Pushkar Vishwas Vs ITO (ITAT Delhi)
Assessee, an individual, appealed against the order of NFAC, Delhi, upholding reassessment framed u/s 144/147 wherein cash deposits of ₹27,73,000 were treated as unexplained income. The sole legal issue argued was that the approval u/s 151 for reopening was mechanical & based on a non-existent provision of law.
AO had recorded reasons citing reopening “u/s 147(a)”—a provision omitted from the statute since 01.04.1989—& obtained sanction from the Addl. CIT & PCIT using a pre-typed format stating only “Yes, I am satisfied.” The Tribunal noted that such references to repealed provisions reflected complete non-application of mind by both the AO & sanctioning authority. Relying on Amit Khatri vs ITO (ITA No. 2430/Del/2023) & CIT vs Kelvinator of India Ltd. (256 ITR 1) affirmed by the Supreme Court, the ITAT held that mechanical or invalid sanction vitiates the entire reassessment. Accordingly, the reassessment order dated 05.12.2018 passed u/s 144/147 was quashed. Other grounds became academic.
Held: Reassessment invalid — approval u/s 151 mechanical & based on repealed s.147(a); reopening quashed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Assessee has filed this Appeal against the Order of the National Faceless Appeal Centre (NFAC), Delhi dated 11.07.2025 relating to assessment year 2011-12 on as many as 7 grounds, however, he has argued only on the legal issues wherein he has raised Ground No. 5 to 5.1 which reads as under:-
5. That on facts and circumstances of the case and in law, the satisfaction recorded u/s. 151 of the Income Tax Act, 1961 by Addl. CIT, Range-3, Bulandshahr on 21.03.2018 and PCIT, Ghaziabad on 22.3.2018 is mechanical and without application of mind and such approval vitiates the assessment. Such mechanical sanction cannot be considered as sanction satisfying the mandatory requirements as prescribed under section 151 of the Act.
5.1 That the AO was seeking approval under old section 147(a) of the Income Tax Act, 1961 – which had been substituted w.e.f. 01.04.1989 by Direct Tax Laws (Amendment) Act, 1987 and superior authorities failed to ensure whether the AO had verified the AIR information before recording reasons.
2. Brief facts are that the assessee is an individual and did not file his return of income for the assessment year 2011-12. In this case, AIR information was received that the appellant has made cash deposits aggregating to Rs. 27,73,000/- in his saving bank account maintained with State Bank of India during the FY 2010-11 relevant to AY 2011-12. The assessee failed to explain the source of this cash deposits. Hence, notice u/s. 148 dated 27.3.2018 was issued to the appellant and properly served on him. However, he failed to comply with the notice. Thereafter, notices u/s. 142(1) was issued multiple times. The appellant remained non-compliant to the notices. A final opportunity was provided to the appellant by issuing notices u/s. 144. The appellant again failed to avail himself of these opportunities and did not comply with the notices. Hence, the case was completed exparte under best judgment assessment u/s. 144 of the Act on the basis of facts of the case and material available on records. In the absence of any substantial evidence regarding the source of cash deposit of Rs. 27,73,000/- during the relevant AY, the amount was treated as unexplained income of the appellant. As per bank statement, the appellant received interest during the year under consideration amounting to Rs. 1311/- which was also added to the income of the appellant under the head of income from other sources. The net taxable income assessed u/s. 144/147 of the I.T. Act stands at Rs. 27,74,311/-.
