Neelkamal Realtors Suburban Private Limited Vs DCIT (ITAT Mumbai)
Search Cannot Justify One Route for Reopening and Another for Scrutiny: Mumbai ITAT Quashes Three Assessments
Summary: A search was conducted on 7 October 2021 in the DB Realty/Dynamix group, covering Neelkamal Realtors Suburban Pvt. Ltd. as well. Assessments for three years followed. For AYs 2019-20 and 2020-21, the AO issued notices under section 148 but ultimately made only statutory disallowances unrelated to the search information cited for reopening. For AY 2021-22, the AO proceeded by ordinary scrutiny under section 143(3), without issuing a notice under section 148. The Mumbai ITAT quashed all three assessments, though for two distinct jurisdictional reasons. The distinction matters: in the first two years, the Tribunal examined the missing link between the reasons for reopening and the additions made; in the third, it examined the absence of the statutory notice required to initiate reassessment for a year preceding the search year.
AYs 2019-20 and 2020-21: What Was the Reopening Based On?
For the first two years, the AO reopened the assessments under section 147 on the basis of information gathered during the search. On examining the recorded reasons, the Tribunal found references to material indicating ₹4,86,26,37,075 of undisclosed income in the case of the DB Realty Group, along with cash and jewellery seized from them. The reasons, however, did not identify escaped income specifically belonging to Neelkamal Realtors.
