Rupesh Laldas Dhakate Vs ITO (ITAT Nagpur)
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has quashed the reassessment order and deleted the entire addition made against Rupesh Laldas Dhakate for the Assessment Year (AY) 2017-18. The Tribunal’s decision, issued on May 27, 2025, primarily rests on the finding that the reassessment proceedings were initiated without proper jurisdiction, as the alleged escaped income fell below the statutory threshold for initiating reassessment beyond three years.
The assessee, Rupesh Laldas Dhakate, had challenged the order dated January 20, 2025, passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The core of the dispute revolved around an addition of Rs. 29,28,420/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, 1961, pertaining to unexplained investments. The AO’s action stemmed from information that Dhakate had purchased an immovable property for a consideration of Rs. 16,71,000/-, while its Stamp Duty Value was Rs. 25,53,000/-. The difference of Rs. 8,82,000/- was initially considered as income from other sources under Section 56(2)(vii)(b), and the AO believed this income had escaped assessment.
Dhakate’s defense was that the funds used for the property purchase were entirely sourced from his father’s legitimate retirement benefits, including provident fund, gratuity, pension, and other savings from his long service at Ordinance Factory Bhandara. These funds, he argued, were received through regular bank transfers, and all applicable tax obligations on his father’s retirement benefits were duly fulfilled. He asserted that Section 69, which deals with “Unexplained Investments,” was inapplicable as there was a clear and documented source for the funds.
