SHAILESH KHODABHAI RAMANI,RAJKOT vs. ITO, WARD-2(1)(3), RAJKOT, RAJKOT

ITA 366/RJT/2024Status: DisposedITAT Rajkot15 October 2026AY 2012-136 pages
AI SummaryAllowed

What were the facts?

The assessee, Shailesh Khodabhai Ramani, proprietor of M/s. Bhoomi Casting, is the appellant, and the Income Tax Officer (ITO), Ward-2(1)(5), Rajkot, is the respondent. The appeals concern Assessment Years 2011-12 (ITA No. 257/Rjt/2024) and 2012-13 (ITA No. 366/Rjt/2024). For AY 2011-12, the reassessment order dated 16.12.2018 was passed under section 143(3) read with section 147. For AY 2012-13, the assessment order dated 08.12.2019 was passed under section 143(3). The Ld. CIT(A) upheld the assessment orders in both cases. The assessee's appeals are against the orders of the Ld. CIT(A). The reassessment for AY 2011-12 was initiated based on information from DCIT Central Circle-1, Rajkot, alleging cash transactions aggregating to Rs. 50,24,340/- through M/s. National Shroff & Co. during FY 2010-11. The Assessing Officer made an addition of Rs. 5,39,614/- on account of alleged unaccounted sales and Rs. 2,724/- towards interest.

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings for AY 2011-12 were not validly initiated. The existence of information suggesting possible escapement of income does not dispense with the statutory requirement for the Assessing Officer to form a requisite belief. While information from another authority can be a basis, the Assessing Officer must independently consider it and record satisfaction. In this case, the Revenue failed to demonstrate any independent examination or preliminary verification by the Assessing Officer to establish a nexus between the received information and the alleged escapement of income. The Tribunal relied on the principle in CIT v. Paramjit Kaur (supra) that reassessment proceedings are unsustainable if the Assessing Officer acts merely on suspicion without forming the requisite belief based on relevant material and his own satisfaction. Consequently, the reassessment order was set aside, and the additions made were deleted. The grounds challenging the validity of reassessment were allowed, and the appeal was allowed. For AY 2012-13, the issues were identical, and the same reasoning applied, leading to the reassessment proceedings being held unsustainable, the order set aside, and additions deleted. Thus, both appeals were allowed.

What were the issues?

1. Whether the reassessment proceedings for Assessment Year 2011-12 were validly initiated under Section 147 of the Income-tax Act, 1961, in the absence of independent inquiry or application of mind by the Assessing Officer. Assessee's contentions: The reassessment was initiated solely on the basis of information received from the DCIT (CC)-1, Rajkot, which merely constituted a reason to suspect, not a reason to believe that income had escaped assessment. The Assessing Officer failed to conduct independent inquiry or verification before forming the requisite belief. Reliance was placed on CIT v. Paramjit Kaur [2008] 168 Taxman 39 (Punjab & Haryana) and other precedents stating that a roving inquiry is impermissible without first forming a belief based on relevant material. Revenue's contentions: The reassessment proceedings were initiated on the basis of information received from the DCIT, Central Circle-1, Rajkot, which justified the initiation, and the Ld. CIT(A)'s order requires no interference.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148,Section 142(1),Section 244A,Section 80C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri Mehul Ranpura, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 13/10/2026Pronounced: 15/10/2026

Per, Shri Sonjoy Sarma, JM: Captioned appeals filed by the assessee in ITA Nos. 257 and 366/Rjt/2024 relate to Assessment Years 2011-12 and 2012-13, respectively. ITA No. 257/Rjt/2024 is directed against the order dated 26.02.2024 passed by the Ld. Commissioner of Income Tax (Appeals) [ hereinafter referred to as ‘Ld.CIT(A)’], arising out of the assessment order dated 16.12.2018 passed under section 143(3) read with section 14

The order continues below.

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