MARUTI KALURAM BORADE (HUF),MUMBAI vs. INCOME TAX OFFICER, KAUTILYA BHAVAN

आदेश / ORDER

Per Sanjay Garg, Judicial Member: The present appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi dated 11-Jul-2025 for the Assessment Year 2019-20.

Invalid Re-assessment - Assumption of Jurisdiction u/s 147 is Bad in Law 1. The learned Assessing Officer has erred in law and on facts in initiating and completing reassessment proceedings under section 147 of the Act without satisfying the mandatory conditions prescribed under the Act. The reopening is based on mere suspicion, conjectures and borrowed satisfaction, without any independent application of mind, and therefore the reassessment order passed is void ab initio and liable to be quashed. Absence of Tangible Material - Reopening Amounts to Change of Opinion 2. In the facts and circumstances of the case and in law, the learned Assessing Officer erred in assuming jurisdiction under section 147 of the Income-tax Act, 1961 by reopening the assessment for the purpose of making roving and fishing enquiries, merely on a general and unsubstantiated allegation that the appellant had obtained accommodation entries in the nature of loans, without any tangible material or live nexus with alleged escapement of income. The re-opening is therefore invalid in law and the reassessment proceedings deserve to be quashed. Violation of Principles of Natural Justice by the AO 3. The learned AO has grossly violated the principles of natural justice by passing the assessment order in a mechanical and arbitrary manner, without properly considering the explanations, documentary evidences and submissions filed by the appellant. The assessment has been framed in haste and without granting a fair and meaningful opportunity of being heard Addition Made Without Proper Inquiry, Evidence or Reasoning 4. The learned AO erred in making additions purely on assumptions and presumptions, without carrying out any independent enquiry, verification or investigation and without considering the fact that the impugned loan was received through banking channels and in making addition without proving any cash trial thereby vitiating the reassessment proceedings. The findings of the officer recorded are unsupported by cogent material and are therefore unsustainable in the eyes of law. Non-Speaking and Cryptic Assessment Order 5. The assessment order is a non-speaking and cryptic order, passed without dealing with the specific contentions raised by the appellant. Such an order reflects complete non- application of mind and deserves to be annulled. Unjustified Addition under Section 69A

Failure of CIT(A) to Exercise Appellate Powers 12. The learned CIT(A) failed to exercise the wide appellate powers vested in him under the Act, including the power to call for records, remand reports, and adjudicate issues on merits. The impugned order reflects abdication of statutory responsibility. Order Passed in Mechanical and Arbitrary Manner 13. The learned CIT(A) passed the impugned order in a mechanical and arbitrary manner, without application of mind to the facts, evidences and legal submissions placed on record, rendering the order unsustainable in law. General ground: 14. The orders passed by the lower authorities are contrary to law, facts, judicial precedents and principles of equity and natural justice. 15. The appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal at or before the time of hearing. 3. A perusal of the above grounds of appeal of the assessee would reveal that the assessee, inter alia, has taken a legal ground relating to the validity of reopening of the assessment. Ms. Akanksha Shinde, the Ld. Counsel for the assessee, has invited our attention to paper book page No.3, which is a copy of notice issued by the Assessing Officer [in short, “the AO”] u/s.148A(b) of the Income Tax Act, 1961 [in short, „the Act‟] dated 30.03.2023, whereby, the AO has mentioned that information has been received on INSIGHT portal about some high risk transaction of Rs.5 lakhs relating to M/s.Consultshah Financial Services Private Limited. The assessee was asked to furnish the necessary details in respect of the same. Thereafter, the Ld. Counsel for the assessee has invited our attention to the order passed by the AO u/s.148A(d) of the Act, wherein, the same information has been mentioned. However, a perusal of the order of the AO passed u/s.148A(d) of the Act, reveal that nothing more has been written in the said order, except, that there is a financial transaction of Rs.5 lakhs relating to the entity i.e. M/s.Consultshah Financial Services Private Limited and the only reason that has been mentioned is that it is a high risk CRIU/VRU case. There is nothing mentioned in the order passed u/s.148A(d) of the Act as to whether the said transaction belongs to the assessee and further as to what was the nature of the said transaction and whether it is a loan or accommodation entry on account of sale or purchase? There is no mention as to how and in what manner any income relating to the said transaction has escaped assessment. It has been held time and again, that merely because the assessee has entered into a high value transaction that, itself, can‟t be assumed to be a case of escapement of income. A perusal of the order passed u/s.148A(d) of the Act would reveal that there is a general allegation relating to the aforesaid transaction entered by M/s.Consultshah Financial Services Private Limited, which is a third party. Even the name of the assessee is not appearing, what to say of escapement of income of the assessee. We note that as per the provisions of Section 147 of the Act, as amended by Finance Act, 2021 w.e.f. 01.04.2021, the reopening of assessment u/s.147 of the Act can be made, if any, income chargeable to tax in case of assessee has escaped assessment for any assessment year. The AO before proceeding to reopen the assessment has to follow the procedure prescribed u/s. 148A of the Act by way of making necessary enquiries and show cause the assessee and thereafter to pass an order u/s.148A(d) of the Act, whereby, he has to decide on the basis of material available on record including the reply of the assessee as to whether or not it is a fit case to issue notice u/s.148 of the Act, by passing an order in this respect. In the case in hand, we are not convinced that in the order passed u/s.148A(d) of the Act, any case of reopening of assessment is made out.

3.1 At this stage, it is pertinent to mention here that in view of the newly inserted provisions of Section 148A of the Act w.e.f. 01.04.2021, prescribing procedure of making enquiry and ascertaining the facts and thereby passing an order u/s.148A(d) of the Act whereby, the AO is supposed to hold that whether the case of the assessee is fit to issue notice u/s.148 of the Act or not, thus the AO has to give a finding of escapement of income, though, not conclusively but there must be some information/details available on record suggesting that the income of the assessee has escaped assessment. Further, an amendment has also been made to Section 147 of the Act, thereby, replacing the words “if the Assessing Officer has reasons to believe that any income chargeable to tax has escaped assessment” with the wording “if any income chargeable to tax, in the case of the assessee, has escaped assessment”. So, in view of the amended provisions of the Section, it is not the “reasons to believe” but now the AO should have to give a finding to the effect that the income has escaped assessment before proceeding to reopen the assessment, though, as observed above, such finding need not be conclusive, but a prima facie finding should be there. However, in the case in hand, there is nothing mentioned as any information available to the AO suggesting that income of the assessee has escaped assessment. In view of the above discussion, the reopening of the assessment in this case is held asbad in law and consequently, the assessment order passed u/s.147 of the Act is hereby quashed.

Order pronounced in the open court on 18.09.2026.

Sd/- Sd/- (G.M. DOSS ) (SANJAY GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 18.09.2026 Copy to: MARUTI KALURAM BORADE (HUF), 305, C-WING, 3RD FLOOR GOLDEN PLAZA, BHARVE MARG KURLA (EAST) NEHRU 1 NAGAR, MUMBAI 400024, MUMBAI-400024, MAHARASHTRA INCOME TAX OFFICER, INCOME TAX OFFICER, WARD 41(1)(3), 2 KAUTILYA BHAVAN, BHANDRA KURLA COMPLEX, MUMBAI, MUMBAI-400051, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE