ITAT Bangalore Sets Aside Rs. 2.17 Crore Cash Deposit Reassessment for Jurisdictional Lapse

The present appeal has been filed by Smt. Shweta Gadgay in ITAT Bangalore, challenging an order dated October 22, 2024, passed by the CIT(A)/NFAC. The case is related to the assessment year 2015-16.

The assessee had filed her income tax return (ITR) for the year in consideration, declaring the total income at Rs. 4.17 lakh. During scrutiny, the Assessing Officer (AO) assessed the total income of the assessee at Rs. 2.69 crore on the grounds that the assessee had made cash deposits of Rs. 2.17 crore into her savings bank account maintained with the DCC Bank, Bidar, during the relevant AY and could not explain the source of the deposit through valid evidence.

The aggrieved assessee filed an appeal before the CIT(A). The assessee claimed that the said cash deposits were earned from the dairy business that was carried out by her husband, and she could not respond to the notice issued by the AO because the portal was not allowing her to file anything beyond 17:00 hours on March 28, 2022. The CIT(A) did not consider the claim of the assessee made on the addition of Rs. 215,449 under Section 69A of the Act. While accepting part of her explanation and deleting an addition of Rs. 50 lakh, most of the additions were confirmed.

Thereafter, the assessee filed an appeal before the ITAT Bangalore. Before the tribunal, the assessee argued that the notice issued for reopening the assessment under section 148 was invalid because the required approval under section 151 was taken from the Joint Commissioner, who was not the competent authority. Since more than four years had passed from the end of the assessment year, approval should have been taken from a higher authority like the Principal Commissioner or Commissioner. The tribunal agreed with the assessee on this point and held the approval taken as invalid. Therefore, the Assessing Officer had no legal authority to issue the reopening notice.

It was also noted that the approval order issued under Section 151 was not even signed by the approving authority. The tribunal cited an earlier judgement of the Allahabad High Court. The tribunal held that an unsigned approval is not valid as per the law, and such a defect makes the entire reassessment proceedings invalid.

In conclusion to the above findings, the tribunal held the Section 148 notice as invalid and the entire reassessment proceedings as illegal, without jurisdiction. As a result, the assessee’s appeal was allowed in full.