Abdul Hamid Abdul Majid Nathani Vs ACIT (ITAT Mumbai)
Reopening Based Only on Suspicion Held Invalid; ITAT Mumbai Quashes Entire 147 Assessment
Assessee filed his return for AY 2012-13 declaring ₹26.50 lakh, which was processed u/s 143(1). Based solely on information from Investigation Wing alleging that ₹27.44 crore moved through bank accounts of the Supariwala family & might have been transferred to Assessee, AO reopened assessment u/s 147 by issuing notice u/s 148 on 28.03.2019. Reasons recorded merely reproduced the Investigation Wing letter & asserted that Assessee failed to disclose income, though no such amount was ever credited in Assessee’s books or bank account.
AO, after rejecting objections, finally made addition only of ₹5.65 crore u/s 68 relating to a loan from Nadeem Kassam Supariwala — an issue different from the basis on which reopening was initiated. CIT(A)/NFAC upheld both reopening & addition.
Before Tribunal, Assessee argued that (i) reasons recorded were vague & merely a suspicion; (ii) alleged ₹27.44 crore was never received; (iii) there was no nexus between Investigation Wing information & belief of escapement; & (iv) addition u/s 68 was entirely unrelated to the escapement reason recorded.
Tribunal examined the reasons & held that AO did not form an independent belief; he simply reproduced a vague, ambiguous Investigation Wing note without showing any specific link to Assessee. Reasons did not identify any receipt by Assessee, nor any failure of disclosure. Tribunal relied on jurisdictional Bombay High Court rulings in Hindustan Lever Ltd. (268 ITR 332) on mandatory standards for reasons, & Jet Airways (321 ITR 236), holding that if the issue for which reopening was initiated is dropped, AO cannot assess a different issue.
