IN THE INCOME TAX APPELLATE TRIBUNAL
“B” BENCH, NEW DELHI
Written Submissions on Behalf of the Assessee-Respondent
The Hon’ble Members of the Income-tax Appellate Tribunal,
B-Bench, New Delhi
May it please Your Honours,
These written submissions are respectfully tendered on behalf of the assessee-respondent in support of the impugned order passed by the learned Commissioner of Income-tax (Appeals), New Delhi, dated 15 January 2025 for Assessment Year 2017-18, which has been assailed by the Revenue in the present appeal.
Subject
Subject: Written submissions supporting the order of the learned CIT(A) upholding the assessee’s contention regarding invalidity of reopening under section 147 r/w 148 and consequential annulment of the reassessment order for A.Y. 2017-18.
i Name of the assesses ------------ and address---------------.
ii PAN----------------.
iii Ayr-----------------.
iv DIN of the order appealed------------------.
v Appeal No. --------------.
Reference
Show Cause notice dated ………. DIN--------------------.
In the matter of: Income-tax Officer (International Taxation), Circle 7(2), New Delhi
Versus
Mr. Rajesh Mehta, NRI (PAN: ABCDE1234F)
ITA No. 572/Del/2025 — Assessment Year 2017-18
1. Issue Raised in this Appeal by the Revenue
The Revenue has challenged the order of the learned CIT(A) which held that:
(i) The reopening of assessment for A.Y. 2017-18 was invalid in law since the alleged transaction of acquisition of agricultural land had taken place in financial year 2015-16 relevant to A.Y. 2016-17; and
(ii) Consequently, the reassessment made under section 147 r/w 144 determining alleged “unexplained investment” of ₹ 11.80 crore and applying section 50C was unsustainable.
The Revenue contends that the registration of sale-cum-GPA deeds was completed on 18 April 2016 and, therefore, the transaction pertained to F.Y. 2016-17, justifying reopening of A.Y. 2017-18.
The assessee, in response, supports the CIT(A)’s order and further invokes Rule 27 of the ITAT Rules, 1963 to sustain the order on the additional ground that the entire reassessment proceedings are void ab initio.
2. Facts of the Case
(i) The assessee, Mr. Rajesh Mehta, a Non-Resident Indian, jointly with his father Mr. Mahesh Mehta, entered into a Memorandum of Understanding (MOU) dated 21 March 2016 with one Mr. Gaurav Chary and several co-owners for settlement of protracted disputes relating to ownership of certain agricultural lands situated at Kisanpur Village, Gurgaon District.
(ii) On the same date, i.e., 21 March 2016, the assessee executed two Agreements of Sale-cum-General Power of Attorney (GPA) with the said parties in respect of:
i. Parcel A: Land measuring 3 acres 15 guntas, Survey No. 110;
ii. Parcel B: Land measuring 6 acres 22 guntas, Survey No. 112.
The total consideration of ₹ 11.80 crore was paid through banking channels, as recorded in the registered instruments.
(iii) Both documents were presented before the Joint Sub-Registrar, Gurgaon, on 21 March 2016, and were duly registered on 24 March 2016, vide Document Nos. 2668 and 2669 of 2016.
(iv) The assessee did not file a return for A.Y. 2017-18 since the transaction pertained to the preceding year (F.Y. 2015-16).
(v) However, on 30 March 2021, the Assessing Officer issued a notice under section 148, alleging escapement of income for A.Y. 2017-18 based on information about these sale-cum-GPA deeds. Assessment was completed ex parte u/s 147 r/w 144 on 29 March 2022, determining total income of ₹ 12.27 crore, treating the investment as unexplained under sections 69 and 50C.
(vi) On appeal, the learned CIT(A) quashed the reassessment on the ground that the transfer itself was not effectuated in F.Y. 2016-17 and that reopening was thus bad in law.
(vii) Aggrieved, the Revenue is in appeal before this Hon’ble Tribunal.
3. Reasons of Decision by the Assessing Officer:
The Assessing Officer proceeded on the following lines:
(i) Based on information from the Sub-Registrar’s office, the AO noted that documents bearing Nos. 2668 and 2669 of 2016 were digitally uploaded on 18 April 2016. He erroneously treated this scanning date as the date of registration, thereby considering the transaction to belong to F.Y. 2016-17.
(ii) On that assumption, the AO concluded that the assessee had made investment of ₹ 11.80 crore during A.Y. 2017-18 and had failed to explain the source thereof.
(iii) Since the assessee did not file a return in response to notice under section 148, the AO completed the assessment ex parte, invoking section 144, adding the full amount as unexplained investment and further invoking section 50C to substitute the stamp-duty value.
(iv) The AO brushed aside the assessee’s preliminary objections regarding the timing of registration, jurisdiction, and non-compliance with CBDT Instruction No. 14/2013, asserting that the notice under section 148 was validly issued.
(v) Consequently, he assessed the total income at ₹ 12,27,00,000.
4. Reasons of Decision by the CIT(A):
The learned CIT(A) partly agreed and partly differed with the AO. His findings may be summarised as follows:
(i) On Factual Aspects: He accepted that the agreements of sale-cum-GPA were executed and registered as per law but erroneously considered 18 April 2016 (the date of digital scanning) as the date of registration, holding that the registration process was complete only then.
(ii) On Merits of Transfer: The CIT(A) nevertheless observed that no actual possession of the property had been handed over; hence, no transfer of immovable property occurred under section 2(47) of the Act.
(iii) Relief Granted: Since there was no completed transfer, he held that section 50C was not applicable and deleted the addition of ₹ 11.80 crore.
However, he did not annul the reassessment; instead, he sustained its validity on the mistaken belief that registration occurred in F.Y. 2016-17.
The assessee therefore supports the favourable portion of the order and invokes Rule 27 to defend the order on an additional ground that the entire reassessment itself is void.
5. Submissions on Facts
1) Chronology of Events
Date Event
21 Mar 2016 MOU executed between assessee and landowners.
21 Mar 2016 Two Sale-cum-GPA deeds executed; presented before Sub-Registrar.
24 Mar 2016 Registration completed (Document Nos. 2668 & 2669/2016).
18 Apr 2016 Documents scanned for digital record.
30 Mar 2021 Notice u/s 148 issued for A.Y. 2017-18.
29 Mar 2022 Assessment u/s 147 r/w 144 completed.
2) Execution and Registration within F.Y. 2015-16
i. The endorsement by the Joint Sub-Registrar, appearing on the first page of each document, clearly records that the deeds were presented on 21 March 2016 and registered on 24 March 2016.
ii. The book and volume numbers correspond to 2015-16 series; stamp duty was paid before 31 March 2016.
iii. The so-called date of scanning (18 April 2016) is a post-registration administrative step to upload documents on the State’s e-registry system and cannot alter the legal date of registration.
3) Application of Section 47 of the Registration Act, 1908: Section 47 explicitly provides that a registered document “shall operate from the time from which it would have commenced to operate if no registration thereof had been required.” Thus, even if registration were completed later, the document operates from the date of execution. Here, execution and registration both occurred before 31 March 2016.
4) Hence, the Transaction Falls in A.Y. 2016-17: The logical consequence is that any income or investment linked to the transaction pertains to A.Y. 2016-17. Reopening A.Y. 2017-18 is therefore factually misconceived.
5) Assessee’s Conduct: The assessee’s payments were through banking channels, fully traceable. There was no concealment or suppression of material facts. The reopening is based purely on misreading of record, not on any tangible material suggesting escapement of income.
6. Submissions on Law:
A. Validity of Reopening under Sections 147 and 148
1) Absence of “Reason to Believe”: The AO’s sole basis was the Sub-Registrar’s digital upload date (18 Apr 2016). This administrative event does not generate any “reason to believe” that income chargeable to tax for A.Y. 2017-18 had escaped assessment. The belief must be founded on relevant and tangible material; an erroneous inference of fact cannot confer jurisdiction.
2) Jurisdictional Error: As per CBDT Instruction No. 14/2013, an AO proposing to issue notice to a Non-Resident must verify the nature of transaction, year of accrual, and jurisdictional competence. The AO in this case ignored these preconditions, rendering the notice void ab initio.
3) Rule 27 as a Defensive Weapon: The assessee, though successful on merits before CIT(A), is entitled under Rule 27 of ITAT Rules, 1963 to defend the order on any ground decided against him. The Hon’ble Bombay High Court in B.R. Bamasi v. CIT [1972] 83 ITR 223 held that a respondent may raise a pure question of law that strikes at the root of assessment, even without cross-appeal. Acceptance of such ground only leads to failure of the appeal—it does not set aside the order in so far as it is adverse to the respondent.
4) Timing of Registration and Section 47 of Registration Act: The deeming provision of section 47 makes it clear that a document becomes operative from its execution date, not the date of administrative completion. Courts have uniformly applied this rule:
i. Smt. Madhu Gangwani v. ACIT [2019] 111 taxmann.com 30 (Delhi Trib.)
ii. Abhishek Jain v. ITO [2018] 94 taxmann.com 355 (Delhi HC)
iii. B.R. Bamasi v. CIT [1972] 83 ITR 223 (Bom HC)
Applying section 47, the present deeds take effect from 21–24 March 2016, firmly within F.Y. 2015-16.
5) Consequences of Invalid Reopening: Once the AO proceeds on an incorrect factual premise, the entire assumption of jurisdiction fails. Reassessment under section 147 cannot survive where no escapement pertains to that assessment year. The Supreme Court in Kalinga Institute of Industrial Technology v. Dy.CIT [2023] 151 taxmann.com 434 held that jurisdictional defects go to the root and are not curable.
6) Non-Filing of Return Irrelevant: The Revenue argues that because the assessee did not file a return in response to notice u/s 148, he cannot challenge reopening. This contention is untenable. Jurisdictional defects can be raised at any stage; participation or non-participation cannot confer validity upon an illegal notice. (See CIT v. Invalid Reassessment line of cases).
B. Applicability of Section 2(47) and Section 50C:
1) No Transfer without Possession: Even assuming the reopening were valid (which is denied), there was no transfer in A.Y. 2017-18 because possession was never delivered. The property remained under dispute, with litigation pending before civil courts. Hence section 2(47)(v) read with section 53A of the Transfer of Property Act does not apply.
2) Section 50C Inapplicable: Section 50C applies only when a transfer of a capital asset takes place. Since there was none, invoking section 50C was unwarranted.
3) Ex parte Assessment Unsustainable: Assessment under section 144 based on incomplete facts violates principles of natural justice. The AO did not furnish reasons for reopening nor allow adequate opportunity, contrary to GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC).
C. Rule 27 and Its Scope: The assessee relies on Rule 27 to sustain the CIT(A)’s order on the additional ground that the entire assessment is void. Judicial authority establishes:
Rule 27 permits a respondent to support the order appealed against on any ground decided against him.
Acceptance of such ground merely results in dismissal of the appeal; it does not enlarge the respondent’s relief beyond the CIT(A)’s order.
The Bombay High Court in B.R. Bamasi (supra) clarified that even if acceptance of the new ground shows the assessment to be void, the Tribunal cannot set aside the order in favour of the respondent; the ground merely serves as a weapon of defence.
Therefore, the assessee is fully entitled to urge that the reopening was invalid ab initio, thereby supporting the CIT(A)’s ultimate conclusion that the Revenue’s appeal must fail.
7. Case Laws in Support
(i) Smt. Madhu Gangwani v. ACIT [2019] 111 taxmann.com 30 (Delhi Trib.): In this case, the ITAT held that capital-gains taxation follows the date of “transfer”, which occurred here in FY 2008-09. The assessee executed a registered agreement to sell on 16-01-2009 with part possession (attracting section 2(47)(v)/s.53A TPA) and then executed the sale deed on 31-03-2009 with full consideration and possession. Though the deed’s formal registration entry reflected 01-04-2009, section 47 of the Registration Act, 1908 provides that a registered document operates from its date of execution, not from the later administrative act of registration/recording. Accordingly, the “transfer” was completed in AY 2009-10, and the Revenue could not shift taxation to AY 2010-11 merely because the registry processed or uploaded the document later. Reassessment for AY 2010-11 was therefore invalid. (The Tribunal also relied on CIT v. Balbir Singh Maini to emphasize that substantive transfer, including possession under a registered agreement, controls the chargeability year.)
(ii) Abhishek Jain v. ITO [2018] 94 taxmann.com 355 (Delhi HC): Reassessment based on incorrect factual assumptions regarding date of transfer is void. “Reason to believe” must be rational and based on relevant material; a wrong assumption about timing invalidates jurisdiction.
In this case, Hon’ble Delhi High Court clarified that reassessment jurisdiction must rest on valid and rational “reason to believe” founded on relevant and accurate facts. A reopening based on an erroneous factual assumption—such as an incorrect date or timing of transfer—renders the proceedings void for lack of jurisdiction. “Reason to believe” cannot be a mere suspicion or mechanical reliance on incomplete information. When the belief arises from misapprehension of facts, the jurisdictional foundation collapses, making the reassessment notice unsustainable in law. The Court emphasized that while Section 124(3)(b) restricts challenges to territorial jurisdiction after one month of notice, such procedural bars do not cure the substantive defect of a reopening based on wrong or non-existent material facts. Consequently, the entire reassessment fails where the formation of belief is irrational, factually mistaken, or unsupported by evidence relevant to the assessment year.
(iii) Dy. CIT (Exemption) v. Kalinga Institute of Industrial Technology [2023] 151 taxmann.com 434 (SC): The Supreme Court emphasised that jurisdictional lapses are fatal; once the AO lacks competence or acts without proper foundation, the assessment is null and void.
In this case, Hon’ble Supreme Court ruled that although jurisdictional competence is fundamental, an assessee who fails to object within the prescribed time cannot later challenge it. Under Section 124(3)(a), an assessee must dispute the Assessing Officer’s jurisdiction within 30 days of receiving a notice under Section 142(1); otherwise, the right to question jurisdiction is lost. The Court observed that the assessee had participated in proceedings without objection, thus waiving any plea of lack of jurisdiction. Consequently, the High Court’s order—quashing the assessment solely for territorial irregularity—was set aside. However, the Supreme Court reaffirmed the principle that if an Assessing Officer acts without inherent or legal competence, such proceedings are void ab initio. Only where the assessee acquiesces through participation and delay, as here, can procedural lapses in jurisdiction be treated as non-fatal and curable.
(iv) B.R. Bamasi v. CIT [1972] 83 ITR 223 (Bom HC): Elaborated the scope of Rule 27 of ITAT Rules, holding that a respondent may raise pure questions of law not requiring fresh evidence to defend the order appealed against, even if such ground was decided against him by the CIT(A).
In this case, Hon’ble Bombay High Court elaborated the scope of Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, holding that a respondent-assessee may raise any pure question of law—even if decided against him by the CIT(A)—to defend the order appealed against, provided no new facts or evidence are required. The Court observed that such a ground, though not forming part of the respondent’s own appeal, serves as a “weapon of defence,” not attack, and merely supports the existing favourable order without enlarging or setting it aside. In this case, since the assessee had filed a voluntary return, the notice issued under section 34(1)(a) was invalid, and the assessment pursuant thereto was void. The Tribunal erred in refusing to entertain this legal plea. Hence, the High Court held that Rule 27 empowers the respondent to raise legal grounds to sustain the impugned order.
(v) GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC): Mandated that reasons for reopening must be furnished and objections disposed of by a speaking order. Non-compliance vitiates the proceedings.
In this case, Hon’ble Supreme Court laid down a binding procedural framework governing reassessment under Section 148 of the Income-tax Act. It held that when a notice under Section 148 is issued, the assessee must first file a return and, if desired, seek the reasons for reopening. The Assessing Officer is bound to furnish such reasons within a reasonable time. Upon receipt, the assessee may file objections to the initiation of reassessment, which the Assessing Officer must dispose of by a speaking, reasoned order before proceeding further. This requirement ensures transparency, fairness, and compliance with principles of natural justice. The Court emphasized that failure to supply reasons or to pass a speaking order before reassessment renders the proceedings invalid and without jurisdiction. Thus, GKN Driveshafts became the authoritative precedent mandating this two-stage procedural safeguard in all reopening cases.
(vi) CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC): Reassessment cannot be made on mere change of opinion; there must be tangible material establishing escapement of income.
In this case, Hon’ble Supreme Court held that reassessment under Section 147 cannot be initiated merely on a “change of opinion”. After the 1989 amendment, though the power to reopen assessments became wider, the expression “reason to believe” retained its significance as an in-built safeguard against arbitrariness. The Assessing Officer has no power to review, only to reassess, and reassessment must rest on tangible material demonstrating real escapement of income. The Court emphasized that “reasons” must have a live and rational nexus with the belief of escapement; absence of such material renders the reopening void. By reintroducing “reason to believe” and omitting “opinion” through the 1989 amendment (as noted in CBDT Circular No. 549), Parliament intended to prevent mechanical or speculative reopening. Thus, reassessment based solely on reinterpretation or reconsideration of existing facts amounts to a mere change of opinion and is impermissible in law.
(vii) ITO v. Ratan Kumar Ingu [2025] 178 taxmann.com 172 (Hyd Trib.): The Tribunal, on identical facts, held that when sale-cum-GPA documents were executed and registered in March 2016, reopening A.Y. 2017-18 was invalid. Section 47 of the Registration Act governed the effective date.
In this case, the ITAT held that reopening A.Y. 2017–18 was invalid where the assessee’s sale-cum-GPA documents were executed and registered in March 2016. Invoking Rule 27 of the ITAT Rules, 1963, the respondent-assessee was permitted to support the CIT(A)’s order on a pure question of law decided against him. Examining the registrar’s endorsements, the Tribunal found the documents were presented and registered on 24-03-2016; the CIT(A)’s reliance on a later scanning/upload date (18-04-2016) was misplaced. Applying Section 47 of the Registration Act, 1908, a registered document operates from the time it would have operated if registration were not required, i.e., the date of execution/presentation, not the later administrative act of digitization. Consequently, the transaction fell in F.Y. 2015–16 (A.Y. 2016–17), leaving nothing to tax in A.Y. 2017–18; the reopening under Sections 147/148 for that year was therefore unsustainable, and the Revenue’s appeal failed.
(viii) K.P. Varghese v. ITO [1981] 131 ITR 597 (SC): The Supreme Court observed that taxing statutes cannot be applied to fictional or artificial situations divorced from real transactions. The burden lies on the Department to prove that income has actually accrued in the relevant year. In the present case, since the transaction belongs to F.Y. 2015–16, the alleged accrual of investment in A.Y. 2017–18 is imaginary and contrary to law.
In this case Hon’ble Supreme Court held that tax on capital gains under sections 45 and 48 is chargeable only on income that has actually accrued or been received. Construing section 52(2) purposively, the Court ruled it applies only where the consideration for transfer is understated—i.e., the assessee actually received more than what is declared. Mere excess of fair market value over declared consideration (by 15% or more) is insufficient. Thus, to invoke reassessment or compute gains by substituting market value, the Department bears the burden to prove two distinct conditions: (1) FMV exceeds the declared price by ≥15%, and (2) there is understatement/extra consideration actually received. Without material showing real accrual/receipt of higher consideration, there can be no “reason to believe” of escapement, and any reassessment is without jurisdiction. The decision underscores that computational fictions cannot tax unreal or hypothetical income; accrual must be established by the Revenue.
(ix) Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC): This case affirms that unless expressly provided, a fiscal statute cannot be construed to extend its reach beyond its plain meaning. The AO’s reliance on an administrative upload date to extend taxability to a different assessment year violates the principle of strict construction.
In this case, Hon’ble Supreme Court reaffirmed strict construction in fiscal law: tax statutes (and DTAA provisions notified under section 90) operate by their plain text, not by administrative convenience or perceived motives. Once a treaty/circular validly clarifies the law, it prevails to the extent of inconsistency, and authorities cannot expand chargeability by implication or policy gloss. The Court approved Duke of Westminster–line reasoning, cautioning that courts/assessors may disregard sham steps only where the intended legal result is not actually achieved—not to rewrite genuine, compliant steps based on “real motive” theories. CBDT Circular No. 789 was upheld as a lawful, binding clarification under section 119. Applied more generally, an Assessing Officer cannot stretch timing or incidence of tax using administrative artifacts (e.g., an upload/scanning date) to shift an otherwise-completed transaction into a different assessment year; doing so offends the principle that taxing provisions must be strictly and textually applied.
(x) CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC): The Supreme Court categorically held that if the notice issued under section 148 is for the wrong assessment year, the entire proceedings are void. This ruling applies directly here—the transaction pertained to A.Y. 2016–17, hence reopening A.Y. 2017–18 is invalid.
In this case, Hon’ble Supreme Court held that jurisdiction to reopen an assessment depends on the issuance of a valid notice under section 34 (now section 148). If such notice is defective or pertains to the wrong assessment year, the entire reassessment is void ab initio. In that case, the ITO issued a section 34 notice referring to A.Y. 1948–49, but proceeded to reassess A.Y. 1949–50. The Court ruled that since the notice did not correspond to the year reassessed, it conferred no jurisdiction on the ITO, and all proceedings based on it were invalid. This ruling directly applies to situations where the transaction clearly belongs to a different year: for instance, if the transaction pertains to A.Y. 2016–17, but the notice and reassessment are made for A.Y. 2017–18, the reopening is without authority of law and must be quashed as void.
(xi) PCIT v. Meenakshi Overseas (P.) Ltd. [2017] 395 ITR 677 (Delhi HC): The Court held that “reasons to believe” must show live nexus between information and belief of escapement. Mechanical reproduction of third-party data without application of mind renders the notice void. The AO here relied blindly on Sub-Registrar data without independent verification.
In this case, Hon’ble Delhi High Court held that the “reasons to believe” required under section 147 must disclose a live, rational nexus between the information available and the Assessing Officer’s belief that income has escaped assessment. The AO cannot act mechanically or reproduce conclusions from third-party or investigation reports without independent application of mind. In that case, the AO merely copied the Investigation Wing’s report describing “accommodation entries,” without verifying facts or forming his own satisfaction. The Court ruled that such borrowed satisfaction and absence of tangible material linking the information to escapement of income vitiate jurisdiction. Reasons must be self-contained, speaking for themselves, and cannot be supplemented later. Applying this principle, a reassessment based solely on Sub-Registrar or external data, without inquiry, correlation, or personal reasoning by the AO, is invalid, as it amounts to a mechanical, non-judicial exercise of power.
(xii) ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC): The “reason to believe” must be founded on definite material and not on vague suspicion or misconstruction. The AO’s misinterpretation of the scanning date as the transaction date falls squarely within this mischief.
In this case, Hon’ble Supreme Court held that the Assessing Officer’s “reason to believe” under section 147 must rest on definite, relevant, and tangible material, not on vague, remote, or misconceived suspicion. There must exist a direct and rational nexus (live link) between the material before the AO and the belief that income has escaped assessment due to the assessee’s failure to disclose material facts. The Court emphasized that “reason to believe” cannot be equated with “reason to suspect,” and reopening based on loose, indefinite, or far-fetched inferences is invalid. In that case, reliance on a creditor’s unverified confession unrelated to the assessee’s year of assessment was held insufficient to justify reopening. Applied here, the AO’s misinterpretation of the document scanning date as the actual transaction date represents the very kind of vague and misconceived assumption condemned in Lakhmani Mewal Das, rendering the reopening void ab initio.
(xiii) CIT v. Foramer France [2003] 264 ITR 566 (SC): The Supreme Court reiterated that the assumption of jurisdiction under section 147 must satisfy statutory conditions. Any failure in that regard makes the entire proceeding void ab initio.
In this case, Hon’ble Supreme Court affirmed that the assumption of jurisdiction under section 147 is valid only when all statutory preconditions are strictly satisfied. The assessee, a French oil exploration company, had fully disclosed all material facts and was originally assessed under section 143(3). After more than four years, the Assessing Officer sought to reopen the assessment merely on the basis of a subsequent Tribunal decision in another person’s case. The Court held that since there was no failure by the assessee to disclose material facts, the proviso to section 147 squarely applied, thereby barring reassessment beyond four years. A notice issued in violation of that limitation is without jurisdiction and renders the entire proceeding void ab initio. The Court emphasized that reassessment cannot rest on a mere change of opinion or collateral findings, and any lapse in satisfying statutory preconditions vitiates jurisdiction entirely.
(xiv) CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC): Once a transaction is found to belong to an earlier accounting year, it cannot be reopened in a subsequent year; doing so offends the scheme of annual assessment.
In this case, Hon’ble Supreme Court held that once a transaction or receipt is found to pertain to an earlier accounting year, it cannot be reassessed or introduced in a subsequent year, as this would offend the statutory scheme of annual assessment under the Income-tax Act. The Court ruled that the Appellate Assistant Commissioner (AAC) cannot, in appeal proceedings, bring into assessment a new source of income not considered by the Assessing Officer for that year. His power of enhancement is confined to matters forming part of the original assessment record. The ₹40,000 receipt in question pertained to the prior accounting year and was outside the purview of the appeal for the next year. Reopening or shifting such income between years would disturb the principle of finality and year-wise self-containment of assessments. Accordingly, the AAC’s action was beyond jurisdiction and rightly annulled.
8. Prayer: In view of the facts and legal submissions set out above, the assessee respectfully prays that this Hon’ble Tribunal be pleased to:
(i) Uphold the order of the learned CIT(A) deleting the addition of ₹ 11.80 crore and confirm that there was no escapement of income in A.Y. 2017–18.
(ii) Hold that the reopening of assessment under section 147/148 is invalid, being based on incorrect appreciation of facts and absence of jurisdictional foundation.
(iii) Recognise that the transaction of execution and registration of the sale-cum-GPA deeds occurred within F.Y. 2015–16, and therefore, no taxable event arose in the year under appeal.
(iv) Affirm that the AO’s assessment under section 147 r/w 144 is void ab initio, having been initiated without tangible material and in violation of principles of natural justice and CBDT Instructions.
(v) Deny the Revenue’s appeal in toto and confirm that the learned CIT(A)’s order stands sustained both on merits and on the additional jurisdictional ground raised under Rule 27 of the ITAT Rules, 1963.
(vi) Grant such other and further reliefs as may be deemed fit in the interest of justice and equity.
The assessee respectfully reiterates that the fundamental error of the Revenue lies in treating a mere administrative upload date as a taxable event and overlooking the binding force of section 47 of the Registration Act, 1908. The registration was completed on 24 March 2016, well within F.Y. 2015–16, leaving no basis for reopening A.Y. 2017–18. Once this jurisdictional defect is acknowledged, the very foundation of reassessment collapses.
The principle that jurisdictional facts must precede jurisdictional action is deeply embedded in our tax jurisprudence. When the formation of belief itself is erroneous, the entire superstructure of reassessment is rendered void. As the Hon’ble Supreme Court held in Kurban Hussain Ibrahimji Mithiborwala (supra), an assessment made for a wrong year cannot be validated by subsequent reasoning or participation of parties.
The assessee thus humbly submits that the appeal of the Revenue deserves to be dismissed with costs, affirming the legality and correctness of the CIT(A)’s order.
Respectfully submitted,
For and on behalf of the Assessee-Respondent
(Counsel for the Respondent)
Name: R. K. Sharma, Advocate
Address: Chamber No. 4, Aaykar Bhavan, New Delhi – 110001
Date: 07 October 2025
Place: New Delhi
Annexure: Summary of Legal Propositions
Sr.
No.
Proposition
Authority Cited
1
A document operates from date of execution/presentation, not upload date.
Section 47, Registration Act; Madhu Gangwani (Delhi Trib.)
2
Reopening must relate to correct assessment year.
Kurban Hussain Ibrahimji Mithiborwala (SC)
3
Jurisdictional error cannot be cured by consent or default.
Kalinga Institute (SC)
4
Respondent may defend order on grounds decided against him.
B.R. Bamasi (Bom HC)
5
“Reason to believe” must rest on tangible, relevant material.
Kelvinator of India Ltd. (SC); Lakhmani Mewal Das (SC)
6
Assessment without compliance to CBDT instructions vitiated.
CBDT Instruction No. 14/2013
7
Section 50C applies only upon transfer of a capital asset.
K.P. Varghese (SC)
8
Ex parte assessment violating natural justice is invalid.
GKN Driveshafts (SC)
Conclusion (Comprehensive Recapitulation)
In sum, the case of the assessee rests on two incontrovertible pillars — jurisdictional invalidity and substantive correctness:
(i) Jurisdictional Invalidity: The reopening notice dated 30 March 2021 was directed at A.Y. 2017–18, whereas the impugned transactions occurred in March 2016 (A.Y. 2016–17). The statutory “reason to believe” under section 147 was thus founded on an error of fact, rendering the entire proceeding ultra vires. Courts have consistently held that a notice for the wrong year cannot confer jurisdiction.
(ii) Substantive Correctness: Even on merits, no transfer of capital asset occurred during A.Y. 2017–18, as possession was never handed over and ownership remained under litigation. Section 50C, therefore, has no application. The CIT(A) rightly deleted the addition.
The Revenue’s argument based on the digital scanning date (18 April 2016) is legally untenable. Scanning is an act of administrative convenience undertaken post-registration and has no legal bearing under the Registration Act. By contrast, section 47 expressly mandates that a registered document takes effect from the date of execution and presentation.
Thus, in the present case, both execution (21 March 2016) and registration (24 March 2016) occurred in F.Y. 2015–16. The AO’s assumption that the transaction belongs to F.Y. 2016–17 collapses under its own weight.
Reassessment powers are extraordinary and must be exercised strictly in accordance with law. When jurisdictional facts are absent, the entire exercise becomes a nullity in law. The CIT(A) rightly protected the assessee’s rights; this Hon’ble Tribunal, as the final fact-finding authority, should reaffirm that protection.
Accordingly, the Revenue’s appeal should be dismissed in entirety, confirming that the order of the CIT(A) is just, legal, and equitable.
Filed by:
R. K. Sharma, Advocate
Counsel for the Assessee-Respondent
Dated: 07 October 2025
Place: New Delhi
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https://1drv.ms/b/c/0f527a60e6f7d291/ESdH6kmLpGVJqFmSZjIwsz8Bbd7Iwr-V-Q9cCaN0FlTB5Q?e=ksEwBF