JCIT (OSD) Vs Ramesh Kumar (ITAT Delhi)
Where alleged unaccounted purchases have corresponding sales and only the embedded profit represents real income escaping assessment, the entire purchase value cannot be taxed; further, reassessment beyond three years is invalid if such escaped income does not meet the statutory threshold.
Summary: The ITAT Delhi disposed of nine Revenue appeals and nine Cross Objections filed by the assessee against the consolidated order of the CIT(A), Noida dated February 2, 2026, concerning Assessment Years 2014-15 to 2022-23. The Tribunal held that for AYs 2014-15 to 2018-19, the escaped income represented only the profit embedded in alleged unaccounted purchases, which was below the ₹50 lakh threshold prescribed under Section 149(1)(b), and therefore notices under Section 148 issued beyond three years were without jurisdiction and were quashed. The Tribunal also held that the AY 2022-23 assessment framed under Section 143(3), instead of the special reassessment mechanism under Sections 147/148, was void ab initio and quashed it. However, the assessee’s challenge based on the 30-day period provided in the notices under Section 148 was rejected because the notices were issued on March 29, 2023, when the applicable provision permitted the Assessing Officer to specify the period for filing the return, with the three-month requirement introduced only from April 1, 2023. The Tribunal rejected the cross-examination ground, finding that the assessee had not demonstrated that any specific request for cross-examination had been made during assessment proceedings. On merits for AYs 2019-20 to 2021-22, the Tribunal agreed that the entire alleged unaccounted purchases could not be taxed and that only the profit embedded therein was taxable, following the cited judicial precedents. The Revenue’s appeals in ITA Nos. 243 to 251/DDN/2026 were dismissed, while the assessee’s Cross Objections in CO Nos. 5 to 9 and 13/DDN/2026 were allowed and CO Nos. 10 to 12/DDN/2026 were dismissed.
