In a recent decision, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled that a reassessment could not be justified by fake information.

The Delhi Income Tax Appellate Tribunal made the aforementioned observation in response to an appeal filed by the assessee against a decision made by the Commissioner of Income Tax (Appeals), Noida (CIT(A), which resulted from an assessment order issued by the Assessing Officer (AO) under section 147 and also section 148 of the Income Tax Act, 1961, concerning the AY 2009–10.

Lack of jurisdiction under Section 147 of the Income Tax Act was the issue that was involved in the appeal. The assessee was a civil or criminal lawyer and that is the fact in brief. And the petitioner, on March 31, 2009, filed his return of income for the assessment year 2009–10, declaring a total income of Rs. 2,39,651, for which an intimation was sent out under Section 143(1).

During the year, the assessee sold agricultural land with a built-up area for an actual consideration of Rs. 24,69,000/- which was one-fourth of the total consideration of Rs. 98,76,000/- in which ¾ belonged to Shri Mashroof Ali.

Asserting income escapement and stating that the assessee had sold residential and agricultural land in Village Dasana for Rs. 98,76,000/- as opposed to the circle rate of Rs. 1,56,99,500/-, the Assessing Officer reopened the assessment and issued a notice under Section 148. It was claimed that the aforementioned transaction resulted in a capital gain, but no ITR was submitted resulting in the escapement.

An ex-parte order issued under Section 144 r.w. Section 147 of the Income Tax Act assessed the income at Rs. 72,11,880. The aggrieved assessee then chose to appeal to CIT (A).

However, the CIT (A) awarded partial relief on the merits while upholding the assumption of jurisdiction made under Section 147. And it is even more resentful for the assessee that he chose to file the current appeal before the Tribunal.

The ITAT noted after hearing the arguments of the assessee’s counsel, Shri Akhilesh Kumar and the Sr. DR, Shri Anuj Garg, on behalf of the revenue that the reopening assessments themselves are not permissible on the basis of inherently wrong facts, we do not consider it necessary to delve into the merits of the addition.

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The coram consisting of the Judicial Member, Chandra Mohan Garg and the Accountant Member, Pradip Kumar Khedia held that we, therefore, overruled the step of the CIT(A) and repealed the reassessment proceedings giving rise to the current appeal. In the end, the coram decided to approve the appeal of the assessee.