Lalit Kumar Modi Vs DCIT (ITAT Delhi)
When Parallel Tax Proceedings Become Invalid – ITAT Quashes Reassessment in the Case of Lalit Kumar Modi
In a significant ruling reinforcing procedural discipline in income-tax assessments, the Income Tax Appellate Tribunal (ITAT) held that reassessment proceedings cannot run simultaneously with an ongoing scrutiny assessment. The case involving Lalit Kumar Modi for Assessment Year (AY) 2010-11 highlights the importance of jurisdictional compliance by the Assessing Officer (AO).
The assessee, Lalit Kumar Modi, filed his return of income for AY 2010-11 declaring total income of ₹54,81,699. The case was selected for scrutiny and notice under Section 143(2) of the Income-tax Act, 1961 was issued by the Assessing Officer.
While the scrutiny proceedings were still pending, the Assessing Officer initiated reassessment proceedings under Section 147 on the basis of alleged unexplained credit card expenditure.
A notice under Section 148 was issued on 29 March 2012, seeking to reopen the assessment.
Objections Filed by the Assessee
The assessee complied with the notice and later filed detailed objections to the reopening on 22 March 2013. These objections challenged the legality of initiating reassessment when scrutiny proceedings were already in progress.
However, instead of adjudicating these objections, the Assessing Officer proceeded to finalize the reassessment.
On 28 March 2013, the AO passed an assessment order determining total income at ₹20,12,27,840, making substantial additions based on alleged unexplained expenditures.
