Sushil Mitruka Vs DCIT (ITAT Kolkata)
Borrowed Satisfaction Backfires — Reopening Quashed; Cash Deposits Explained, Revenue Appeal Crumbles
Kolkata ITAT delivered a sweeping relief to Sushil Mitruka for AYs 2014-15 to 2017-18, holding that the very foundation of reassessment was illegal. The Tribunal found that reopening u/s 147 was based purely on borrowed satisfaction from DDIT (Investigation), with the AO mechanically reproducing the investigation report without any independent application of mind or formation of his own “reason to believe”. Such reopening, the Tribunal held, is impermissible in law.
Adding to the fatal defect, the AO failed to follow the mandatory GKN Driveshafts procedure — reasons were not supplied despite repeated requests and objections to reopening were never disposed of by a speaking order. This procedural lapse alone was sufficient to invalidate the reassessment.
On merits also, the Tribunal dismantled the additions. Cash deposits in bank were held to be fully explained through opening cash balance duly reflected in earlier year balance sheet, cash withdrawals from the same bank, sale of land receipts, and refund of advances — all supported by cash flow and books of account. The approach of taxing redeposited cash u/s 68 was rejected outright. Tribunal reiterated that there is no law prohibiting retention of cash and unless Revenue proves diversion or utilisation elsewhere, cash redeposit cannot be branded unexplained.
Invoking settled law, the Tribunal held that availability of cash is the decisive test, not suspicion. Since assessee discharged the initial onus and Revenue failed to rebut with cogent material, all cash deposit additions were deleted.
For AY 2017-18, even though CIT(A) had granted relief on merits, the assessee successfully invoked Rule 27 of ITAT Rules to challenge reopening itself. Tribunal accepted this plea and quashed reassessment, rendering Revenue’s appeal infructuous.
Resultantly, all reassessments were quashed, assessee’s appeals were allowed in full, and Revenue’s appeal stood dismissed, reinforcing that jurisdictional lapses cannot be cured by additions on merits
FULL TEXT OF THE ORDER OF ITAT KOLKATA
These appeals preferred by the assessee and Revenue against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.08.2025, 27.05.2025 for A.Y. 2014-15, 2015-16, 2016-17 & 2017-18.Since the appeals are relating to same assessee and involves commons issues , therefore all these appeals are decided by this consolidated order for the sake of brevity.
