Navnirman Infracon Pvt. Ltd. Vs ITO (ITAT Kolkata)
Kolkata ITAT comprising quashed a reassessment initiated mechanically, holding it void ab initio for lack of sanction u/s 151 & absence of genuine belief of escapement of income.
The case arose from a reassessment u/s 147/148 where AO added ₹2.18 crore as unexplained loan from Crescent Dealers Pvt. Ltd. & ₹2.70 crore u/s 56(2)(viia) towards alleged undervaluation of shares. Assessee contended that the notice u/s 148 was invalid since it did not disclose approval u/s 151 & the “reasons recorded” reflected only suspicion without tangible material. It was argued that AO acted on borrowed satisfaction without independent application of mind.
Tribunal observed that the notice lacked any mention of approval u/s 151 & the reasons merely expressed doubt about the lender’s creditworthiness, not belief of income escapement. Reopening based on suspicion or for roving verification is impermissible in law. Relying on DSJ Communications Ltd. v. DCIT (Bom HC) & Maruti Clean Coal & Power Ltd. v. ACIT (Chhattisgarh HC), it held that absence of valid sanction & mechanical reopening renders the proceedings void.
Held: Reassessment proceedings quashed as invalid. Approval u/s 151 not shown & reasons recorded amounted only to suspicion, not belief. Borrowed satisfaction & mechanical reopening cannot sustain in law.
