Santosh Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the appeal of Santosh by quashing the reassessment proceedings initiated under Sections 147 and 148 of the Income-tax Act for Assessment Year 2015-16. The reassessment was initiated after information indicated that the assessee had entered into two immovable property transactions during the relevant year without filing a return of income. During the reassessment proceedings, the Assessing Officer examined the sale of one property for ₹43 lakh, originally purchased for ₹15 lakh, and the purchase of another property for ₹90 lakh. The assessee explained that the sale proceeds of ₹43 lakh and ₹14.98 lakh received from sale of jewellery were utilised towards the purchase of the new property. The Assessing Officer accepted the deduction under Section 54 in respect of the capital gains but treated the balance amount of ₹47 lakh as unexplained investment under Section 69 read with Section 115BBE. The Commissioner (Appeals) upheld the addition, leading to the present appeal. The assessee primarily challenged the validity of the reassessment proceedings. The Tribunal noted that the notice under Section 148 had been issued on 29.03.2022, more than three years after the relevant assessment year, making the provisions of Section 149(1)(b) applicable. Under the amended reassessment regime, reopening beyond three years is permissible only where the income escaping assessment amounts to ₹50 lakh or more. The Tribunal examined the notice issued under Section 148A(b) and found that the Assessing Officer had treated the transactions involving ₹43 lakh and ₹90 lakh as resulting in escapement of income exceeding ₹50 lakh. However, the Tribunal observed that the assessee had merely sold a property for ₹43 lakh and reinvested the amount in the purchase of another property, with the actual disputed amount being ₹47 lakh. It further found that the Assessing Officer had incorrectly treated information relating to tax deducted under Section 194-IA, where the assessee was the purchaser, as evidence of another sale transaction. By mechanically combining two different information sources, the Assessing Officer concluded that capital gains exceeding ₹50 lakh had escaped assessment, without distinguishing between sale and purchase transactions. The Tribunal held that the reassessment was based on a mechanical appreciation of facts and that the statutory threshold prescribed under Section 149(1)(b) had not been satisfied. It rejected the Revenue’s contention that only a prima facie view was required at the stage of reopening, observing that the amended reassessment provisions require compliance with the prescribed jurisdictional conditions where reopening is sought beyond three years. Accordingly, the Tribunal allowed the assessee’s jurisdictional grounds, quashed the reassessment proceedings, and allowed the appeal without examining the addition on merits.
