Narendra Sevantilal (HUF) Vs ITO (ITAT Delhi)
Reopening Invalid When Issue Was Examined Earlier — ITAT Quashes Section 147 Action on Share Investment
The Mumbai SMC Bench of the Income Tax Appellate Tribunal allowed the assessee-HUF’s appeal for AY 2014-15 and quashed the reassessment proceedings, holding that reopening under section 147 was unwarranted when the issue had already been fully examined and accepted in the original assessment.
The assessee had invested ₹58.26 lakh in shares of Sunrise Asian Ltd. During the original scrutiny assessment under section 143(3), the Assessing Officer issued multiple notices under sections 142(1), 143(2) and summons, calling for confirmations, bank statements, and source details. After detailed examination, the AO made an addition of ₹32.85 lakh and implicitly accepted the balance amount of ₹25.41 lakh as genuine. This addition was later deleted by the CIT(A), and the Revenue’s appeal against that relief was dismissed by the ITAT.
Subsequently, the AO reopened the assessment to tax the very balance amount of ₹25.41 lakh, alleging lack of confirmations and creditworthiness. The Tribunal found this impermissible, noting that:
- The entire transaction was scrutinised in the original assessment.
- The AO had consciously made a partial addition, thereby accepting the remainder.
- Reopening amounted to a change of opinion, which is not permissible in law.
Holding that the pre-conditions for section 147 were not satisfied, the ITAT quashed the notice under section 148 and the reassessment order passed thereafter. Once reopening was struck down, other issues became academic.
The appeal was allowed in full, reaffirming that completed scrutiny cannot be reopened merely to revisit an issue already examined and accepted
FULL TEXT OF THE ORDER OF ITAT MUMBAI
