DCIT Vs Taradevi Ratanlal Bafna (ITAT Pune)
Tribunal Quashes Re-assessment: Approval by PCIT Instead of Principal Chief Commissioner Held Invalid
Assessee, an individual, filed her return of income on 26.02.2021 declaring total income of ₹93.17 crore. The case was originally assessed u/s 143(3). Later, AO received information from the Investigation Wing that Assessee had allegedly received bogus accommodation entries of ₹27.21 lakh as LTCG, claimed exemption u/s 10(38) of ₹1.10 crore & had unverified bank credits of ₹7.68 crore. On this basis, notice u/s 148A(b) was issued on 30.03.2022 & reopening was approved by PCIT.
AO finally completed reassessment u/s 147 r.w.s. 144B on 30.03.2024 assessing total income at ₹94.40 crore by:
(a) adding ₹27.21 lakh u/s 68 (unexplained cash credits),
(b) ₹54,421 u/s 69C (alleged commission for bogus entries), &
(c) disallowing ₹83.75 lakh exemption u/s 10(38).
On appeal, CIT(A) upheld reopening but deleted all additions. He held that AO violated principles of natural justice by relying upon Investigation Wing statements (including Naresh Jain’s) without supplying copies or granting cross-examination. Citing Ayaaubkhan Noorkhan Pathan (4 SCC 465) & Omar Salav Mohammad Sait (37 ITR 151 SC), CIT(A) ruled that assessment based on third-party statements without cross-examination is invalid.
Before Tribunal Revenue argued that addition was based on concrete information from the Investigation Wing & not merely on statements, hence deletion was unjustified. During hearing, Assessee invoked Rule 27 of ITAT Rules, urging that even without filing appeal, she could support CIT(A)’s order on grounds decided against her—specifically, on the issue of invalid reopening.
