Sapna Nainesh Jatania Vs ITO (ITAT Rajkot)
Reopening Quashed: Reasons Show Only Verification & Borrowed Satisfaction- Wrong Facts, No Enquiry: Tribunal Strikes Down Verification-Based Reopening
Assessee’s appeals for AYs 2011-12 & 2012-13 involved additions of Rs.8,60,444 treating penny-stock sale proceeds of Gemstone Investment Ltd as unexplained u/s 69 pursuant to reassessment u/s 147 r.w.s 144. CIT(A)/NFAC had remanded the case to AO without deciding Assessee’s jurisdictional ground against reopening.
Tribunal first condoned 55-day delay after finding the affidavit explanation reasonable. Examining the reasons recorded (page 6 image), Tribunal noted that AO merely stated that information “needs deep verification”, that no tangible material was cited, that the recorded reasons wrongly alleged claiming exemption u/s 10(38) which Assessee never claimed, and that AO conducted no primary enquiry before issuing notice u/s 148.
Tribunal held that reopening was initiated solely for making enquiries based on outside information & amounted to borrowed satisfaction. Relying on Gujarat HC in Manzil Dinesh Kumar Shah (affirmed by Supreme Court) & Krupesh Ghanshyam Bhai Thakkar, Tribunal held that reassessment cannot be used for roving or verification purposes. Since the reasons lacked any foundation of “reason to believe”, the assumption of jurisdiction u/s 147 was invalid.
Accordingly, Tribunal quashed the reassessment for both years. As reassessment itself was annulled, all other additions & grounds became academic. Both appeals were allowed.
