Adal Singh Vs ITO (ITAT Agra)
Reassessment Notice Invalid Due to Non-Application of Mind in Section 151 Approval; ITAT Agra Holds Reopening Beyond Three Years Unsustainable Because Final Addition Was Only Rs.27 Lakh; ITAT Quashes Section 148 Proceedings Because Escapement Figure Changed Repeatedly During Proceedings; Section 151 Sanction Held Invalid Because AO Was Uncertain About Escaped Income Amount.
The ITAT Agra allowed the appeal filed by the assessee for Assessment Year 2017-18 and quashed the reassessment proceedings initiated under Sections 147 and 148 of the Income Tax Act. The assessee challenged the reopening notice dated 26.03.2024 on the ground that it was barred by limitation under Section 149(1)(a), as the reopening was initiated beyond three years from the end of AY 2017-18. The assessee also argued that the statutory threshold of escapement exceeding Rs.50 lakh, required for reopening beyond three years under Section 149(1)(b), was not satisfied because the final addition made by the Assessing Officer was only Rs.27 lakh relating to cash deposits.
The Tribunal admitted an additional legal ground challenging the validity of sanction granted under Section 151. The assessee pointed out that approval under Section 151 was obtained on the basis of alleged escapement of income amounting to Rs.1.11 crore, whereas the order passed under Section 148A(d) subsequently reduced the alleged escapement to Rs.66.13 lakh. Ultimately, the final assessment order sustained only an addition of Rs.27 lakh under Section 69A. The assessee argued that this showed complete non-application of mind by the sanctioning authority and the Assessing Officer. Reliance was placed on several judicial precedents including Vodafone India Ltd., United Electrical Co. (P) Ltd., Sonali Dharmendra Mhatre, and Malkiat Singh.
