2025 (3) TMI 1464 - AT - Income Tax

Reopening of assessment u/s 147 - case has been reopened beyond 4 years - non-filing of a return by the assessee - HELD THAT - In view of the assumption by Ld. AO that the assessee has not filed Income Tax Return this fact has led to absence of necessary nexus between the tangible material and formation of belief which would vitiate the reassessment proceedings as held in the case of Sagar Enterprises 2001 (12) TMI 18 - GUJARAT HIGH COURT holding that the factor of non-filing of return of income has overbearingly weighed with the AO for arriving at satisfaction about the failure on the part of the assessee about escapement of income. Therefore the assessment stood vitiated. Similar is the analogy in the decision of Ritika Gupta 2022 (8) TMI 796 - ITAT LUCKNOW which referred to the decision of Sunil Kumar Rastogi 2019 (12) TMI 1612 - ALLAHABAD HIGH COURT We would hold that the jurisdiction of AO to reopen the case stood vitiated since the same has proceeded on wrong presumption that the assessee had not filed her return of income. Consequently the assessment order stands quashed. Assessee appeal allowed.

Summary

The judgment from the ITAT Agra, presided over by Hon'ble Shri Satbeer Singh Godara and Hon'ble Shri Manoj Kumar Aggarwal, addresses twin appeals for the Assessment Year 2012-13. The appeals challenge the orders of the CIT(A), NFAC, Delhi, concerning an assessment made by the AO under sections 144 and 147 of the Income Tax Act, and a penalty imposed under section 271(1)(c).The case was reopened based on information that the assessee sold urban agricultural land for Rs. 54.90 Lacs, leading to an assessment of short-term capital gains of Rs. 18.61 Lacs and a penalty of Rs. 4.21 Lacs. The reopening was initiated due to the alleged non-filing of a return by the assessee, which was later found to be incorrect as the return was e-filed on 17-12-2012.The tribunal found that the AO's assumption of non-filing led to a lack of necessary nexus between tangible material and the belief of income escapement, rendering the reassessment proceedings invalid. This conclusion was supported by precedents from the Gujarat High Court in Sagar Enterprises and the Lucknow Tribunal in Ritika Gupta, which emphasized the importance of correct assumptions in reopening cases. Consequently, the tribunal quashed the assessment order, and the penalty was deemed unsustainable.Both appeals were allowed, and the order was pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963.