Manoj Purushottam Bhadra Vs ITO Ward-20(2)(1) (ITAT Mumbai)
Mumbai ITAT quashes reassessment for AY 2015-16 – AO’s “artificial inflation” of escaped income held legally unsustainable
In a major relief to the assessee, the Mumbai ITAT quashed the entire reassessment proceedings initiated u/s 147 after holding that the notice issued u/s 148 dated 18.04.2022 for AY 2015-16 was time-barred, based on incorrect facts, and issued without proper jurisdiction.
The reopening was triggered on the basis of information available on the Insight Portal alleging that the assessee had purchased immovable property worth ₹76.93 lakh and had also received professional income. The AO treated the assessee as having escaped income exceeding ₹50 lakh and invoked the extended limitation period under section 149(1)(b).
Before the Tribunal, the assessee pointed out that the AO had arrived at the figure of ₹76.93 lakh by mechanically aggregating the actual agreement value of the property at ₹40 lakh and the stamp duty value of ₹36.93 lakh relating to the very same transaction. It was argued that such double counting had no sanction under the Income-tax Act and was done only to artificially cross the ₹50 lakh threshold required for extended reopening limitation.
Accepting the contention, the ITAT held that such aggregation was neither supported by any statutory provision nor by any accepted principle of taxation. The Tribunal observed that the reopening was founded on an “incorrect factual premise” and clearly reflected non-application of mind by the AO.
The Bench further held that once the correct transaction value was considered, the alleged escaped income remained below ₹50 lakh, and therefore the Revenue could not invoke the extended limitation period under section 149(1)(b). Consequently, the notice issued beyond the normal limitation period was held to be clearly time-barred.
The Tribunal also relied heavily on the Bombay High Court ruling in Cherian Nallathu Abraham Annamma v. ITO, following the Supreme Court decision in Union of India v. Rajeev Bansal, wherein it was categorically held that for AY 2015-16, all notices issued u/s 148 after 01.04.2021 are liable to be dropped. Even the Departmental Representative fairly conceded that the issue was fully covered against the Revenue.
Accordingly, the ITAT quashed the notice issued u/s 148 as well as the consequential reassessment order passed u/s 147 r.w.s. 144 and 144B. Since the reassessment itself was annulled on jurisdictional grounds, the Tribunal did not adjudicate the additions made on merits
FULL TEXT OF THE ORDER OF ITAT MUMBAI
