SONIA KAPOOR,DELHI vs. ITO WARD-69(1), NEW DELHI

The appeal in AY 2017-18 arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. ITBA/NFAC/S/250/2025- 26/1076359037(1) dated 21.05.2025 against the order of assessment passed u/s 147 r.w.s. 144B of the Income-tax Act, 1961 dated 09.03.20222 (hereinafter referred to as ‘the Act’) by ITO, Ward-69(1), New Delhi (hereinafter referred to as ‘ld. AO’).

The assessee has challenged vide Ground Nos. 1 a. to f. the validity of assumption of jurisdiction u/s 147 of the Act by the ld AO. The reasons recorded for the assessment are enclosed in pages 24 to 26 of the paper book, which reads as under: –

On perusal of the said reasons, it could be seen that the ld AO had formed a belief that income of ₹9,60,000/- had escaped assessment being alleged cash payment made for purchasing the property by the assessee. I find that ultimately re-assessment was framed u/s 147 r.w.s. 144B of the Act on 09.03.2022, wherein no addition on account of ₹9,60,000/- was made on account of purchase of property. Other than ₹9,60,000/-, some other additions were made in the sums of ₹65,100/- and Rs. 75,000/- by the ld AO. I hold that when the reasons for which the assessment of the assessee had been sought to be reopened does not find place ultimately in the reassessment order, then the very basis of formation of belief by the ld AO vanishes and consequentially the belief of the ld AO that income of the assessee had escaped assessment vanishes in thin air. Even if portion of addition of ₹9,60,000/- being alleged cash payment made for purchase of property is added finally in the reassessment order, then the ld AO is entitled to proceed to make further addition on some other issues. But if no addition is made for the issue which is mentioned in the reasons recorded, either wholly or in part, then the entire formation of belief fails and consequentially the entire reassessment proceedings would have to be declared as void ab initio. This view of mine is further fortified by the decision of the Hon’ble Jurisdictional High Court in the case of Ranbaxy Laboratories Vs. CIT reported in 336 ITR 136 (Del). Similar view was expressed by the Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways Pvt. Ltd reported in 331 ITR 236 (Bom) and by Hon’ble Madras High Court in the case of Martech Peripherals P. Ltd. v. Deputy Commissioner of Income-tax reported in 394 ITR 733 (Mad). Respectfully following the same, I have no hesitation in quashing the reassessment proceedings framed for the assessment year 2017-18. Since the reassessment is quashed on this limited ground, the adjudication of other legal grounds and other grounds on merits becomes academic and they are left open. Accordingly, the grounds raised by the assessee on the validity of reopening is allowed.

In the result, appeal of the assessee is allowed.