked year-specific details.
The AO expanded the scope of inquiry by including unrelated years and unsubstantiated accusations involving luxury cars and alleged black money.
The reassessment notice was based on a fishing and roving inquiry without tangible material.
(iv) Arguments of the defendant (respondents) in brief:
The AO relied on information from the Insight Portal and other inputs allegedly suggesting that the petitioner had engaged in high-value real estate transactions and owned luxury cars.
It was claimed that the petitioner failed to provide documentation to rebut these allegations.
It was argued that such information sufficed for the formation of belief that income had escaped assessment.
(v) Decision of the Court:
The Delhi High Court quashed the reassessment proceedings by setting aside the order under Section 148A(d) and the notice under Section 148. The writ petition was allowed.
(vi) Reasoning given by the Court for its decision:
The AO failed to establish any material linking the alleged investment specifically to AY 2019-20.
The reasons for reopening were based on assumptions and suspicions not grounded in verifiable data.
The AO altered the scope of allegations after issuing the notice, which is impermissible.
The Court reiterated the principle that “reasons to believe” must be based on existing tangible material and cannot be supplemented by post-facto allegations.
Reliance was placed on judicial precedents including Living Media India Ltd., Indivest PE Ltd., and Kelvinator of India Ltd., emphasizing the requirement of a live link between the information and the assessment year in question.
(vii) Full citation of the judgement relied upon by the Court for its decision:
Commissioner of Income Tax-II v. Living Media India Ltd.
Indivest PE Ltd. v. Additional Director of Income-tax
CIT v. Kelvinator of India Ltd., (2010) 320 ITR 561 (SC)
Asst. CIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd., (2007) 291 ITR 500 (SC)
ATS Infrastructure Ltd. v. ACIT, 2024 SCC OnLine Del 5048
(viii) Circumstances where this judgement can be applied:
When reassessment proceedings are initiated without concrete, year-specific material evidence.
Where there is a change in reasoning or expansion of grounds post issuance of notice under Section 148A(b).
In cases of vague allegations not supported by tangible material.
To challenge arbitrary or roving inquiries initiated under Section 147.
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95
“Section 68 Addition Deleted for Failure of AO to Verify Creditor Despite Prima Facie Evidence”
M/S. Kachrulal Jitendra Kumar v. ITO 2025 (2) TMI 865 - ITAT RAIPUR
(i) Issue decided by the Court
Whether the addition made under Section 68 of the Income Tax Act, 1961 on account of unexplained cash credit in the books of the appellant was justified in the absence of adequate investigation of the creditworthiness and genuineness of transactions.
(ii) Facts relating to the issue
The assessee, a partnership firm engaged in trading, had shown receipt of unsecured loans from a third party. The AO invoked Section 68 and treated the loans as unexplained cash credits due to lack of conclusive evidence on the genuineness and creditworthiness of the lender. The CIT(A) upheld the AO’s findings, prompting the appeal before the ITAT.
(iii) Arguments of the Appellant in brief
The assessee contended that all details regarding the loan — including PAN, bank statements, confirmation letters, and ITR copies of the lender — were submitted.
Asserted that the AO failed to make independent inquiries or issue summons under Section 131 or notices under Section 133(6).
Argued that the burden under Section 68 was adequately discharged.
(iv) Arguments of the Defendant in brief
The Revenue argued that merely submitting documents does not establish creditworthiness and genuineness.
It emphasized the failure of the assessee to produce the lender or explain the real source of the credit.
Cited that the lender’s financials did not match the amount advanced.
(v) Decision of the Court
The ITAT allowed the appeal and deleted the addition under Section 68. It held that once the assessee had submitted documentary evidence regarding identity, genuineness, and creditworthiness, the burden shifted to the AO.
(vi) Reasoning given by the Court for its decision
The Tribunal emphasized that no summons were issued or cross-verification attempted by the AO despite availability of lender’s details.
Reiterated that once primary onus under Section 68 is met by the assessee through documentary evidence, it is incumbent on the AO to make further inquiry if he is not satisfied.
Criticized the AO’s approach as mechanical and not in accordance with settled judicial principles.
(vii) Circumstances where this judgement can be applied
In cases involving addition under Section 68 for unsecured loans or share capital where assessee provides identity, bank details, and ITRs of creditors.
When AO does not conduct independent inquiries or issue statutory summons despite having adequate information.
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96
Additions Without Independent Verification of Third-Party Statements Invalid
DCIT v. Shri Vinay Kumar Agrawal” [2025 (2) TMI 891 - ITAT Raipur]
(i) Issue Decided by the Court
Whether addition under Section 68 of the Income Tax Act is sustainable solely on the basis of statements of entry operators without granting the assessee an opportunity to cross-examine and without conducting any independent verification.
(ii) Facts Relating to the Issue
The assessee had shown unsecured loans in the books of accounts from entities alleged to be accommodation entry providers. The Assessing Officer relied on statements of such alleged entry operators recorded by the Investigation Wing to treat these loans as non-genuine and made an addition under Section 68.
(iii) Arguments of the Appellant (Revenue)
The AO argued that the loan entries were not genuine as the entities were found to be accommodation entry providers.
Relied heavily on statements recorded by third parties and investigation reports.
Claimed that the assessee failed to discharge the burden of proving the genuineness and creditworthiness of the creditors.
(iv) Arguments of the Respondent (Assessee)
The assessee contended that proper opportunity to cross-examine the third-party statement providers was not granted.
Submitted confirmations, PAN details, and bank statements to support the identity and genuineness of the loans.
Argued that no independent verification was done by the AO to refute the documents provided.
(v) Decision of the Court
The ITAT deleted the additions made under Section 68, holding that the addition was unsustainable in absence of independent inquiry and denial of cross-examination opportunity to the assessee.
(vi) Reasoning Given by the Court
Mere reliance on third-party statements without allowing cross-examination violates principles of natural justice.
The assessee had submitted sufficient documentary evidence to discharge the initial burden under Section 68.
The AO did not conduct independent verification or establish any direct link to prove the transaction as accommodation entries.
(vii) Circumstances Where This Judgment Can Be Applied
When the AO makes an addition under Section 68 relying solely on third-party statements.
When no opportunity for cross-examination is given.
Where assessee has provided plausible primary evidence to prove the transaction.
When the investigation report is not corroborated by on-ground verification.
(ix) Conclusion
This judgment reinforces the principle that natural justice and evidentiary burden cannot be bypassed. Unsupported statements and absence of cross-examination do not justify additions under Section 68. It acts as a precedent to guard genuine assessees against arbitrary additions based on vague or unverified reports.
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97
"Burden of Proof in Share Capital Cases under Section 68”
ARUN BHARDWAJ v. ACIT 2025 (2) TMI 936 - ITAT JAIPUR
(i) Issue decided by the Court:
Whether the addition under Section 68 of the Income Tax Act, 1961 on account of unexplained cash credit in the form of share capital and share premium received by the assessee was justified.
(ii) Facts relating to the issue:
The Assessing Officer made an addition under Section 68 alleging that the share capital and premium received by the assessee were not properly substantiated. The assessee had submitted details such as PAN, confirmation, and bank statements of investor companies. Despite this, the AO considered the transactions as unexplained and made additions.
(iii) Arguments of the appellant in brief:
The assessee argued that all necessary documentary evidence was furnished, including PAN details, confirmation letters, ITR copies, and bank statements.
It was contended that the identity, creditworthiness of investors, and genuineness of the transactions were duly established.
The burden had shifted to the AO to rebut the evidence, which was not effectively done.
(iv) Arguments of the defendant in brief:
The department contended that the investor companies were shell entities.
The AO relied on general observations and third-party statements indicating bogus transactions.
It was claimed that the assessee failed to produce directors of the investor companies for cross-verification.
(v) Decision of the Court:
The Tribunal deleted the additions made under Section 68. It held that the assessee had discharged its initial burden of proof, and the AO failed to bring any substantive evidence to disprove the documents provided.
(vi) Reasoning given by the Court for its decision:
The assessee had provided all primary documents required to prove the share capital transactions.
Mere suspicion or reliance on third-party statements without giving the assessee an opportunity to cross-examine was unjustified.
The AO failed to undertake independent inquiries to rebut the assessee's evidence.
The Tribunal emphasized that the principles of natural justice were violated.
(vii) Circumstances where this judgement can be applied:
Where share capital/premium receipts are in question under Section 68.
When the assessee has submitted all primary documents.
Where the AO fails to conduct further investigation or violates principles of natural justice.
In cases of addition based solely on suspicion or generic information.
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98
“Validity of Reassessment Notice in Transitional Regime Post Finance Act 2021”
DCIT v. SBC Minerals Pvt. Ltd. [2025 (2) TMI 980 - ITAT Delhi]
(i) Issue Decided by the Court
Whether the reassessment notice issued under Section 148 of the Income Tax Act, 1961, was validly issued prior to 1 April 2021 under the old provisions, or was subject to the new reassessment regime post Finance Act 2021, and whether the reassessment proceedings conducted under the old regime were legally sustainable.
(ii) Facts Relating to the Issue
SBC Minerals Pvt. Ltd. filed its return on 30/09/2015 for AY 2015–16, assessed under Section 143(3) on 26/12/2017. Based on flagged information indicating alleged bogus entries of ₹3 crores linked to one Mr. Himanshu Verma (against whom search proceedings were conducted), the AO sought to reopen the assessment under Section 147 by issuing a notice dated 31/03/2021. However, the digital signature on the notice was dated 01/04/2021. The assessee challenged the notice as time-barred and invalid.
(iii) Arguments of the Appellant (Revenue) in Brief
The assessee’s delayed response to the notice resulted in inability to verify return status.
The reassessment notice dated 31/03/2021 was valid and was issued within time under the old regime.
The AO followed appropriate procedure, and NFAC's conclusions were incorrect in law.
(iv) Arguments of the Defendant (Assessee) in Brief
The notice under Section 148 was not digitally signed until 01/04/2021 and was thus deemed to be “issued” only on that date.
The reassessment notice was therefore issued under the new reassessment regime post Finance Act 2021, and the old procedures adopted by the AO were invalid.
No approval of Principal Commissioner or authority as per new Section 151 was obtained.
The reopening was based on vague material without specific facts or failure to disclose by the assessee.
(v) Decision of the Court
The ITAT upheld the decision of NFAC and CIT(A), holding that the reassessment notice was invalid as it was issued on 01.04.2021 and thus governed by the new reassessment provisions under Finance Act 2021. Accordingly, the reassessment proceedings were quashed.
(vi) Reasoning Given by the Court for Its Decision
Under Section 282A(1) of the Act and Section 13 of the IT Act, 2000, a notice is deemed “issued” when it is signed and enters into computer systems beyond the originator’s control.
Since the digital signature of the AO was dated 01/04/2021, the notice could not be treated as issued on 31/03/2021.
As the new reassessment scheme came into effect from 01/04/2021, the notice had to comply with new provisions (Sections 148A and 151).
AO followed the old regime, and did not obtain approval of the Principal Commissioner as required post 01/04/2021.
The Supreme Court’s rulings in Union of India v. Ashish Agarwal and Rajeev Bansal were relied upon to establish the binding nature of the new reassessment scheme.
(vii) Full Citation of the Judgement Relied Upon by the Court for Its Decision
Union of India & Ors. v. Rajeev Bansal, 2024 (10) TMI 264 - Supreme Court (LB)
Union of India & Ors. v. Ashish Agarwal, 2022 (5) TMI 240 - Supreme Court
Also supported by CBDT Instruction No. 1/2022 dated 11.05.2022.
(viii) Circumstances Where This Judgement Can Be Applied
Where reassessment notices are issued around 31 March 2021, and the date of actual digital signature falls on or after 01 April 2021.
In cases where the AO has followed the old reassessment regime despite the applicability of new provisions post Finance Act 2021.
When sanctioning authority under Section 151 does not align with new procedural mandates post-amendment.
For evaluating validity of notice under Section 148 in the context of electronic transmission and digital signature laws.
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99.
“Audit Objection and Post-Amendment Reassessment”
Sanjay Patel v. ACIT 2025 (2) TMI 1148 - Bombay High Court
(i) Issue Decided by the Court:
Whether reopening of assessment under Section 147 of the Income Tax Act, 1961, post-amendment, can be sustained when based solely on audit objections and without sufficient documentary evidence annexed in the writ petition.
(ii) Facts Relating to the Issue:
The petitioner, Sanjay Patel, filed his return for AY 2017–18. The return was scrutinized under Section 143(3), and deduction under Section 57 was allowed. Later, on the basis of a revenue audit objection citing lack of documentary nexus between interest income and expenses, reassessment proceedings were initiated under Sections 148A(b) and 148. The petitioner claimed that the issue was already examined during assessment and thus reopening was a mere "change of opinion". However, petitioner failed to annex necessary attachments or respond within stipulated time.
(iii) Arguments of the Appellant (Petitioner):
The issue was thoroughly examined during the original assessment proceedings.
Reopening based solely on audit objections amounts to a change of opinion, impermissible in law.
Relied on judgments including:
Mira Bhavin Mehta v. ITO (2024)
Knight Riders Sports Pvt. Ltd. v. ACIT (2023)
Dilip Laximan Powar v. ITO (2024)
(iv) Arguments of the Defendant (Respondent):
The reopening is justified under Explanation 1 to Section 148, which includes audit objections within the definition of “information”.
Petitioner failed to respond timely under Section 148A(b) and did not seek any adjournment.
None of the cited precedents establish that audit-based reopening is barred under amended law.
The claim of "change of opinion" lacks evidentiary support as petitioner suppressed annexures and failed to place material documents.
(v) Decision of the Court:
Writ petition dismissed. The Court declined to invoke its extraordinary jurisdiction under Article 226, while granting the petitioner liberty to challenge reassessment proceedings before the appellate authority.
(vi) Reasoning Given by the Court for its Decision:
Petitioner failed to submit a reply within the time provided under Section 148A(b).
Reply submitted later did not include attachments that could support his claim.
Court cannot enter into disputed factual matters in writ jurisdiction, especially when petitioner has suppressed documents.
Cited precedents are distinguishable and not directly applicable, particularly in the context of post-amendment Section 148 and Explanation 1.
Prima facie, audit objections may constitute “information” under amended Section 148, subject to case-specific facts.
(vii) Full Citation of the Judgement Relied Upon by the Court:
Dilip Laximan Powar v. ITO – 2024 (8) TMI 824 (Bombay HC)
Sree Narayana Guru Memorial Educational & Cultural Trust v. ACIT – 2024 (3) TMI 39 (Kerala HC)
Mira Bhavin Mehta v. ITO – 2024 (2) TMI 844 (Bombay HC)
Knight Riders Sports Pvt. Ltd. v. ACIT – 2023 (10) TMI 137 (Bombay HC)
Siemens Financial Services Pvt. Ltd. v. DCIT – 2023 (9) TMI 552 (Bombay HC)
(viii) Circumstances Where this Judgement Can be Applied:
When reassessment is initiated post-amendment to Section 148 based on audit objections.
Where the assessee claims “change of opinion” but fails to produce material evidence submitted during original assessment.
When procedural lapses by assessee (such as delay or failure in filing replies under Section 148A) weaken the scope of relief in writ jurisdiction.
When the writ petition lacks complete factual foundation due to missing enclosures or suppressed annexures.
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100
"Reassessment Invalidated Due to Improper Sanction Beyond Three-Year Limit"
Hareshkumar Dungarmal Jain, Akash Hareshkumar Jain v. DCIT 2025 (2) TMI 1179 - ITAT PUNE
(i) Issue Decided by the Court:
Whether the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, were valid when the approval was obtained from the wrong authority (PCIT instead of Principal Chief Commissioner or Principal Director General), beyond the three-year threshold.
(ii) Facts Relating to the Issue:
The appellants, Hareshkumar Dungarmal Jain and Akash Hareshkumar Jain, were issued notice under Section 148 for AY 2018–19 on 13.04.2022 based on information from the Insight Portal and a prior search action on Kushal group entities, indicating alleged accommodation entries. The reassessment was based on receipt of Rs. 28.39 lakhs as capital gains. However, the sanction for reopening was obtained from the Principal Commissioner of Income Tax (PCIT), Pune, even though the statutory provision required approval from the Principal Chief Commissioner (PCCIT) or Principal Director General, since more than three years had passed from the end of the assessment year.
(iii) Arguments of the Appellant in Brief:
Reassessment was wrongly initiated under Section 147 instead of Section 153C as it was based on a search on a third party.
The sanction was obtained from an unauthorized authority (PCIT) instead of the PCCIT, as required under Section 151(ii) post-01.04.2021.
Relied on decisions like Vodafone Idea Ltd v. DCIT and Davos International Fund v. ACIT, which held similar reassessments invalid.
(iv) Arguments of the Defendant (Revenue) in Brief:
Argued that reassessment based on third-party information was valid under Section 147.
Justified that sanction from PCIT was in order, claiming the case was within the three-year period or that extended provisions allowed such approval.
(v) Decision of the Court:
The ITAT Pune allowed the assessee's appeal and quashed the reassessment proceedings, holding that the sanction was not obtained from the correct statutory authority as required by Section 151(ii) of the Act.
(vi) Reasoning Given by the Court for Its Decision:
The Tribunal relied on the plain language of Section 151(ii), which mandates approval by the PCCIT/PDG if more than three years have passed from the end of the assessment year. Since AY 2018–19 ended on 31.03.2019 and notice was issued on 13.04.2022, the threshold of three years had elapsed. Thus, the approval from PCIT was invalid. The Tribunal reinforced its reasoning with reference to rulings from the Bombay High Court and Mumbai ITAT, which set aside similar reassessments for want of proper sanction.
(vii) Full Citation of the Judgment Relied Upon by the Court for Its Decision:
Vodafone Idea Limited v. DCIT, Circle 5(2)(1), Mumbai, 2024 (2) TMI 1408 – Bombay High Court
Davos International Fund v. ACIT (T)-2(1)(2), Mumbai, 2025 (1) TMI 1052 – ITAT Mumbai
Pr. CIT-7, Delhi v. Naveen Kumar Gupta, 2024 (11) TMI 1071 – Delhi High Court
(viii) Circumstances Where This Judgment Can Be Applied:
Reassessment notices issued beyond three years from the end of the assessment year without proper approval from the PCCIT/PDG.
Situations where AO initiates action under Section 147 instead of the appropriate special provision (like Section 153C) in case of search-based information.
Reassessment orders challenged on procedural lapses under Section 148A and 151.