GUNA SHANTARAM MUNDHE,PANVEL RAIGAD vs. INCOME TAX OFFICER WARD 1 PANVEL, PANVEL RAIGAD

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ITA 2543/PUN/2025Status: DisposedITAT Pune25 May 2026AY 2013-146 pages
AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the reopening of the assessment was bad in law because the reasons recorded by the Assessing Officer were vague and lacked independent application of mind. Furthermore, there was no evidence of service of the notice for reopening, rendering the assessment order void ab initio.

What were the facts?

The assessee, an illiterate household help, appealed an assessment order passed after reopening the case. The appeal was filed with significant delay, which the tribunal condoned due to sufficient cause. The primary contention was that the notice for reopening was never served, and the reasons recorded by the AO were vague and lacked independent application of mind.

What were the issues?

Whether the reopening of assessment under Section 147/148 was valid without proper service of notice and with vague reasons recorded by the AO. Whether the assessment order is void ab initio due to procedural defects in the reopening process.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI Dr. DIPAK P. RIPOTE & SHRI VINAY BHAMORE

For Appellant: Adv. Deepali Jadhav
For Respondent: DR (Through virtual)

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), (NFAC) [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2013-14 on 08-03- 2024, emanating from the Assessment Order u/s 147 r.w.s. 144 of the Act, dated 27-09-2021.

2.

There was a delay of 540 days in filing appeal before this Tribunal. In this connection, Ld.AR submitted a condonation petition on behalf of the assessee, wherein it was submitted that the impugned order came to the knowledge of the assessee only on 30-06-2024. Assessee is an illiterate lady, who works as household help. She does not have any understanding about the electronic devices like mobile etc. We have perused the condonation petition filed by the assessee and observed that there was sufficient and reasonable cause for the delay. Substantial justice is more important than procedural delays. No assessee is going to gain anything by delaying the appeal. Accordingly, we condone the delay.

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3.

Submission of Ld.AR: Adv. Deepali Jadhav submitted that assessment order is erroneous. She invited our attention to pg. 16-19 of the appeal set. It has been mentioned in the written submission that the assessee is an illiterate person and works as maid. Assessee’s father had ancestral land which was in the name of her father and uncle, the said land was sold. Ld.AO issued notice u/s. 148 of the Act for AY. 2013-14 on the basis of the information received on ITBA portal, regarding cash deposits of Rs. 20,49,000/-. Then passed assessment order, making addition of Rs. 20,49,000/-. Ld.AR submitted that the notice u/s. 148 of the Act was never served on the assessee. Therefore, assessment order is bad in law. Ld.AR submitted that assessee was not provided reasons recorded by ITO. Ld.AR further submitted that she personally visited ITO, Panvel, but ITO, Panvel refused to provide the copies of the reasons recorded and evidence of service of notice u/s. 148 of the Act. Ld.AR submitted that since no reasons have been provided, the assessment order is void ab initio. Ld.AR relied on the decision of the Hon’ble Bombay High Court.

4.

Submission of Ld.DR: The Ld.DR relied on the order of the AO and Ld.CIT(A).

5.

Findings and analysis: We have heard both the parties and perused the records. Ld.AR had submitted that notice u/s. 148 of the Act was not served on the assessee. Ld.AR also pleaded that reasons recorded were never provided. This was the pleading made by the Ld.AR during the earlier hearing. Accordingly, we had directed the Ld.DR to file report and provide copy of the reasons recorded for reopening.

5.1. Ld.DR submitted that as per the report of the AO, apparently, there is no evidence of service of notice u/s. 148 of the Act on record of the assessee.

5.2. We had perused the reasons recorded by the AO, which were filed before us. The reasons recorded by the AO ITO, Ward-1, Panvel are reproduced here as under:

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On perusal of the reasons, it is apparently clear that the AO had no specific information. AO was not aware about the Bank in which the alleged amount has been deposited. Apparently, it is clear from the reasons recorded that the AO has not bothered to obtain copy of the impugned bank Statement and bothered to verify the alleged deposits. Thus, the AO was having Vague information and AO recorded the reasons based on the vague information without verifying it.

5.3. The Hon’ble Delhi High Court in the case of Well Trans Logistics India (P.) Ltd.Vs ACIT Delhi, [2024] 301 Taxman 11 (Delhi)/[2025] 474 ITR131 (Delhi)[02-09-2024] has held as under : Quote, “ 24. We may note that the Assessing Officer after reproducing the information received from DDIT,(Investigation) Unit, drew the conclusion of escapement of income. In the case of Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500 (SC), the Supreme Court had explained that expression "reason to believe" would mean justification to know or suppose that income had escaped assessment. While, it is correct that it is not necessary for the Assessing Officer to finally ascertain whether income had escaped assessment, nonetheless, the Assessing Officer must have sufficient cause to believe that it has. 25. In the present case, as may be seen, there is no "close nexus" or "live link" between tangible material and the reason to believe that income has escaped assessment. The information received from the Investigating Unit of

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the Revenue cannot be the sole basis for forming a belief that income of the assessee has escaped assessment. Having received information from the Investigating Wing, it was incumbent upon the Assessing Officer to take further steps, make further enquiries and garner further material and if such material indicate that the income of the assessee has escaped assessment and then form a belief that the income of the assessee has escaped assessment. 26. Clearly, in this case, the Assessing Officer has not acquired any material to form such belief. There is not even a line of reason which may justify the formation of the belief. Consequently, we are satisfied that reopening of assessment for the assessment year in question by the Assessing Officer does not satisfy the requirement of law in terms of Section 147 & 148 of the Act. 27. Consequently, the writ petition is allowed. The impugned reassessment notice” Unquote.

5.4. Hon’ble Bombay High Court in the case of Principal CIT-5 vs. Shodiman Investments (P.) Ltd. [2020] 422 ITR 337 (Bombay) has held as under : Quote, “12. The re-opening of an Assessment is an exercise of extra- ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. Lakhmani Merwal Das [1976] 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee isentitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer. 13. In this case, the reasons as made available to the Respondent- Assessee as produced before the Tribunal merely indicates information received from the DIT (Investigation) about a particular entity, entering into suspicious transactions. However, that material is not further linked by any reason to come to the conclusion that the Respondent-Assessee has indulged in any activity which could give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped Assessment. It is for this reason that the recorded reasons even does not indicate the amount which according to the Assessing Officer, has escaped Assessment. This is an evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment. 14. Further, the reasons clearly shows that the Assessing Officer has not applied his mind to the information received by him from the DDIT (Inv.). The Assessing Officer has merely issued a re-opening notice on the basis of intimation regarding re-opening notice from the DDIT (Inv.) This is clearly in breach of the settled position in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction.

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15.

Therefore, in the above facts, the view taken by the impugned order of the Tribunal cannot be found fault with. This view of the Tribunal is in accordance with the settled position in law. 16. Therefore, the question as framed does not give rise to any substantial question of law. Thus, not entertained. 17. Accordingly, Appeal dismissed. ” Unquote.

5.5. In the case of the present assessee, we have already reproduced the reasons recorded for reopening, which were made available to us, and noted that the AO has reopened the assessment, based on the vague information without making any verification. There is no independent application of mind by the AO. Therefore, the decision of the Hon’ble Bombay High Court (supra) and Hon’ble Delhi High Court (supra) are applicable in this case. Respectfully following the decisions of the Hon’ble Bombay High Court and Hon’ble Delhi High Court, we are of the considered opinion that the reopening is bad in law. Accordingly, notice u/s. 148 of the Act is bad in law. Therefore, the consequential assessment order is void ab initio. In this case, it has already been mentioned by us above that evidence of service of notice u/s. 148 of the Act was not available. Even on this ground, the assessment order is bad in law.

6.

Accordingly, grounds of appeal raised by the assessee are allowed.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 25th May, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 25-05-2026 TNMM

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आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपील र्थी / The Appellant 1. प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘SMC’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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