Pravinbhai Jethabhai Patel Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has allowed the appeal of Pravinbhai Jethabhai Patel, quashing a reassessment order that had added Rs. 36,29,000 to his income. The tribunal’s decision was not based on the merits of the addition itself but on a procedural lapse by the Income Tax Department. The ITAT ruled that the entire reassessment proceeding was invalid because the Assessing Officer (AO) failed to serve a mandatory notice under Section 143(2) of the Income-tax Act, 1961.
The case originated from the Assessment Year 2011-12. Pravinbhai Jethabhai Patel, an individual engaged in agricultural activity, had not filed a return for that year, as his income was below the taxable limit. The AO, however, initiated a reassessment under Section 147 after discovering large cash deposits and term deposits in the assessee’s bank account. During these proceedings, the assessee explained that a significant portion of the funds, specifically Rs. 36,79,000, was cash received from the sale of agricultural land. The registered sale deed only reflected a cheque payment of Rs. 4,88,250. The AO, deeming the cash portion to be without consideration, added it to the assessee’s income under Section 56(2)(vii)(a) of the Act. The Commissioner of Income-Tax (Appeals), or CIT(A), upheld this addition, after a minor reduction, bringing the final added amount to Rs. 36,29,000.
