Manik Somani Vs ACIT (ITAT Delhi)
Delhi ITAT Quashes Reassessment for Ignoring Mandatory Procedure in Search-Based Reopening
The Delhi ITAT quashed the reassessment proceedings after holding that the Assessing Officer failed to comply with the mandatory procedure prescribed for reopening an assessment based on material unearthed during a search on a third party. The reassessment was initiated on the allegation that the assessee had received ₹30,000 in cash as interest on an unsecured loan, based on documents and statements recorded during the search of another person.
The Tribunal held that under Explanation 2(iv) to section 148, reopening the assessment of an “other person” based on search material requires the prior approval of the Principal Commissioner or Commissioner of Income-tax. Since the Revenue failed to produce any evidence of such approval, the notice issued under section 148 was held to be invalid, rendering the entire reassessment proceedings void.
The Tribunal further observed that the Assessing Officer had wrongly invoked the procedure under section 148A, even though the proviso to that section specifically excludes cases involving reopening based on search material relating to another person. This mechanical invocation of section 148A reflected non-application of mind and deprived the Assessing Officer of jurisdiction. Accordingly, the reassessment order was quashed, and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 02.02.2026, for Assessment Year 2019-20.
