KAMUNI MALLESH,HYDERABAD vs. DCIT, CIRCLE-3(1), HYDERABAD

ITA 851/HYD/2026Status: DisposedITAT Hyderabad16 October 2026AY 2017-1814 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were invalid. The principal issue was whether the approval under Section 151 was granted with due application of mind. The Tribunal noted that the AO reopened the assessment for AY 2017-18 based on the entire purchase consideration of Rs. 92,27,250, assuming it represented income escaping assessment for that year. However, the assessee's contention, supported by details in the assessment order itself, was that payments were spread over AYs 2017-18, 2018-19, and 2019-20. The Tribunal found that the AO proceeded on the premise that the entire consideration was for AY 2017-18 without considering the year-wise payments. The Tribunal emphasized that while the AO need not conclusively establish escapement at the reopening stage, there must be a rational connection between the material and the belief of escapement. The approval under Section 151 is a statutory safeguard requiring due application of mind. A mechanical approval without considering material facts, such as the spread of payments over different years, defeats the purpose of this safeguard. The Tribunal found that the prescribed authority failed to consider this material discrepancy, rendering the approval mechanical and invalid. Consequently, the reassessment proceedings and the assessment order were quashed. The issue regarding Section 292BC was also decided in favor of the assessee, as the approval predated its effective date. Other grounds became academic.

What were the facts?

The assessee, Shri Kamuni Mallesh, filed his return for AY 2017-18 declaring Rs. 14,15,100. The Assessing Officer (AO) reopened the assessment under Section 147, issuing a notice under Section 148. The assessee purchased a commercial property for Rs. 92,27,250 from M/s. Skill Promoters Private Limited, with Rs. 58,09,750 paid in cash. The AO treated the entire purchase consideration as unexplained investment under Section 69 and added it to the income, completing the assessment under Section 147 read with Section 144B at Rs. 1,06,42,350. The assessee appealed to the CIT(A), who partly allowed the appeal. The assessee then appealed to the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961, are valid, considering the approval granted by the prescribed authority under Section 151 was mechanical and without proper application of mind? (Question of law) Assessee's contentions: - The approval under Section 151 was granted mechanically without applying mind to the material on record. - Section 292BC, introduced by the Finance Act, 2026, with retrospective effect from 01.04.2021, cannot validate the approval obtained prior to 01.04.2021. - The entire purchase consideration was not paid during AY 2017-18; payments were spread across AYs 2018-19 and 2019-20, a fact available to the AO and the approving authority. - The approval was invalid, and consequential reassessment proceedings should be quashed. Revenue's contentions: - Relied on the orders of the lower authorities and supported the validity of the reassessment proceedings.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151,Section 69,Section 144B,Section 292BC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia

Hearing: 23/09/2026

Per Madhusudhan Sawdia, A.M.: This appeal is filed by Shri Kamuni Mallesh (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi (“Ld. CIT(A)”) dated 14.01.2026 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal:

3.

The brief facts of the case are that the assessee is an individual who filed his return of

The order continues below.

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