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

ITA 539/LKW/2026Status: DisposedITAT Cochin25 September 2026AY 2020-219 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was valid because the assessee had admittedly not filed its return of income, and therefore, the income in question had not been subjected to assessment. The judicial precedents relied upon by the assessee were distinguishable on facts. Regarding the validity of the PCIT's approval, the Tribunal found that the PCIT had recorded satisfaction with reference to the information and material available, indicating due application of mind, and rejected the assessee's contention. However, the Tribunal found the addition made under Section 69 to be erroneous and unsustainable. It noted that Section 69 is attracted for investments not recorded in books of account, whereas the assessee claimed the amount was received through banking channels and utilized for time deposits, and that the transaction was recorded in the books. The Tribunal also observed that neither the AO nor the CIT(A) had made any independent inquiry from the lender, Shri Pushkar Pathak, to ascertain the creditworthiness, rendering the conclusion arbitrary. The Tribunal directed the AO to delete the addition of Rs. 10,00,000/-. Grounds challenging the addition on merits were allowed, while the additional ground challenging the validity of 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 due to a lack of valid sanction obtained by the AO under Section 151 of the Income Tax Act, 1961? The assessee argued that the approval granted by the Principal Commissioner of Income-tax (PCIT) was bad in law, lacking application of mind, and that the reopening was based on incorrect facts. The revenue contended that the reopening was valid as the assessee had not filed its return and income had escaped assessment. 2. Whether the AO erred in invoking Section 69 for an addition when the transaction was recorded in the books of accounts, and whether the CIT(A) erred in converting Section 69 to Section 68? The assessee argued that the addition under Section 69 was erroneous as the transaction was recorded and banking channels were used, and that the AO and CIT(A) failed to conduct proper inquiries. The revenue supported the assessment order. 3. Whether the AO erred by invoking Section 115BBE and making an addition of Rs. 10 lakhs beyond the scope of the original reasons recorded for reopening? The assessee argued that the reassessment was initiated on time deposits and interest income, but the final addition related to an alleged unexplained loan source, making the reassessment void ab initio. The revenue contended that the interest income and loan/advance had escaped assessment.

Which sections of the Income-tax Act were involved?

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

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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