Fashion Accessories Vs DCIT (ITAT Delhi)
The Delhi ITAT quashed reassessment proceedings initiated against M/s. Fashion Accessories for AYs 2011-12 and 2012-13, holding that reopening beyond four years from the end of the assessment year was invalid since the Assessing Officer failed to record any allegation regarding failure of the assessee to make full and true disclosure of material facts. The reassessment was initiated on the basis of information received from another officer alleging that an employee of the assessee had stated that no actual business activity was being carried on. However, the Tribunal noted that original assessments had already been completed u/s 143(3), thereby attracting the first proviso to section 147.
The ITAT observed that the recorded reasons nowhere mentioned any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, which is a mandatory jurisdictional requirement for reopening beyond four years. Relying on the Bombay High Court ruling in Hindustan Lever Ltd. vs. R.B. Wadkar, the Tribunal reiterated that reasons recorded by the AO must stand on their own and cannot later be supplemented through affidavits or arguments. The Bench further noted that the AO had wrongly stated in the reasons that no return was filed and no scrutiny assessment existed for the relevant years, though assessments had in fact already been completed u/s 143(3). Holding that reopening based on such incorrect factual assumptions and defective reasons amounted to invalid assumption of jurisdiction, the ITAT quashed the entire reassessment proceedings for both years.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeals in ITA Nos. 4653 and 4654/Del/2025 for AYs 2011-12 and 2012-13, arise out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 17.07.2025 against the order of assessment passed u/s 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 21.12.20185 and 19.09.2019 respectively by the Assessing Officer, DCIT, Circle-1(1), Gurgaon (hereinafter referred to as ‘ld. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
