URBAN PLAZA LLP,LUCKNOW vs. ITO WARD 1(4), LUCKNOW

ITA 539/LKW/2026Status: DisposedITAT Jaipur25 September 2026AY 2020-219 pages
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What did the Tribunal hold?

The Tribunal held that the judicial precedents relied upon by the assessee regarding the validity of reopening were distinguishable on facts because, in this case, the assessee had admittedly not filed its return of income, unlike in the cited cases where returns were filed. Regarding the approval by the Principal Commissioner of Income-tax (PCIT), the Tribunal found that the PCIT recorded satisfaction with reference to the information and material available, indicating due application of mind, and thus rejected the assessee's contention challenging the validity of the approval. However, concerning the addition of Rs. 10,00,000/-, the Tribunal found the AO's action of treating it as unexplained investment under Section 69 to be erroneous and illegal. The Tribunal noted that Section 69 is attracted where investments are not recorded in the books of account, whereas the assessee claimed the amount was received as a loan/advance from Shri Pushkar Pathak and was utilized for time deposits, with the transaction recorded in the books. The Tribunal found no discussion by the AO on why the documentary evidence was not acceptable and no adverse material to controvert the assessee's evidence. It also noted that both the AO and CIT(A) focused on the creditworthiness of the lender without proper inquiry from Shri Pushkar Pathak. Therefore, the Tribunal directed the AO to delete the addition. Grounds challenging the addition on merits were allowed, while the additional ground challenging the reopening was dismissed.

What were the facts?

The assessee, Urban Plaza LLP, is an LLP that failed to file its return of income for Assessment Year 2020-21. The Assessing Officer (AO) received information about a time deposit of Rs. 1,86,88,888/- with interest income of Rs. 1,32,888/-. A notice under Section 148A(b) was issued, followed by an order under Section 148A and a notice under Section 148. The assessee filed its return and supporting documents. However, the AO made an addition of Rs. 10,00,000/- on account of an alleged unexplained loan/advance from Shri Pushkar Pathak, treating it as unexplained investment under Section 69 read with Section 115BBE. The Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC) sustained the addition. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the reopening of assessment proceedings was valid, specifically concerning the sanction obtained by the AO under Section 151 of the Income Tax Act, 1961, and whether the AO erred by invoking Section 69 for a transaction recorded in the books, with the CIT(A) converting it to Section 68. 2. Whether the AO erred by invoking Section 115BBE. 3. Whether the AO violated principles of natural justice and travelled beyond jurisdiction by making an addition of Rs. 10 lakhs. 4. Whether the reassessment was void ab initio as it was initiated on the basis of time deposits and interest income, but the final addition related to an alleged unexplained loan source, beyond the scope of the original reasons. 5. Whether the CIT(A) erred by not allowing additional evidence submitted under Rule 46A. Assessee's arguments: The assessee contended that the sanction for reopening was invalid, citing Independent News Service (P.) Ltd. v. Assessing Officer and Rajesh Kumar Mishra v. ITO. The AO erred in invoking Section 69 for a recorded transaction and the CIT(A) erred in converting it to Section 68. The AO also erred in invoking Section 115BBE, violating natural justice, and travelling beyond jurisdiction. The reassessment was void as the addition was beyond the scope of reopening reasons. The CIT(A) wrongly disallowed additional evidence. The primary onus was discharged as the amount was received through banking channels, and the AO failed to conduct independent inquiries. Revenue's arguments: The revenue argued that the assessee had not filed its return, necessitating reopening. The interest income and the loan/advance from Shri Pushkar Pathak had escaped assessment, making the reopening valid. The additional ground challenging the reopening should be rejected.

Which sections of the Income-tax Act were involved?

Section 151,Section 69,Section 68,Section 115BBE,Section 271AAC(1),Section 139(1),Section 148A,Section 148,Section 143(3),Section 46A

AI-generated summary — verify with the full judgment below

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

Before: SHRI KUL BHARAT

PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC) dated 09.03.2026 pertaining to the assessment year 2020-21. The assessee has raised the following grounds of appeal: - “1. On the facts and circumstances of the case and in law, there was no valid sanction obtained by the Ld. Assessing Officer u/s 151 of the Income Tax Act, 1961 for re-opening the asse

The order continues below.

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