MARALBID PAWAN KUMAR,RAICHUR vs. INCOME TAX OFFICER, WARD-1, RAICHUR

Briefly stated the facts of the case are that the assessee filed the original return of income on 31/3/2017 declaring a total income Rs.3,48,819/-. Subsequently the proceedings u/s 147 of the Act was initiated on the basis of information received from DDIT investigation. It was noticed that the assessee has entered into transactions with respect to sale of immovable property but has not filed the return of income disclosing the transaction. The Ld.AO thereafter issued a notice u/s 148 of the Act on 31st March 2021, requiring the assessee to file the return of income within the prescribed time limit. In response the assessee filed the return of income on 24th April 2021 declaring the income at Rs 3,48,819/- which was declared while filing the original return of income. The assessee has also declared capital gains as NIL by claiming deduction u/s 54F of the Act. Thereafter notice u/s 143(2) dt 14th September 2021 was issued and served on the assessee. Subsequently notice u/s 142(1) was issued on the assessee on various dates. The assessee replied on various dates. After perusing the submissions furnished by the assessee, the Ld AO noticed that the assessee has not submitted documents for sale four plots and therefore the Ld AO proceeded to determine the market value of the plots at Rs 16 lakhs each while making the addition of Rs 64 lakhs in addition to the income declared by the assessee. The ld AO also denied the deduction claimed by the assessee u/s 54F of the Act, by observing that the assessee has not provided documentary evidences with respect to investment in new residential property except the building plan approval and estimate of construction.

On being aggrieved by the Order of the Ld AO, the assessee filed an appeal before learned CIT(A). The Ld CIT(A) after considering the submissions of the assessee granted partial relief with respect to computation of Long Term Capital Gains, while sustaining the denial of deduction u/s 54F claimed by the assessee.

On being aggrieved by the Order of the learned CIT(A), assessee is in appeal before us by raising following grounds: The appellate order passed by the learned Commissioner 1. of Income-tax [Appeals]NAFC, under Section 250 of the Act dated 28/05/2025 for the impugned Assessment Year 2015-16, in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case, may be quashed. 2. Grounds on the assumption of jurisdiction and validity of re-opening under section 147 of the Act: 2.1. The order of assessment passed by the learned assessing officer is bad in law since the mandatory conditions as envisaged in the Act to assume jurisdiction under section 147 of the Act to re-open the case of the appellant did not exist or having not been complied with and consequently, the order of reassessment passed under section 147 r.w.s. 144B of the Act, requires to be cancelled, on the facts and circumstances of the case. 2.2. The learned Commissioner of Income-Tax [Appeals] failed to properly appreciate that the re-opening of the case of the appellant by the learned assessing officer is merely based on the information obtained from DDIT [INV], Ballari and without independent application of mind, which amounts to borrowed satisfaction which is impermissible in law and consequently the reopening is bad in law and requires to be cancelled, on the facts and circumstances of the case. 2.3. Without prejudice the re-opening of assessment is based on the dictate of the Hon'ble DDIT [Inv] Ballari, consequently any re- opening based on the dictate of the higher authority is impermissible in law and consequently the impugned order passed on an invalid assumption of jurisdiction requires to be cancelled, on the facts and circumstances of the case. 2.4. The learned Commissioner of Income-tax [Appeals] ought to have held that the impugned order of reassessment passed by the learned assessing officer is bad in law, since the reasons recorded for re-opening of assessment amounts to reason to suspect and do not amount to reason to believe and the said reason do not constitute belief and consequently the order of reassessment passed requires to be cancelled, on the facts and circumstances of the case. Without prejudice, the appellant denies himself liable to be assessed 3. over and above the income returned and reported by the appellant of Rs. 5,23,106/ -, on the facts and circumstances of the case. 4. The learned Commissioner of Income-tax [Appeals] erred in upholding the addition of Rs. 16,00,000/- being sale consideration of Plot No. 22 at Yermaras Village, which was infact sold by the appellant on 29/07/2013 and offered to tax in the previous assessment year 2014-15 which was inadvertently included and considered while filing the reply before the learned assessing officer, on the facts and circumstances of the case.

At the outset the ld AR submitted that the Ground 2 including sub grounds, being legal grounds, be adjudicated firstly since it challenges the validity of the Notice u/s 148 and consequential assessment framed based on invalid Notice. The Ld AR submitted that the notice u/s 148 was issued based on the borrowed satisfaction that there is income escaping assessment based on the information received from DDIT (Inv), Bellary. He further submitted that on identical facts in the case of assessee’s mother Smt Maralbid Padmavathi, who is also a co-owner of the inherited property along with the assessee, this Hon Tribunal has quashed the assessment reopened u/s 148 of the Act. Therefore he prayed that the assessment reopened based on invalid notice be quashed in the case of assessee also.

Per contra the Ld DR fully supported the order of Ld CIT(A) and submitted that the Ld CIT(A) has granted substantial relief to the assessee.

We have heard the rival contentions and carefully perused the material on record. The issue requiring consideration is whether the reopening of assessment based on the borrowed satisfaction on the report submitted by the DIT (Investigation), Bellary, as valid. The assessee has placed reliance on the decision of the jurisdictional Bench in ITA No.1006/Bang/2025 in which the mother of the assessee who also happens to be the co-owner of the inherited properties. The Tribunal in paras 8 and 9 observed as follows:

In the instant case the Ld AO initiated re-assessment proceedings on the basis of investigation report received. The AO has relied to issue notice under section 148 of the Act on the basis of report of the DIT (Inv.), Bellary. But he has not independently examined the veracity of the report submitted by the DIT (Inv.). Respectfully following the decision of the co-ordinate Bench, we are of the opinion that notice issued under section 148 of the Act and the consequent reassessment proceedings based on the borrowed satisfaction is not justifiable and hence Assessment Order is quashed. Since the legal ground has been adjudicated in assessee’s favour, adjudication of other grounds on merits is merely academic.

In the result, appeal of the assessee is allowed.

Considering the identicalness of the issues involved in all these appeals, our decision rendered while adjudicating the appeal in ITA No. 1646/Bang/2025 (supra) applies mutatis mutandis to the assessee’s appeal in ITA No. 1647/Bang/2025 also.

In the result the appeals of the assessee are allowed. Pronounced in the open court on the date mentioned on the caption page.