ITO Vs Ramanbhai Jagabhai Bharwad (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad has dismissed an appeal filed by the Income Tax Officer (ITO) against a decision by the National Faceless Appeal Centre (NFAC), Delhi, which had deleted a significant addition of Rs. 6.80 crore made under Section 69A of the Income-tax Act, 1961, against individual assessee Ramanbhai Jagabhai Bharwad. The case revolves around high-value bank transactions that occurred during the demonetization period in November 2016.
The assessee had originally filed his income tax return for Assessment Year 2017-18 declaring a modest income, later revised. However, the Assessing Officer (AO) received information about a credit and debit of Rs. 6.80 crore in the assessee’s bank account during the third week of November 2016. Concluding that this amount represented escaped income, the AO initiated reassessment proceedings under Section 148 of the Act. Despite submissions from the assessee, the AO determined that the nature and source of the Rs. 6.80 crore transaction had not been satisfactorily explained, leading to the entire amount being treated as unexplained income under Section 69A.
In challenging the AO’s order before the Commissioner of Income Tax (Appeals) [CIT(A)], the assessee contested both the validity of the reassessment proceedings and the Section 69A addition. On the procedural front, the assessee argued that the notice under Section 148, issued beyond the three-year period, lacked the mandatory prior sanction from the Principal Chief Commissioner or Director General as required by Section 149(1)(b), with approval instead obtained from the Principal Commissioner of Income Tax. Furthermore, it was contended that under the faceless assessment scheme, the notice should have been issued through automated allocation by the National Faceless Assessment Centre (NFAC), not by a jurisdictional AO, rendering the entire reassessment process void.
