Bhagirathi Krishnan Vs ITO (ITAT Delhi)
AO issued notice u/s 148A(b) on 15.02.2023 alleging investment of ₹70 lakh in property & trading transactions, claiming escapement > ₹50 lakh. Assessee replied same day explaining that ₹62 lakh was paid by her husband (supported by bank statements & his ROI showing income of ₹48.87L & ₹72.25L) & balance was from her past savings and gifts. She also showed losses in SBI shares & F&O. AO ignored all these and issued 148 on 25.03.2023—beyond 3 years from end of AY 2016-17—and ultimately made additions of only ₹7,25,000 u/s 69 & ₹93,287 on bank credits, proving escapement was far below ₹50 lakh.
Tribunal held that once material showed escapement < ₹50 lakh, reopening after 3 years could not be done under s.149(1)(a), relying on Sonali Dharmendra Mhatre (Mum ITAT) & Delhi HC in Sonash Creations. Tribunal rejected reliance on Raymond Woollen Mills as irrelevant for this statutory bar. Notice u/s 148 & all consequent proceedings were therefore void-ab-initio. Appeal allowed; merits rendered academic.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by assessee is directed against the order of learned CIT(A)/National Faceless Appeal Centre, Delhi dated 04.09.2025 for assessment year (AY) 2016-17. The assessee has raised following grounds of appeal:
“1. That on the facts and circumstances of the case and the provision of law, the Ld. CIT(A) has failed to appreciate the fact that the initiation of proceeding u/s 147 is illegal, bad in law, without jurisdiction and time barred and thus assessment order passed requires to be quashed.
2. That on the facts and circumstances of the case and the provision of law, the notice issued under section 148A(b), the order passed under section 148A(d), and the consequential notice issued under section 148 of the Income-tax Act, 1961 is illegal, bad in law, time barred and without jurisdiction and thus assessment order passed requires to be quashed.
3. That on the facts and circumstances of the case and the provision of law, the notice issued under section 148A(b), the order passed under section 148A(d), and the consequential notice issued under section 148 of the Income-tax Act, 1961, by the Jurisdictional Assessing Officer (JAO), are illegal, bad in law, time barred and without jurisdiction, since as per the Faceless Assessment Reassessment Scheme and CBDT Notification No. 18/2022 dated 29.03.2022, such notices and orders are required to be issued only by the Faceless Assessing Officer (FAO). That accordingly, the entire proceedings initiated are void ab initio and liable to be quashed.
4. That on the facts and circumstances of the case and the provision of law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 7,25,000/- u/s 69 of the Income Tax Act with regard to investment made in purchase of immovable property.
5. That on the facts and the circumstances of the case and the provisions of the law, the learned CIT(A) has erred in forming an incorrect opinion without confronting the same and in using the same adversely without providing the reasonable opportunity of defending, which inaction of the AO makes the assessment proceedings and consequential assessment order as null and void.
6. That on the facts and circumstances of the case and the provision of law, the Ld. AO has erred in initiating the penalty proceeding u/s 271(1)(c) and 271F of the IT Act.”
2. Rival submissions of both the parties have been heard and record perused. The learned Authorized Representative (AR) of the assessee submits that the assessee has raised legal grounds of appeal challenging the validity of notice issued under section 148 as well as addition on merit. The ld. AR of the assessee while referring the notice under section 148 dated 25.03.2023, a copy of which is filed at page no.1 to 14 of the paper book, submitted that case of the assessee for AY 2016-17 was reopened beyond the period of three years from the end of the relevant assessment year. The Assessing Officer while passing the assessment order made addition of Rs.7,25,000/- and Rs.93,287/-only, hence, the income allegedly escaped from assessment was admittedly less than Rupee fifty lacks. Thus, no notice under section 148 for AY 2016-17 could be issued on 25.03.2023. Time period of three years from the end of relevant assessment years expired on 31.03.2020. The ld. AR of the assessee while explaining the facts submits that the initially notice under section 148A(b) was issued on 15.02.2023 inter alia stating that the assessee made investment in property of Rs.70 lakhs and there was another transaction with regards to sale of equity share of Rs. 93,560/- and sale of futures option of Rs.13,71,438/- and that assessee has not filed the return of income. In response to said show-cause notice, the assessee filed reply vide reply dated 15.02.2023 and explained that investment in property of Rs.62 lakhs was made her husband Shri Krishnan Subramanium through account payee cheque and balance payment was made by assessee out of her past accumulated savings and gifts received from time to time from close relatives. The assesses further submits the details of sale of 400 equity of shares of SBI, wherein, there was a loss of Rs.40. Similarly, with regard to sale of futures complete details were provided and there was loss of Rs.32,192/- on this type of transactions. So the assessee submitted that there was no escapement of income and prayed for dropping the reassessment proceedings. The assessee also furnished a copy of bank statement along with return of income of her husband. The ld. AR of the assessee while showing return of income of husband to submit that her husband has shown income of Rs.48.87 lakhs in AY 2015-16 and Rs.72.25 in AY 2016-17. The Assessing Officer despite taking all such details on record disregarded the reply of assessee. The Assessing Officer held in absence of sale deed of property it cannot be established that payments to seller was paid by other family members. However, while passing the assessment order, Assessing Officer accepted the same explanation and no addition was made in respect of payment made through bank account of her husband. The ld. AR of the assessee also explained the source of additions of Rs. 7.25 Lakhs from the entry in her bank accounts, copy of which is placed on record. In support of legal issue, the ld AR of the assessee relied on the following case laws;
- Shri Malkiat Singh vs ITO in ITA No.4366/Del/2025 dated 08.10.2025,
- Ms. Sonali Dharmendra Mhatre vs ITO [2025] 174 taxmann.com699 ,
- Abdul Majeed vs Income Tax Officer [2022] 140 com485 ,
- Santosh Creations Pvt. Ltd. vs ACIT W.P.(C) 17570/2022
3. On the other hand, learned Senior Departmental Representative ( Sr DR) for the Revenue supported the orders of lower authorities. On specific submission of the ld. AR of the assessee that escaped income is less than Rs.50 lakhs, the ld. Sr. DR for the revenue submits that no such ground of appeal was raised by the assessee before the learned CIT(A). Thus, the issue may be restored back for consideration of such issue.
