Kanhaiya Lal Hari Narayan Vs ITO (ITAT Jaipur)
Reasons for AY 2012-13, Notice for AY 2013-14- Wrong Year Reopened, Entire 147 Collapses:
Jurisdictional Defect Fatal: ITAT Jaipur Says CIT(A) Should Have Quashed 147- Borrowed Satisfaction & Wrong AY:
The Jaipur Bench (SMC) of the ITAT, vide order dated 31.12.2025 in Kanhaiya Lal Hari Narayan v. ITO (ITA No. 1034/JPR/2025, AY 2013-14), allowed the assessee’s appeal and quashed the reassessment framed u/s 147, holding that the very assumption of jurisdiction was invalid.
The reassessment was initiated on the basis of information received from the Investigation Wing, Karnal, alleging that the assessee had obtained accommodation entries of ₹6,96,000 from concerns controlled by one Hitesh Jain. However, a perusal of the reasons recorded revealed a fundamental jurisdictional defect: the AO repeatedly referred to the return filed for AY 2012-13, transactions during FY 2011-12, and alleged escapement of income for AY 2012-13, while the notice and assessment were issued for AY 2013-14.
The CIT(A)/NFAC noticed this contradiction but instead of deciding the legal issue, set aside the matter to the AO for fresh adjudication, including verification of the correct assessment year. The assessee challenged this approach before the Tribunal, contending that the issue was purely legal, fully borne out from the recorded reasons, and required no further factual verification.
The ITAT agreed with the assessee and held that there was no material whatsoever in the reasons to form a belief of escapement of income for AY 2013-14. Since the information relied upon clearly pertained to a different assessment year, the AO had failed to apply his mind, and the reopening was based on borrowed satisfaction and wrong assumptions. The Tribunal further held that in such circumstances, the CIT(A) ought to have quashed the reassessment himself, instead of remanding the issue back to the AO.
Accordingly, the ITAT quashed the reassessment u/s 147, and held that once the assessment itself is void, the addition of ₹6.96 lakh on merits has no legs to stand on. The appeal of the assessee was allowed in full.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), under Section 250 of the Income Tax Act, 1961, (hereinafter referred to as “Act”).
