Mahesh Kumar Vs ITO (ITAT Delhi)
In Mahesh Kumar v. ITO (ITA No. 2650/Del/2024, AY 2012-13), the assessee, a government employee, filed his return disclosing only salary income. Following a report from the Investigation Wing, the Assessing Officer (AO) reopened the assessment under Section 147, alleging receipt of ₹9.60 lakh as an accommodation entry claimed as exempt long-term capital gains (LTCG) under Section 10(38). In reassessment, the AO added ₹9.60 lakh LTCG under Section 68, ₹15.48 lakh towards cash and cheque deposits under Section 68, and ₹20.62 lakh towards property investments under Section 69. The Commissioner of Income Tax (Appeals) deleted the LTCG addition but upheld the other additions. The Judicial Member (Vice President) observed that since the sole reason for reopening—the LTCG addition—was deleted by CIT(A), the reassessment was invalid, relying on precedents including ATS Infrastructure Ltd. v. ACIT (2024), CIT v. Jet Airways (I) Ltd. (2011), and CIT(E) v. B.P. Poddar Foundation (2023). The Accountant Member dissented. Upon reference under Section 255(4), the Third Member (President) concurred with the Judicial Member, holding that the reassessment could not be sustained when the foundational addition was deleted, and consequently, other additions made in reassessment also failed. The ruling emphasizes that reopening of assessment under Section 147 is impermissible if the primary reason for reassessment is invalidated, reinforcing the principle that a reassessment lacking a valid basis is legally unsustainable.
