Case Law Details
Kavita Pahuja Vs ITO (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) allowed both appeals filed by the assessee, comprising a quantum appeal and a penalty appeal arising from proceedings under Sections 147 and 144B of the Income-tax Act, 1961.
The Tribunal first considered the quantum appeal and examined the assessee’s legal challenge to the validity of the reassessment proceedings. The assessee contended that the reopening of assessment was unsustainable because the reasons recorded by the Assessing Officer differed from the additions ultimately made in the assessment order. According to the Tribunal, the Assessing Officer had initially proposed to invoke Section 44AB and make additions under Section 69 by estimating profits at 8% of the entire turnover of Rs. 7,86,67,936, resulting in a proposed addition of Rs. 62,93,434. However, the assessment order dated 22.05.2023 ultimately treated the initial investment of Rs. 4,00,327 and share purchases amounting to Rs. 11,04,800, aggregating to Rs. 15,05,172, as the issues requiring addition.
The Tribunal observed that this factual position remained unrebutted by the Revenue. It noted that the Assessing Officer had deviated from the original reasons recorded for reopening while completing the reassessment. Relying on the decisions in Ranbaxy Laboratory v. CIT, CIT v. Jet Airways (I) Ltd., and ATS Infrastructure Ltd. v. ACIT, the Tribunal held that the reassessment proceedings could not be sustained in law when the final additions were unrelated to the basis on which the reopening had originally been initiated.
Consequently, the Tribunal quashed the reassessment proceedings and allowed the quantum appeal. Since the penalty proceedings under Section 271(1)(c) were consequential to the reassessment, the penalty appeal was also allowed. Accordingly, both appeals filed by the assessee were allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
These assessee’s twin appeals ITA Nos. 147 & 148/DDN/2026 arise against the Commissioner of Income Tax(Appeals)/ National Faceless Appeal Centre (in short, “CIT(A)/NFAC”), Delhi’s as many DINs & Orders No. ITBA/NFAC/S/250/2025-26/1085079094(1) & ITBA/NFAC/S/250/2025-26/1085079789(1); both dated 22.01.2026; involving proceedings u/s 147 r.w.s. 144B of the Income Tax Act, 1961; hereinafter referred to as, ‘the Act’.
Heard both the parties. Case files perused.
2. We advert to the assessee’s quantum appeal No. i.e. ITA No. 147/DDN/2026 first of all. She canvasses her first and foremost legal ground/argument that the impugned reopening itself is not sustainable in law as the learned Assessing Officer had proposed to add to invoke section 44AB of the Act for the purpose of making section 69 unexplained investment @8% profit estimation of the entire turnover of Rs. 7,86,67,936/-; coming to Rs. 62,93,434/-whereas the assessment order herein dated 22.05.2023 ended up in treating the initial investment of Rs. 4,00,327/- and the share purchase of Rs. 11,04,800/- totalling to Rs. 15,05,172/- in issue. This clinching factual position has gone unrebutted from the Revenue side.
3. Faced with this situation, we hereby quote Ranbaxy Laboratory Vs. CIT (2011) 336 ITR 136 (Del) and CIT Vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.) and ATS Infrastructure Ltd. Vs. ACIT (2024) 166 com 61 (Delhi) to conclude that the impugned reopening itself is not sustainable in law once the learned assessing authority has deviated from its foregoing proposal/reason in the assessee’s case. Quashed in very terms therefore.
4. The assessee succeeds in her quantum appeal ITA No. 147/DDN/2026.
5. The assessee’s penalty appeal ITA No. 148/DDN/2026 also follows the suit since involving section 271(1)(c) consequential proceedings.
6. Both these assessee’s appeals ITA Nos. 147 & 148/DDN/2026 are allowed. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 27.05.2026
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