Mustafamiya H. Sheikh Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad Partially Allows Assessee’s Appeal in Case Involving ₹57.5 Lakh Addition
In the case of Mustafamiya H. Sheikh vs. ACIT, the Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, ruled in part favour of the assessee by deleting an addition of ₹57.5 lakh on the grounds of lack of evidentiary support and denial of the right to cross-examination. However, the Tribunal upheld the reopening of the assessment under Section 148 of the Income Tax Act, dismissing the objection to the jurisdictional validity of the notice.
Background and Issues for Adjudication
The dispute concerned two primary issues:
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Whether the assessment order passed under Section 147 was without jurisdiction due to an error in the assessment year mentioned in the notice.
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Whether the addition of ₹57.5 lakh made on the basis of third-party statements and documents, without granting the assessee an opportunity for cross-examination, was sustainable.
Issue 1: Validity of Notice under Section 148
The assessee challenged the validity of the notice issued under Section 148 of the Act, pointing out that while the reopening pertained to AY 2004-05, the notice erroneously mentioned AY 2005-06.
The Tribunal observed that the reasons recorded for reopening correctly specified AY 2004-05, and the assessee had participated in the reassessment proceedings without objecting to the error in the assessment year at the initial stage. Citing Section 292BB of the Income Tax Act, and relying on precedent from Varia Pratik Engineering [(120 TTJ 1 (Ahmd))], the Tribunal held that procedural defects in the notice are cured when the assessee does not object during the proceedings.
The Tribunal concluded that there was no legal infirmity in the reassessment proceedings under Section 147, and the assessee’s challenge to jurisdiction was dismissed.
