Nikita Mahajan Vs ITO (ITAT Delhi).
Income Tax Appellate Tribunal (ITAT) Delhi recently ruled in favor of the assessee, Nikita Mahajan, in a case against the Income Tax Officer (ITO). The appeal challenged the First Appellate order dated 12.06.2024, which arose from an assessment order dated 30.03.2022, related to the assessment year 2016-17. The core issue was the legitimacy of the reassessment initiated under Section 147 of the Income Tax Act, 1961, and additions made towards Long Term Capital Gain (LTCG) on the sale of shares.
The ITAT’s decision centered on two critical flaws in the reassessment process. First, the Assessing Officer (AO) incorrectly assumed jurisdiction under Section 147, stating that the assessee had not filed an in-come tax return for AY 2016-17. This was factually incorrect, as the assessee had indeed filed a return. The ITAT cited previous judgments, including Arvind Sahdeo Gupta vs ITO-1 and Kunwar Ayub Ali vs ITO, which established that reassessment notices based on incorrect facts are invalid. Second, the ITAT found that the approval granted by the CIT for the reassessment was “mechanical,” lacking any evidence of the necessary application of mind. The tribunal emphasized that the sanctioning authority must provide a reasoned and objective approval, not a mere formality.
