ITO Vs Raghavbhai Gordhanbhai Narola (ITAT Ahmedabad)
Reopening Based on Investigation Wing Info Quashed – Labour Income Already Disclosed & TDS Reflected in 26AS – Revenue Appeals Dismissed – ITAT Ahmedabad
The AO reopened assessments for AYs 2013-14, 2015-16 & 2016-17 alleging bogus job-work transactions and unexplained credits based on STR/investigation wing information relating to diamond job work receipts from Kiran Gems Pvt. Ltd. However, the assessee demonstrated that the amounts were genuine labour income duly disclosed in audited books, reflected in ROI and supported by TDS in Form 26AS.
ITAT held that reopening was initiated merely on vague investigation inputs without correlating them with assessment records already available with the department. The AO failed to verify that receipts were declared in audited financials, and reopening based on suspicion rather than “reason to believe” is invalid in law.
Following earlier coordinate bench decisions on identical facts, the Tribunal quashed the reassessment proceedings and upheld CIT(A)’s deletion of additions. Revenue’s appeals were dismissed and assessee’s cross-objections were allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeals have been preferred by the Revenue and corresponding cross objections by the assessee are against separate orders of even date 31/03/2021 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], u/s. 250 of the Income Tax Act, 1961 (“the Act” for short) relevant to the Assessment Years (AYs) 2013-14, 2015-16 & 2016-17. Since issues raised in all the appeals/COs are identical (except quantum in appeals), they are disposed of by this common order for the sake of convenience. First, we take up the Revenue’s appeal in ITA No.1266/Ahd/2025 for AY 2013-14 and CO No.55/Ahd/2025 for AY 201314 (in ITA No.1266/Ahd/2025 for AY 2013-14) as lead case for the purpose of narration of facts.
