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Facts
The assessee's original assessment for AY 2011-12 was completed under Section 143(3) on 28.03.2014. Subsequently, based on allegedly incriminating information from the Investigation Wing regarding bogus speculative transactions through M/s Kartika Investments, a notice under Section 148 was issued on 28.03.2018. The reassessment resulted in additions under Section 68 for unexplained cash credit (speculative profit) and estimated commission paid to an alleged entry operator.
Held
The Tribunal held that the reassessment proceedings were legally faulty. It found that the proceedings were barred by limitation as per the first proviso to Section 147, constituted a change of opinion since the original AO had enquired into the transactions, and the reassessing AO had travelled beyond the reasons recorded. The Tribunal therefore allowed the appeal on jurisdictional grounds without adjudicating on merits.
Key Issues
Validity of reassessment proceedings under Section 147/148, specifically concerning limitation, change of opinion, and the scope of reasons recorded for reopening the assessment.
Sections Cited
147, 148, 143(3), 250, 68
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Income Tax Appellate Tribunal, DELHI BENCH “B”NEW DELHI
Before: SHRIMAHAVIR SINGH, HON’BLE & SHRISANJAY AWASTHI
(order dated 28.03.2014, placed at pages 139-141 of the paper book), the assessee has duly submitted the details of assessee’s shares account and most importantly, a copy of account of Kartika Investment. It was pointed out that the then AO did not take an adverse view in the matter, leading to the conclusion that the present AO was working on the basis of mere change of opinion on the same set of facts. Secondly, the reasons for reopening (supra) indicated a specific set of transactions, which were nowhere in evidence in the reassessment order, which contained an entirely different set of workings. Furthermore, it was also pointed out that actually the only amount specifically transacted with M/s Kartika Investments was Rs.1,00,000/- credited in that account through a cheque from the assessee. It was the submission that the remaining transactions were settled on the basis of profit and loss accruing through speculative trading done by the assessee, which was duly disclosed in the return of income (placed at pages 100-102 of the paper book). It was the submission that if the figures given in the reasons recorded (supra) were to be summarized then a loss of Rs.7,72,625/- would result. Such a small loss would need to be seen in the backdrop of substantial business income of Rs.3,69,07,161/-.
The Ld. AR summarized his arguments and stated that: i. The assessee had fully and truly disclosed the facts during the first round and hence the reassessment proceedings were hit by the first proviso to section 147 of the Act, as the notice u/s 148 of the Act was issued well beyond the four years period mandated therein; ii. The impugned proceedings represented a change of opinion, which was specifically disapproved in the case of Kelvinator of India Ltd., reported in 320 ITR 561 (SC); and iii. The Ld. AO had travelled far beyond the scope of reasons recorded prior to issue of notice u/s 148 of the Act and in so doing he had violated the principles laid down in the case of Jet Airways reported in 331 ITR 236 (Bom.), Oriental Bank of commerce reported in 272 CTR 56 (Del), and the case of Ranbaxy Laboratories reported in 336 ITR 136 (Del).
2.1 Per contra, the Ld. DR relied on the orders of the authorities below.
We have carefully considered the rival submissions and have gone through the records before us. Right at the outset, it deserves to be mentioned that in this case the Ld. AO’s action are legally faulty on all the grounds alleged by the Ld. AR. Thus, we find that this case is one where the first proviso to section 147 of the Act would come into play, thereby time-barring the impugned proceedings. Secondly, the original AO is seen to have enquired about the impugned transactions, which have again surfaced as an allegation in the reassessment proceedings.
Thus, generally, change of opinion can be inferred. Lastly, the Ld. AO has travelled beyond the allegations in the reasons recorded (supra) to arrive at entirely different conclusions. The cases of Jet Airways (supra), Ranbaxy Laboratories (supra), etc. would come to the assessee’s rescue.
Thus, the assessee deserves to succeed with respect to grounds of appeal numbers 1 to 7.
3.1 Since the assessee has succeeded with respect to the jurisdictional grounds, we do not adjudicate on merit as such an exercise would be of academic nature at best.
In the result, this appeal is allowed.
Order pronounced in the open court on 17.12.2025