Rehana Shaikh Ishaq Vs ITO (ITAT Pune)
Pune ITAT Quashes Reassessment Based on Factually Incorrect Section 148 Notice; Wrong Assertion of Search in Assessee’s Case Held Fatal
The Pune ITAT held that a reassessment initiated under sections 147/148 is void ab initio where the very notice under section 148 is founded on factually incorrect assumptions, demonstrating a lack of application of mind. The Tribunal noted that although the Assessing Officer reopened the assessment based on information arising from a search conducted in the Manjeet Pride Group and Gadiya Group, the notice erroneously stated that a search under section 132 had been conducted in the assessee’s own case, when no such search had ever taken place. Rejecting the Revenue’s contention that the error was merely typographical and curable under sections 292B/292BB, the Tribunal held that the “reason to believe” must be founded on correct facts, and reopening based on an erroneous factual premise is legally unsustainable. Relying on its earlier decision in Lombard Realty Pvt. Ltd., as well as the judgments of the Bombay High Court in Sea Glimpse Investments Pvt. Ltd. and Dhiren Anantrai Modi, the Gujarat High Court in Sagar Enterprises, and the Delhi High Court in Dr. Ajit Gupta, the Tribunal quashed the reassessment proceedings, holding that the defect went to the very root of jurisdiction. Having allowed the legal ground, it declined to adjudicate the remaining grounds on merits, including the challenge to the proposed penalty proceedings under sections 271D and 271E.
Cases Discussed
- M/s. Lombard Realty Pvt Ltd vs. DCIT (ITAT Pune), ITA Nos.536 & 535/PUN/2026, order dated 17.07.2026
- Dhiren Anantrai Modi Vs. ITO (Bombay HC), Writ Petition No. 3224 of 2019, order dated 15.12.2021
- Sea Glimpse Investments Pvt Ltd vs. DCIT & ors (Bombay HC), Writ Petition No.3172 of 2019, order dated 22.12.2021
- Ajit Gupta vs. ACIT (Delhi HC)
- ITO Vs. M/s. Champaklal Mathurbhai Mehta (ITAT Mumbai), ITA No. 2253/Mum/2022
- ITO Vs. Surendra Dalal (ITAT Delhi), ITA No. 7714 & 7490/Del/2019
- Keshav Saran Vs. ACIT (ITAT Delhi), ITA No. 382/Del/2019
- Kissan Fats Limited, BCL Industries Ltd vs. DCIT (ITAT Chandigarh), ITA No.407 & 409/CHD/2023, order dated 01.07.2024
- Sagar Enterprises Vs. ACIT (Gujarat HC), 257 ITR 335 (Guj)
- Ankita A. Choksey vs. Income-Tax Officer And Others (Bombay HC), [2019] 411 ITR 207 (BOM)
- German Remedies Ltd. vs. Deputy Commissioner of Income Tax
- Commissioner of Income Tax. v. Kelvinator of India Limited (SC), (2010) 320 ITR 561
- Principal CIT v/s. Shodimen Investments P. Ltd. [2018] (93) com153 (Bom)
- Commissioner of Income Tax v/s. Rajesh Jhaveri Stock Brokers (P) Ltd. (SC), [2007] 291 ITR 500
- Monika Rani Vs the ITO, Ward-2, Kurukshetra, ITA No.582/CHD/2019
- Baba Kartar Singh Dukki Educational Trust Vs ITO (ITAT Chandigarh SMC), (2016) 158 ITR 965 (CHD)(TRIB)
- Shri Ram Mohan Rawat Vs ITO, ITA No. 1014/JP/2018
- Van Oord Dredging & Marine Contractors BV Cs ADIT, ITA Nos. 495&496/Mum/2016
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 21.10.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2020-21.
2. Facts of the case, in brief, are that the assessee is an individual and farmer earning no income from business or no income from other sources. A search action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was conducted by the DDIT (Inv), Aurangabad on 30.11.2023 in the case of Manjeet Pride group, Gadiya group and their associated entities. Specific information in respect of the assessee was found and seized during the search action. Information was forwarded by the DDIT(Inv), Aurangabad to the Assessing Officer of the assessee. On the basis of information, the Assessing Officer reopened the case of the assessee as per the provisions of section 147 of the Act and issued notice u/s 148 of the Act. The assessee in response to the same filed her return of income declaring total income of Rs.4,33,780/-. The Assessing Officer thereafter issued statutory notice u/s 143(2) of the Act. Although the Assessing Officer accepted the income returned by the assessee, however, initiated penalty proceedings u/s 271D(2) and 271E(2) of the Act by observing as under:
3. Before the Ld. CIT(A) / NFAC the assessee apart from challenging the levy of penalty on merit, challenged the validity of re-assessment proceedings. However, the Ld. CIT(A) / NFAC was not satisfied with the arguments advanced by the assessee and dismissed the appeal filed by the assessee.
4. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds:
All the following grounds are independent and without prejudice to each other-
1. On the facts and in the prevailing circumstances of the case and in Law, the Ld. CIT(A) erred in not appreciating the fact that the Ld. Assessing Officer completed the assessment by issuing the notice under section 148 dated 30.03.2024 without Jurisdiction being issued
a. by JAO instead of FAO
b. in a vague manner and in pre-printed format without specifying the applicable points to the assessee
c. without DIN
d. without prior approval of appropriate authority as specified under section 151 thereby making the entire assessment bad in law. Hence, the impugned assessment order as well as the appellate order may please be set aside.
2. On the facts and in the prevailing circumstances of the case and in Law, the Ld CIT(A) erred in not appreciating the fact that the Ld. Assessing Officer ought to have completed the assessment under section 153C instead of section 147 of the Act thereby making the assessment bad in law. Hence, the impugned assessment order as well as the appellate order may please be set aside.
3. On the facts and in the prevailing circumstances of the case and in Law, the Ld. CIT(A) erred in not appreciating the fact that the Ld. Assessing Officer has wrongly computed the amount of cash accepted/paid by the assessee in respect of the property sold without considering the submission of the assessee. Hence, the impugned assessment order as well as the appellate order may please be set aside.
4. On the facts and in the prevailing circumstances of the case and in Law, the Ld. CIT(A) erred making the enhancement to the assessed income without appreciating the submission of the assessee and without cogent reason. Hence, the impugned enhancement of Rs. assessment order as well as the appellate order may please be set aside.
5. The Appellate craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.
5. The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the notice issued u/s 148 of the Act and submitted that at bullet point No.1 the Assessing Officer has mentioned wrong facts in the notice issued u/s 148. According to him a search action 132 of the Act was conducted in the case of the assessee whereas no such search has taken place in the case of the assessee. Further, in bullet point Nos.2 and 3, the Assessing Officer has mentioned about the approval of the Principal Commissioner of Income Tax or Commissioner of Income Tax but he is not sure as to from whom the approval has been taken and therefore, such notice is a vague notice.
6. In his third point the Ld. Counsel for the assessee submitted that since the information was obtained on the basis of search in the case of Manjeet Pride Group, Gadiya group and their associated entities, therefore, the proper course should have been issue of notice u/s 153C and not u/s 148.
7. Relying on various decisions he submitted that when the re-assessment proceedings are initiated on the basis of wrong facts, such re-assessment proceedings are liable to be quashed. For the above proposition, he relied on the decision of the Pune Bench of the Tribunal in the case of M/s. Lombard Realty Pvt Ltd vs. DCIT vide ITA Nos.536 & 535/PUN/2026 order dated 17.07.2026 for assessment years 2011-12 and 2013-14.
8. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that due approval has been taken by the Assessing Officer by recording reasons and a mere typographical error cannot invalidate the re-assessment proceedings. He accordingly submitted that the additional grounds raised by the assessee should be dismissed.
9. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the notice issued u/s 148, copy of which is placed at page 1 of the paper book reads as under:
10. A perusal of the above shows that the Assessing Officer while issuing notice u/s 148 of the Act has mentioned that a search was initiated u/s 132 in the case of the assessee. However, a perusal of the assessment order and other record shows that no such search has taken place in the case of the assessee. Therefore, such reopening of the assessment was on the basis of wrong facts. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of M/s. Lombard Realty Pvt Ltd vs. DCIT (supra) wherein the Tribunal quashed the re-assessment proceedings on account of wrong facts. The relevant observations of the Tribunal read as under:
“20. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case reopened the assessment as per the provisions of section 147 by recording reasons, the details of which have already been reproduced in the preceding paragraphs. A perusal of the reasons recorded shows that according to the Assessing Officer the return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) / 144 as stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1). Under these circumstances, we have to see as to whether the reopening of the assessment is based on wrong appreciation of facts or not.
21. We find an identical issue had come up before the Hon’ble Gujarat High Court in the case of Sagar Enterprises vs. ACIT (supra) where the Hon’ble High Court has quashed the re-assessment proceedings on the ground that the reasons recorded were de hors the facts i.e. return not filed when the return was actually filed. The relevant observations of the Hon’ble High Court read as under:
“6. On going through the reasons recorded and the documents which have been produced on affidavit, it is apparent that the reasons which are recorded are de hors the facts available on record. Mr. Mihir Joshi, learned standing counsel appearing on behalf of the respondent, stated that in para. 2 of the reasons recorded, the respondent has also referred to action under Section 132 of the Act which was carried out at the premises of one Shri G.D. Shah in February, 1992, and has submitted that at least that part of the reasons would survive vesting the respondent with jurisdiction to initiate and continue action under Section 147 of the Act.
7. On going through the entire reasons recorded, it can be seen that in the penultimate paragraph, the respondent has further recorded as under :
“Further, the assessee was required to file the return of the income for the assessment year 1991-92 which the assessee has failed. Moreover, it was the duty of the assessee to declare this transaction and to file the return of income for the assessment year 1991-92. The assessee has failed on both these counts. Therefore, the escapement of assessment of income is solely attributable to the assessee.”
8. Therefore, it is apparent that the factor of non-filing of the return for the assessment year 1991-92 has overbearingly weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income.
9. On the basis of the same, even for the sake of argument, if the contention raised by Mr. Joshi is taken into consideration, the settled legal position is that in such circumstances, it would not be possible to say with certainty as to which factor would have weighed with the officer concerned and once it is shown that an irrelevant fact has been taken into consideration, to what extent the decision is vitiated would be difficult to say. On this count alone, the petition requires to be accepted.”
22. Similar view has been taken by the Hon’ble Bombay High Court in the case of Sea Glimpse Investments Pvt Ltd vs. DCIT & ors vide Writ Petition No.3172 of 2019 order dated 22.12.2021. The Hon’ble High Court has quashed the re-assessment proceedings by observing as under:
4. The reasons to re-open is annexed to the petition. In paragraph no. 5 it says necessary approval of the Additional Commissioner of Income Tax…….has been obtained……….. vide letter No. dated____ , 2019. This is one lacuna that Ms. Hariya pointed out. Secondly, Ms. Hariya submitted that the assessee had filed its e- return of income on 25th November, 2014 as could be seen in the assessment order dated 27th October, 2016 but in the reasons for re-opening it is stated that assessee e-filed its return on 27 th October, 2016 and scrutiny assessment was completed under Section 143(3) of the Act on 27 th October, 2016. This ground itself would show non application of mind not only by the Assessing Officer but also the authority which sanctioned the proposal of re-opening the assessment. Any one reading the first paragraph in the reasons for re- opening would wonder how the filing of return of income and scrutiny assessment under Section 143(3) of the Act can be completed on the same date. It is therefore, clear that the sanction has been granted without application of mind.
One more fact which appears from the reasons for re-opening that exposes total non application of mind by the sanctioning authority and also the person recording the reasons is it says that the assessee holds 0.01% i.e., 10 shares in itself. How can a company hold its own shares?
This erroneous statement of fact in the reasons itself should have made the authority granting sanction to refuse granting the sanction. Moreover, in the petition, position before amalgamation and post amalgamation has been mentioned which is at variance with what is given in the reasons for re-opening. It is also alleged in the petition that change in shareholding pattern as recorded in the reasons for re-opening is erroneous. That has not been denied in the affidavit in reply. The reason to believe that income chargeable to tax has escaped assessment must be on correct fact. If the facts as recorded in the reasons are not correct, it is for the Assessing Officer to establish that the facts stated by him in the reason as recorded are correct. The Division Bench of this court in Ankita A. Choksey vs. Income- Tax Officer And Others1 in paragraph no. 6 and 7 has held as under :
6. It is a settled position in law that the Assessing Officer acquires jurisdiction to issue a reopening notice only when he has reason to believe that income chargeable to tax has escaped Assessment. This basic condition precedent is applicable whether the return of income was processed under Section 143(1) of the Act by intimation or assessed by scrutiny under Section 143(3) of the Act. [See Asst. Commissioner of Income Tax v/s. Rajesh Jhaveri Stock Brokers (P) Ltd., [2007] 291 ITR 500 (SC) and Principal CIT v/s. Shodimen Investments P. Ltd. [2018] (93) com153 (Bom). Further, the reasons to believe that income chargeable to tax has escaped Assessment must be on correct facts. If the facts, as recorded in the reasons are not correct and the assessee points out the same in its objections, then the order on objection must deal with it and prima facie, establish that the facts stated by it in its reasons as recorded are correct. In 1 [2019] 411 ITR 207 (BOM) Purti Parab 4/5 909-WP 3172–2019.doc the absence of the order of objections dealing with the assertion of the assessee that the correct facts are not as recorded in the reason, it would be safe to draw an adverse inference against the Revenue.
7. Thus, we are of the view that even in cases where the return of income has been accepted by processing under Section 143(1) of the Act, reopening of an assessment can only be done when the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. The mere fact that the return has been processed under Section 143(1) of the Act, does not give the Assessing Officer a carte blanche to issue a reopening notice. The condition precedent of reason to believe that income chargeable to tax has escaped assessment on correct facts, must be satisfied by the Assessing Officer so as to have jurisdiction to issue the reopening notice. In the present case, the Assessing Officer has proceeded on fundamentally wrong facts to come to the reasonable belief/conclusion that income chargeable to tax has escaped assessment. Further, even when the same is pointed out by the Petitioner, the Assessing Officer in his order disposing of the objection does not deal with factual position asserted by the Petitioner. Thus, it would be safe to conclude that the Revenue does not dispute the facts stated by the Petitioner. On the facts as found, there could be no reason for the Assessing Officer to believe that income chargeable to tax has escaped assessment.
5. It is settled law as held by the Division Bench of this court in German Remedies Ltd. vs. Deputy Commissioner of Income Tax 2 that while granting approval it was obligatory on the part of the Principal Commissioner of Income Tax to verify whether there was any failure on the part of the assessee to disclose full and true relevant facts in the return of income filed for the assessment of income of that assessment order.
6. In view of the above, the impugned notice and consequential order justifying reasons recorded are unsustainable. The same are liable to be quashed and set aside. Hence, petition is allowed. Rule made absolute in terms of prayer clause – (a) and (b) which reads as under :
(a) that this Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or a writ, including a writ in the nature of ‘Certiorari’, calling for the records of the case and after satisfying itself as to the legality thereof quash and set aside the notice dated 31.03.2019 issued by the First Respondent under section 148 of the Income Tax Act, 1961, being Ex. – ‘G’ hereto ;
(b) that this Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or a writ, including a writ in the nature of ‘Certiorari’, calling for the records of the case and after satisfying itself as to the legality thereof quash and set aside the order dated 14.10.2019, Ex. – ‘L’ herein, passed by the First Respondent, purportedly disposing of the objections raised by the Petitioner against the initiation of the reassessment proceeding by the First Respondent.”
23. We find the Hon’ble Delhi High Court in the case of Dr. Ajit Gupta vs. ACIT (supra) has held that the reasons for reopening of the assessment based on factually erroneous premise are unsustainable in law. The relevant observations of the Hon’ble High Court reads as under:
“23. Since the action of the Revenue was based on a factually erroneous premise, the Court is of the view that the reopening of the assessments for the said AYs is not sustainable in law. The Court is also satisfied that the requirement of the law, as explained by the Court in Commissioner of Income Tax. v. Kelvinator of India Limited (2010) 320 ITR 561 (SC), and reiterated in the later decisions, has not been fulfilled in the present case.”
24. We find Chandigarh Bench of the Tribunal in the case of Kissan Fats Limited, BCL Industries Ltd vs. DCIT vide ITA No.407 & 409/CHD/2023 order dated 01.07.2024 while quashing the re-assessment proceedings on account of wrong facts has held as under:
“7. From the above discussed facts, it is evident that the discrepancy in the reasons, as pointed out on behalf of the assessee, is clear and admitted, that is to say, the reasons recorded by the AO for issuance of notice of re-opening of the completed assessment have been recorded on wrong facts, in as much as firstly, the date of filing of the return of income of the assessee for the year under consideration has been wrongly mentioned. Then, the declared income has wrongly been shown at Rs.1,62,28,910/- as against the actually declared ‘Nil’ income.
8. Now, it is to be seen as to whether in such a scenario, the re-assessment proceedings are liable to be quashed as void, as contended by the assessee.
8.1 In this regard, under similar circumstances, in ‘Smt. Monika Rani Vs the ITO, Ward-2, Kurukshetra’, vide order (copy at the assessee’s case laws Paper Book, pages 308 to 318) dated 28.02.2020, passed for assessment year 2010-11, in ITA No.582/CHD/2019, it was observed that from the reasons recorded, it was clear that the AO had issued the notice u/s 148 of the Act for the reason that the assessee had not filed her return of income and that the assessee had purchased a property for Rs.1,49,02,500/- during Financial Year 2009-10; that further, the said reasons given by the AO for re-opening the assessment were not correct, since the assessee had filed the return of income on 30.03.2011,the copy of which had been placed in the assessee’s compilation; that the assessee had also shown investment in agricultural land amounting to Rs.52,20,000/- in her balance sheet as on 31.03.2010, copy of which had been placed in the assessee’s compilation; that both the reasons given by the AO were, thus, wrong; that the AO had, thus, reopened the assessment on the basis of wrong facts and, therefore, the re-opening was not valid and it was being quashed.
8.2 The Tribunal followed the decisions cited as under :
i) Sagar Enterprises Vs ACIT, 257 ITR 335 (Guj)
ii) Baba Kartar Singh Dukki Educational Trust Vs ITO, rendered by the Chandigarh ‘SMC’ Bench of the Tribunal, (2016) 158 ITR 965 (CHD)(TRIB)
iii) Shri Ram Mohan Rawat Vs ITO, order dated 10.10.2019 passed by the Jaipur Bench of the Tribunal in ITA No. 1014/JP/2018
iv) Van Oord Dredging & Marine Contractors BV Cs ADIT, order dated 28.02.2018, passed by the Mumbai Bench of the Tribunal in ITA Nos. 495&496/Mum/2016.
8.3 Similarly, in ‘Sagar Enterprises’ (supra), it has been held as follows :
” that it was apparent that the fact of non-filing of the return for the assessment year 1991-92 had weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income. However, the material on record showed that the return had been filed. In such circumstances, it could not be said with certainty as to which fact would have weighed with the officer concerned and once it was shown that an irrelevant fact had been taken into consideration, to what extent the decision was vitiated would be difficult to say. Moreover the Income-tax Officer had stated that the payment which was stated to be undisclosed income relevant for the assessment year 1991-92 could have been made during the financial year 1990-91 relevant to the assessment year 1991-92 and hence, “to cover up that probability, protective addition was made in the assessment year 1992-93.” The first appellate authority decided the appeal for the assessment year 1992-93 on January, 1996, and the reason had been recorded thereafter on August 18, 1997. The notice of reassessment was not valid and was liable to be quashed.”
8.4 Likewise, in ‘Baba Kartar Singh Dukki Educational Trust’ (supra), it has been held as follows :
HEAD NOTE:
” Where Assessing Officer processed under section 143(1) returns of income filed by assessee for assessment years 2001-02 to 2003-04 and subsequently he reopened said assessments on sole basis that assessee had not filed returns for years preceding to assessment year 2004-05 and, therefore, its income having escaped assessment, reopening of assessment was on basis of suspicion and non-existent and incorrect facts and it was invalid”
8.5 Further, in ‘Ram Mohan Rawat’ (supra), it has been held as follows :
“Thus the reasons recorded by the AO for formation of belief that income assessable to tax has escaped assessment are based on two counts. One, the assessee has made bogus purchases and the second, that the purchases are not verifiable as the assessee has not filed the return of income. Thus the formation of belief is based on these two factual aspects that the assessee has made bogus purchases which are not verifiable as assessee has not filed the return of income. The reason for non verifiableness of the purchases made by the assessee due to non filing of the return of income as stated by the AO is absolutely incorrect and wrong and contrary to the record when the assessee has filed the return of income electronically on 29.10.2007. This fact was also subsequently accepted by the AO that the assessee filed the return of income under section 139(1). The second aspect of the reasons that the assessee has made bogus purchases is also not based on any enquiry or verification of record by the AO but this is simply reproduction of information received from the Investigation Wing. The said information is also incomplete as regards the details of the purchases and the parties from whom such purchases were made by the assessee. Thus the reasons recorded by the AO manifest that there is no application of mind and the averments as recorded in the reasons are very vague and general and rather inconsistent with the facts available on record so far as the filing of return of income by the assessee. The formation of belief on such incorrect and vague reasons would lead the reopening of the assessment as invalid.”
8.6 Then, in ‘Van Oord Dredging and Marine Contractors BV’ (supra), it has been held as under :
“In AY 2005-06, the A.O. has reopened the assessment on incorrect facts and further the assessing officer has failed to demonstrate that there was failure on the part of ht assessee to disclose fully and truly all material facts during the course of original assessment proceedings. Hence the reopening of assessment of AY 2005-06 is liable to be quashed on these two grounds also. Accordingly we set aside the order passed by Ld. CIT(A) on this issue and hold that the reopening of assessments of both the years are not in accordance with the law and accordingly quash the assessment orders passed for both the years under consideration.”
9. No decision contrary to the above case laws has been cited before us, nor has any of the above decisions been shown to have been reversed by higher authorities.
10. Therefore, respectfully following the ratios of the above discussed decisions, we hold that the re-opening of the completed assessment in the present case was not valid. The plea of the Department, that the recording of wrong facts by the AO in the reasons was an inadvertent mistake, is of no avail and it does not validate the reasons recorded by the AO. It is trite that the reasons recorded are to be read as they are, and the reasons recorded in the present case, read as they are, are factually incorrect reasons which could not have led the AO to arrive at a valid satisfaction that income for the year under consideration had escaped assessment. Accordingly, the initiation of the re-assessment proceedings through the incorrect reasons recorded and the entire re-assessment proceedings, culminating in the order under appeal are quashed as void ab initio.
11. Since the re-assessment proceedings stand quashed, as above, nothing further survives for adjudication. Ordered accordingly.”
25. We find the Hon’ble Bombay High Court in the case of Dhiren Anantrai Modi Vs. ITO vide Writ Petition No. 3224 of 2019, order dated 15.12.2021 has quashed the reassessment proceedings which are passed on totally erroneous and incorrect facts and without non application of mind. The relevant observations of the Hon’ble High Court read as under:
“1. Petitioner is impugning notice dated 26th March, 2019 issued under Section 148 of the Income Tax Act, 1961 (the Act) and the order dated 22nd October, 2019 disposing petitioner’s objections to the re-opening.
2. Petitioner has challenged notice dated 26th March, 2019 on various grounds including non application of mind by the Assessing Officer while issuing notice.
3. We have considered the petition with documents annexed thereto, reply filed by respondent and also heard Mr. Gandhi and Mr. Pinto.
4. On bare perusal of the reasons it is quite evident that the reasons are based on totally erroneous and in correct facts and without due application of mind. In the reasons it is stated “The assessee is an individual and the Return of Income for A.Y. 2012-13 was filed on 24 th September, 2012 declaring total loss of Rs.4,21,11,382/- and the same was processed by the….C.P.C. It is pertinent to mention here that in this case the assessee had filed return of income for the year under consideration but no assessment as stipulated under Section 2(40) of the Act was made and the return of income was only processed under Section 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment”.
5. The fact is the return of income for A.Y. 2012-13 filed by petitioner on 24th September, 2012 has been assessed under Section 143(3) of the Act and the Assessment Order dated 31st March, 2015 has been passed. Therefore, the Assessing Officer has proceeded on erroneous factual basis that the return of income was only processed under Section 143(1) of the Act. That displays total non application of mind. In fact, petitioner’s allegations that Respondent No.1 has sought to re-open the assessment on incorrect factual position that the return of income was only processed under Section 143(1) of the Act has not even been denied in the affidavit in reply which is filed by the same Assessing Officer. In paragraph no.2 of the affidavit in reply which is in response to paragraph no.1 and 2 of the Purti Parab 3/4 420-WP-3224-2019.doc petition, Respondent No.1 simply says that these are factual in nature and the notice under Section 148 dated 26th March, 2019 and the order disposing the objections and the notice dated 22ndOctober, 2019 are issued in pursuance of the objective of completing reassessment in accordance with the procedures laid down.
On this ground alone, the notice dated 26th March, 2019 has to be set aside.”
26. Similar view has been taken by the Mumbai Bench of the Tribunal in the case of ITO Vs. M/s. Champaklal Mathurbhai Mehta in ITA No. 2253/Mum/2022 and Delhi Bench of the Tribunal in the case of ITO Vs. Surendra Dalal in ITA No. 7714 & 7490/Del/2019 and in the case of Keshav Saran Vs. ACIT in ITA No. 382/Del/2019. The various other decisions relied on by the Ld. Counsel for the assessee also support his case to the proposition that the re-assessment proceedings which are based on totally erroneous and incorrect facts and without application of mind are not in accordance with law and are liable to be quashed. So far as the argument of the Ld. DR that it was a typographical error and therefore the provisions of section 292B / 292BB will take care of the mistake is concerned, the same in our opinion, is not correct. We, therefore, quash the re-assessment proceedings on this ground.”
11. Since in the instant case also the Assessing Officer has mentioned in the notice that a search has taken place in the case of the assessee, whereas no such search has taken place, therefore, such reopening of the assessment, in our opinion, is on account of wrong facts and therefore, the same is liable to be quashed. We hold and direct accordingly. The legal ground raised by the assessee challenging the validity of re-assessment proceedings is accordingly allowed.
12. Since the assessee succeeds on this legal ground, the other legal ground and the grounds on merit become academic in nature and therefore, are not being adjudicated. It is pertinent to mention here that the Ld. Counsel for the assessee did not press the grounds relating to JAO / FAO and DIN issue.
13. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 28thJuly, 2026.
