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Facts
The assessee, a non-filer of income tax returns for AY 2012-13, purchased an immovable property for Rs. 45,50,000. The AO received information indicating a transaction for transfer of a capital asset and detected TDS. Based on this, the AO reopened the assessment under section 147.
Held
The Tribunal held that the AO rightly assumed jurisdiction for reopening the assessment under section 147 as the assessee had not filed a return and there was a failure to disclose material facts. However, regarding the addition of Rs. 45,50,000 for unexplained investment, the Tribunal found that the assessee was not granted adequate opportunity to substantiate the source of investment.
Key Issues
Whether the reopening of assessment under section 147 was validly done and whether the addition for unexplained investment was justified without providing adequate opportunity to the assessee.
Sections Cited
250, 143(3), 147, 151, 69B, 115BBE, 148, 69A, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “K (SMC
Before: SHRI ANIKESH BANERJEE & SHRI BIJAYANANDA PRUSETH
The instant appeal of the assessee filed against the order of the NFAC [for brevity ‘the Ld. CIT(A)], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for assessment year 2012-13, date of order 24.10.2025. The impugned order emanated from the order of the Ld. Income Tax Officer Ward 33(1)(7), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 147 of the Act date of order 12.12.2019.
Rekhaben Sharadkumar Mehta 2. The assessee has taken the following grounds: “
1. The assessment order passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 ("the Act") by the Ld. Assessing Officer is without jurisdiction, invalid, bad-in-law and against the principles of natural justice.
2. (a) The Id. CIT(A) erred in not appreciating the fact that reopening was done to verify the genuineness of a particular transaction which is grossly invalid as also settled by the Hon'ble Apex Court in the case of PCIT v. Manzel Dinesh Kumar Shah [2019] 101 taxmann.com 259 (SC) and Hon'ble Jurisdictional Bombay High Court in the case of HDFC Bank Ltd và ACIT [2022] 136 taxmann.com 69 (Bom HC). (b) The sanction granted for reopening the assessment u/s. 151 of the Act by Ld. Principal CIT- 33, MUMBAI, is mechanical devoid of any material/ evidence against the assessee and without appreciating that there was no live nexus of the information with the allegation of escapement of income.
3. (a) The Id. CIT(A) erred in facts and law in confirming addition of Rs. 45,50,000/-paid towards purchase of property as unexplained investment and applying section 69B r.w.s. 115BBE of the Act without appreciating the evidences in the form of purchase agreement and bank statements were already placed on record and that adequate opportunity of being heard was not granted.
4. All the grounds raised are without prejudice to one another.
5. Your appellant craves leave to add, amend, alter or drop all or any of the above grounds of appeal.”
3. The brief facts of the case are that the assessee is a non-filer of income tax return. During the impugned assessment year the Ld. AO had received information with the assessee had made a transaction for transfer of capital asset and the stamp duty value is assessed more than declare sale value amount of Rs.45,50,000/-. The assessee purchased immovable property value amount of Rs.45,50,000/- the TDS was also deducted. The Ld. AO got the information that assessee made the total transaction amount of Rs.91,20,342/-. Accordingly, the Ld. AO noted the reasons for reopening the assessment u/sec. 147 of the Act. The Rekhaben Sharadkumar Mehta reasons for reopening of the assessment recorded reason is duly reproduced as below: “REASONS FOR REOPENING OF ASSESSMENT IN THE CASE OF REKHA SHARAD MEHTA FOR A.Y. 2012-13 U/SEC. 147 OF THE Act The assessee has not filed return of income for A.Y. 2012-13.
2. In this case, the following information is available on individual Transaction Statement (ITS) for F.Y. 2011-12 relevant to A.Y. 2012-13:- Sr No. Information Information code Amount(Rs.) description 1 Purchased AIR-006 45,50,000/- Immovable Property Valued At 3000000/- or Mor- 2 Transfer of Capital CIB-402 45,50,000/- Asset where stamp duty value assessed is more than declared sale value. 3 TDS deducted 92A 20342/- Total 91,20,342/- As such REKHA SHARAD MEHTA, It is seen from the ITS information available in the computer system that the assessee has purchased immovable property of Rs. 45,50,000/-on 02.05.2011 Hence, total investments in immovable property made by the assessee are of Rs. 45,50,000/-. Also, the assessee has transferred of Capital Asset where stamp duty value assessed is more than declared sale value of Rs 45,50,000/- while the value of stamp duty is Rs 15,36,500/- and stamp duty paid of Rs 2,27,500/-. An amount of Rs 20,342/- has been credited to Assessee on accont of TDS U/s 92A of the Act. However the assesse has not filed the return of Income for the A.Y. 2012-13. Hence assesse's profiling could not be ascertained. These transactions are required to be verified.
Rekhaben Sharadkumar Mehta 3. As such, income chargeable to tax to the tune of 91,20,342/- has escaped assessment for A.Y- 2012-13 by reason of the failure on the part of the assessee to disclose fully and truly all materials facts necessary, within the meaning of section 147 of the I.T Act. 1961.
In this case a return of income was not filed for the year under consideration and no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded in paragraph 2 above.
It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (a) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.
In this case more than four years have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice u/s.148 has been obtained separately from Principal Commissioner of Income Tax as per the provisions of Section 151 of the Act.”
The notice was issued u/sec. 148 of the Act. The assessee filed the return and asked for the recorded reason. The assessment was completed with the addition amount to Rs.45,50,000/- from unexplained source u/sec. 69A of the Act. Aggrieved assessee challenged both the legal grounds and as on merit before the Ld. CIT(A). The Ld. CIT(A) rejected the appeal of the assessee. Being aggrieved assessee filed an appeal before us.
The Ld. AR argued and contended that related to Ground no.1 and 2, the Ld. AO had wrongly assumed the jurisdiction for reopening u/sec. 148 of the Act due to incorrectly recorded the reason. The alleged recorded reason is grossly dissimilar in connection with the addition made by the Ld. AO in the assessment order. The Ld. AR respectfully relied on the order of the Hon'ble Gujarat High Court in case of PCIT vs Manzil Dinesh Kumar Shah (2018) 95 taxmann.com 46
Rekhaben Sharadkumar Mehta (Guj) and the order of the Hon'ble Bombay High Court in case of HDFC Bank Ltd. vs ACIT (2022) 136 taxmann.com 69 (Bom). So his prayer for quashing the assessment order passed u/sec. 143(3) r.w.s. 147 of the Act.
The Ld. DR argued and stated that the assessee is a non filer of ITR. The Ld. AO has no information about the assessee’s income and source. The Ld. DR filed a written note bearing No. Jt.CIT/(Sr.AR) ITAT/K-Bench/2025-26 dated 19/02/2026 which is placed on record. Further he respectfully relied on the order of Hon'ble Bombay High Court in case of Raymond Woollen Mills Ltd. v. Income-tax Officer reported in [1994] 77 Taxman 117 (BOM.) held that:- “18. The third contention of Shri Dastur regarding the reasons not being furnished to him or the said reasons being not germane and not relevant, can survive no longer. In the light of what we have stated above, it is clear that the reasons have already been furnished to the assessee and it is clear that the reasons are relevant and germane for the exercise of the powers under section 147(a) . Prima facie, therefore, we are satisfied that the Assessing Officer had reason to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the six years in question, income chargeable to tax had escaped assessment for the said six years. Exercising our powers under article 226 of the Constitution, it is not possible for us to examine the sufficiency of the reasons. As observed by the Supreme Court in the case of S. Narayanappa v. CIT [1967] 63 ITR 219 , if there are in fact some reasonable grounds for the ITO to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment, that would be sufficient to give jurisdiction to the ITO to issue the notice under section 147(a) of the 1961 Act corresponding to section 34(1)(a) of the 1922 Act. Whether these grounds are adequate or not, is not a matter for the High Court to investigate in a petition under article 226 of the Constitution. In other words, the sufficiency of the grounds which induces the ITO to act is not justiciable. It is, of course, open to the assessee to contend that the ITO did not hold the Rekhaben Sharadkumar Mehta belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. From what we have stated above, it is not possible for the assessee, on the facts of the present case, to contend that the ITO did not hold such a belief that there had been non-disclosure. There is, thus, no merit in the third contention of Shri Dastur.” He further contended that sometimes the information has coming from different source and the Ld. AO had no opportunity to verify the return of the income as the assessee was non-filer of ROI. He relied on the order of the Ld. CIT(A) relevant para no.6 of the impugned appellate order is reproduced as below:-
“6. Adjudication:-
“6.1 I have considered the facts of the case and examined the documents uploaded by the appellant at the time of filing of appeal.
6.2 The first five grounds of appeal relate to the reasons recorded for reopening the assessment and assessment. No doubt the AO reopened the case on the basis of information as available to him at that time. However during assessment the appellant made various submissions and stated the correct position. The same was accepted and accounted for by the AO and the addition has been made on only one account as discussed in respect of ground number 6 below. The appellant had not filed the return of income and the AO had information about financial transactions of the appellant. Accordingly he was fully justified in reopening the assessment on the basis of these facts. It has not been done merely on the basis of suspicion or heresy. It is based on the information available with him part of which has turned out to be correct and some other part was accounted for by the appellant in the return of income filed in response to notice u/s 148. No adverse view has been taken by the AO in the assessment. Similarly there is a ground on jurisdiction also. However nothing specific has been stated as to which AO had the correct jurisdiction over the case. Moreover the jurisdiction can be challenged within 30 days of the receipt of notice. Nothing such had been done by the appellant.
Rekhaben Sharadkumar Mehta Accordingly no fault can be found with the reopening or the assessment and the assessment made. All these grounds of appeal are dismissed. 6.3 The sixth ground of appeal is regarding the addition of Rs. 45,50,000/- madeon account of unexplained investment in purchase of property. The fact admitted by the appellant also is that during the relevant year she purchased a property for Rs. 45,50,000/-. However during assessment proceedings she could not provide the details of sources of this investment and its evidence. Accordingly the AO treated the same as unexplained and made addition of the amount under section 69A. In appeal this addition has been contested. A number of things have been stated. However the basic requirement of submission of sources of investment and its evidence has not been furnished. It has been stated that the addition cannot be made on account of unexplained cash credit. However the basic issue of sources of investment has not been addressed. These technical things are only subsidiary and peripheral in nature and at the most these can be stated to be technical defects in the assessment order which can be cured at this stage also. However in the absence of any evidence and details of sources, the investment remains unexplained and is liable to be deemed to be her income u/s 69B. As such the addition cannot be deleted and the appellant doesn't deserve any relief. As such this ground of appeal is dismissed. 6.4 The seventh Ground of appeal is general in nature and needs no discussion.
7. In result, appeal is dismissed for statistical purposes”.
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee purchased an immovable property for a consideration of Rs.45,50,000/-. The Ld. AO received information regarding the transfer of a capital asset wherein the stamp duty valuation exceeded the declared consideration of Rs.45,50,000/-, and tax was deducted at source amounting to Rs.20,342/-. On the basis of such information, the Ld. AO reopened the assessment under section 147 of the Act by issuing notice under section 148. It is an admitted position that the assessee had not filed the return of Rekhaben Sharadkumar Mehta income under section 139(1) of the Act. However, pursuant to the notice issued under section 148, the assessee filed the return of income. In the absence of any original return, the Ld. AO was constrained to rely upon the information available from departmental sources. The fundamental fact regarding the purchase of property for Rs.45,50,000/- has not been disputed by the assessee. The Ld. AR placed reliance on the judgments of the Hon’ble Gujarat High Court in the case of Manzil Dinesh Kumar Shah (supra) and the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. (supra). However, in both the cited cases, the assessees had filed returns of income. Further, in HDFC Bank Ltd., the assessment had already been completed under section 143(3) prior to the issuance of notice under section 148. Therefore, the facts of those decisions are distinguishable and the reliance placed thereon is misplaced. On the other hand, respectfully following the decision of the Hon’ble Bombay High Court in Raymond Woollen Mills Ltd. (supra), we find that where income has escaped assessment due to the failure of the assessee to make a true and full disclosure of material facts, the Assessing Officer is justified in assuming jurisdiction under section 147. In the present case, considering that no return was originally filed, the Ld. AO has rightly assumed jurisdiction for issuance of notice under section 148 of the Act. Accordingly, Grounds No. 1 and 2 raised by the assessee are dismissed.
In respect of Ground No. 3 relating to the addition of Rs.45,50,000/- under section 69A, the Ld. CIT(A) observed that the assessee failed to furnish evidence in support of his claim. Upon perusal of the record, we find that at neither the assessment stage nor the appellate stage was adequate opportunity effectively
Rekhaben Sharadkumar Mehta granted to the assessee to substantiate the source of investment in the said property. In the interest of justice, we deem it appropriate to restore Ground No. 3 to the file of the Ld. AO for fresh adjudication. The Ld. AO is directed to re- examine the issue and pass a speaking order after affording the assessee a reasonable opportunity of being heard and after considering such evidence as may be furnished in accordance with law. Ground No. 3 is allowed for statistical purposes in the above terms.
In the result, Grounds No. 1 and 2 are dismissed. Ground No. 3 is allowed for statistical purposes. Grounds No. 4 and 5 being general in nature and not requiring separate adjudication are dismissed as academic.
In the result, the appeal of the assessee bearing ITA No.8318/Mum/2025 is partly allowed. Order pronounced in the open court on 05th day of March 2026. Sd/- Sd/- (BIJAYANANDA PRUSETH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 05/03/2026 SAUMYASr.PS