Guthu Rithesh Rai Vs DCIT (ITAT Bangalore)
148 Valid, But Reasons Must Be Supplied: ITAT Bangalore Sets Aside Reassessment for Fresh Adjudication
The Bangalore SMC Bench of the ITAT set aside the reassessment framed u/s 143(3) r.w.s. 147 and restored the matter to the AO solely on the ground that reasons recorded for reopening were not furnished to the Assessee, thereby depriving him of the statutory right to file objections. However, the Tribunal upheld the validity of reopening u/s 148 and also agreed, in principle, that the unexplained investment could be examined in the hands of the Assessee.
The case arose from a search u/s 132 on 17.12.2020 in the Atria Brindavan Power Pvt. Ltd. group, during which an allotment letter relating to a flat purchased in the name of the Assessee’s wife was found. Though the sale deed reflected consideration of ₹17.82 lakh, the allotment letter showed ₹27.61 lakh, resulting in a difference of ₹9.78 lakh. The Assessee, in statements u/s 132(4) and 131(1A), admitted cash payment of the differential amount from unaccounted income.
AO reopened the assessment for AY 2014-15 and made addition u/s 69, which was confirmed by the CIT(A). Before the Tribunal, the Assessee contended that proceedings ought to have been initiated u/s 153A/153C and that reopening u/s 147 was invalid. This plea was rejected, with the Tribunal holding that the Assessee was not a searched person, and therefore invocation of s.148 was legally valid.
However, the Tribunal noted that the Assessee had specifically sought the reasons recorded on 24.12.2021, which were never supplied, even after filing the return on 07.03.2022. This failure violated the mandatory procedure laid down in law and deprived the Assessee of an opportunity to raise objections.
Accordingly, the entire matter was restored to the AO with directions to:
