Satbir Vs ITO (ITAT Delhi)
Reopening Quashed – AO Recorded Wrong Facts, Wrong AY & Ignored Co-Purchasers; Mechanical 151 Approval Also Invalid
The Assessee appealed against the NFAC order dated 20.02.2024 sustaining reassessment u/s 147/143(3) wherein AO had added ₹78,00,000 as unexplained investment u/s 69 on the allegation that the Assessee purchased a property for ₹78 lakh but registered it for only ₹15 lakh.
Chronology of earlier proceedings:
• Original assessment u/s 143(3) completed on 25.02.2014.
• Order revised u/s 263 on 11.02.2016, resulting in fresh assessment u/s 143(3)/263 on 15.12.2016 assessing income at ₹1.08 crore.
• Appeal against revised assessment still pending before CIT(A).
Despite two completed assessments, AO issued notice u/s 148 on 28.03.2018, reopening AY 2011-12, but the notice incorrectly mentioned AY 2012-13, based on information that the Assessee paid ₹78 lakh for a property though sale deed recorded ₹15 lakh.
Tribunal noted several fatal defects in the reassessment:
1. Reasons were based on wrong facts
• Sale deed (page 9) clearly showed that the property was purchased by three buyers—Satbir Sagwal (Assessee), Lalit Mohan, Shyam Sunder—not by the Assessee alone.
• AO recorded reasons treating only Satbir as the sole purchaser.
• Additional evidence included affidavits of co-purchasers confirming their cash contribution, which CIT(A) wrongly rejected.
2. AO reopened the wrong Assessment Year
Reasons were based on FY 2010-11 relevant to AY 2011-12, yet notice u/s 148 was issued for AY 2012-13—a jurisdictional error that vitiates the entire reassessment.
3. AO relied on “borrowed” investigation information without verification
Tribunal noted that neither during the original 143(3) assessment nor during 263 proceedings did AO examine any such information. The new information was unverified and factually incorrect.
4. Mechanical approval u/s 151
Tribunal found that sanction was granted without considering the sale deed, overlooking the existence of co-purchasers. Approval lacked application of mind, rendering reopening invalid.
5. Precedents squarely support quashing
Tribunal relied on:
• Smt. Monika Rani (ITAT Chandigarh)
• Sagar Enterprises (Gujarat HC)
• Baba Kartar Singh Dukki Trust (ITAT Chandigarh)
• Ram Mohan Rawat (ITAT Jaipur)
• Van Oord Dredging (ITAT Mumbai)
All holding that reopening based on incorrect/non-existent facts is void ab initio.
Tribunal’s final finding
Reopening was initiated on wrong facts, wrong AY, wrong assumptions, and wrong legal foundation. Hence:
– Entire reassessment is quashed as void ab initio.
– Addition of ₹78 lakh u/s 69 automatically falls.
– Nothing else survives for adjudication.
The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
