Case Law Details
Sonu Pankaj Shakti Sagar Sood Vs ACIT (ITAT Mumbai)
Mumbai ITAT in Sonu Sood Case: Fresh Statement u/s 131 During Search Can Reopen Completed Assessments – “Change of Opinion” Defence Rejected Under New Reassessment Regime
The Mumbai ITAT, in the case of actor Sonu Sood, upheld the validity of reassessment proceedings initiated under Sections 147/148 pursuant to a post-search action, holding that the new reassessment regime introduced from 01.04.2021 is materially different from the erstwhile Section 153A framework. The Tribunal observed that although the issue of unsecured loans had already been examined during the original scrutiny assessment u/s 143(3), the subsequent statement recorded u/s 131 from an alleged accommodation entry operator constituted “new tangible material” enabling the AO to reopen the assessment. Accordingly, Sonu Sood’s plea that the reopening amounted to a mere “change of opinion” was rejected.
The assessee had strongly argued that no incriminating material was found or seized during the course of the search and that the additions were based solely on third-party statements recorded behind the assessee’s back, without granting cross-examination. Reliance was placed on decisions such as Kabul Chawla, Continental Warehousing, and Abhisar Buildwell, contending that no addition can survive in absence of incriminating material. However, the Tribunal distinguished those rulings by holding that they were rendered in the context of the old Section 153A regime, whereas under the amended law, Explanation 2 to Section 148 creates a deeming fiction that a search itself constitutes “information suggesting escapement of income.”
The Tribunal further noted that the statement of the alleged entry operator specifically described a modus operandi of routing bogus unsecured loans through conduit entities, thereby giving rise to fresh material not available during the original scrutiny proceedings. Therefore, reopening based on such subsequent information could not be treated as a mere review or reappreciation of existing material already examined in scrutiny. The dispute pertained to additions u/s 68 in respect of unsecured loans allegedly routed through multiple entities, which the department claimed were accommodation entries.
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