- Shikha Kedia Vs ITO (ITAT Hyderabad)
- Original Scrutiny Assessment and Cash Deposits
- Reopening of Assessment Under Section 148
- Department's Arguments on Reopening
- ITAT's Findings on Change of Opinion
- Reliance on Supreme Court Decision
- Section 148 Reopening Held Invalid
- Addition of ₹37,36,996 Deleted on Merits
- Assessee's Appeal Allowed
- President.
Shikha Kedia Vs ITO (ITAT Hyderabad)
Hyderabad ITAT Quashes Reassessment as Mere “Change of Opinion”: AO Cannot Reopen Scrutiny Assessment on Same Material Merely Because Audit Raises an Objection
The Hyderabad Bench of the Income Tax Appellate Tribunal, SMC-Bench, in ITA No. 178/HYD/2026 for AY 2017-18, allowed the assessee’s appeal against the order dated 30.09.2025 of the CIT(A)-NFAC.
Original Scrutiny Assessment and Cash Deposits
The assessee had originally filed her return on 06.11.2017 declaring total income of ₹3,54,300. Her case was selected for scrutiny under CASS because of cash deposits during the demonetisation period, and assessment under Section 143(3) was completed on 26.12.2019 at ₹4,02,100.
During the scrutiny assessment, the assessee explained the source of the bank deposits as gifts and furnished confirmations from the persons concerned, which were accepted by the Assessing Officer.
Reopening of Assessment Under Section 148
The assessment was subsequently reopened under Section 148. In the reasons recorded on 25.03.2021, the Assessing Officer referred to the difference in the capital account balances between AY 2016-17 and AY 2017-18 and proposed to treat the increase as unexplained cash credit.
The assessee contended that the reopening was based on the same facts, books of account and documents already examined during the original scrutiny assessment and was therefore a change of opinion.
She also pointed to an audit objection dated 22.07.2020, discrepancies concerning the dates of recording reasons and approval under Section 151, and the fact that the Section 148 notice was sent by speed post on 06.04.2021.
Department’s Arguments on Reopening
The Department argued that the original scrutiny had considered only the bank deposits and not the increase in closing capital, that no opinion had been expressed on that issue, and that the discrepancies in the approval dates were typographical errors.
The Department also contended that the source of the bank deposits and increase in capital were not necessarily the same.
ITAT’s Findings on Change of Opinion
The Tribunal found that the facts relied upon for reopening were already available during the original scrutiny assessment.
The assessee had explained gifts aggregating to ₹40,32,000 as the source of the deposits and had furnished confirmations, and the Assessing Officer had accepted that explanation.
Since the gifts would increase the capital balance, the Tribunal held that the same material could not subsequently be re-examined in reassessment proceedings in the absence of fresh material showing that the records were bogus or otherwise inadmissible.
Reliance on Supreme Court Decision
Relying on CIT vs. Kelvinator India 320 ITR 561 (SC), the Tribunal held that reopening on the same facts and material amounted to a change of opinion and was not permissible.
Section 148 Reopening Held Invalid
The Tribunal accordingly set aside the reopening by notice under Section 148 dated 30.03.2021 as invalid.
It further observed that the reasons referred to approval under Section 151 before the stated date of approval, and that the speed-post envelope showed the Section 148 notice was sent on 06.04.2021.
The Tribunal observed that the proceedings were not in accordance with Section 148A when the notice was sent on that date, although it stated that, irrespective of this issue, the reopening was unsustainable because it was based on a change of opinion.
Addition of ₹37,36,996 Deleted on Merits
On merits, the Tribunal held that the source of the increase in the capital account had already been explained as gifts and the supporting confirmations had been examined and accepted during scrutiny.
In the absence of contrary material or facts, the Assessing Officer could not re-examine and re-verify the same evidence in reassessment.
The addition of ₹37,36,996 was therefore held unsustainable and liable to be deleted.
Assessee’s Appeal Allowed
The assessee’s appeal was allowed.
The order was pronounced on 07.08.2026 by Shri Vijay Pal Rao, Vice President.
President.
