Kajal Batra Vs ACIT (ITAT Delhi)
Tax Reopening Within 4 Years: Prima Facie Belief Justified by Undisclosed Accounts; Demonetisation Deposits Scrutiny: “Sufficiency of Material” Not Relevant for Reopening; Undisclosed Bank Account Deposits: Valid Reason for Reassessment Initiation; Sufficiency of Material Not Relevant at Reopening Stage – Reopening within Four Years Justified for Dual PANs & Huge Demonetisation Cash Deposits- Prima Facie Belief Enough for Reopening
Assessee, an individual, challenged the reassessment order u/s 147 r.w.s. 144 framed for AY 2017-18. The reassessment was triggered on the basis of information that Assessee had two PANs (AGQPB4318Q & ADTPB7505R) & had made large cash deposits of ₹8.56 crore during the demonetisation period in two Federal Bank accounts, one of which was not disclosed in the ITR. AO noted aggregate credits of ₹71.41 crore & ₹2.53 crore in two accounts, whereas turnover declared in ITR was only ₹60.79 crore. In absence of any explanation, AO taxed ₹10.61 crore (difference between bank credits & turnover) u/s 68 & ₹2.53 crore as unexplained money u/s 69A, apart from minor disallowances.
Before CIT(A), Assessee contested the reopening as invalid, arguing lack of nexus between reasons recorded & additions made, absence of proper sanction u/s 151, & mechanical approval. It was further urged that AO erred in invoking sections 68 & 69A, since the deposits represented business receipts & VAT collections. CIT(A), however, upheld the validity of reopening. He relied on various judicial precedents including Raymond Woollen Mills Ltd. 236 ITR 34 (SC) & Kalyanji Mavji & Co. 102 ITR 287 (SC), holding that AO had sufficient material to form belief that income escaped assessment. He also referred to the amendment made by Finance (No.2) Act, 2024 empowering CIT(A) u/s 251(1)(a) to set aside best judgment assessments u/s 144. Accordingly, considering repeated non-compliance, CIT(A) remanded the matter to AO for fresh assessment, giving liberty to assessee to substantiate claims with evidence.
