ITAT Quashes Reassessment for AY 2012-13, Cites Defective Reasons for Reopening

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the reassessment proceedings initiated against assessee Manujendra Shah for AY 2012-13.

The dispute began from a reassessment order passed by the AO u/s 147 & 148 of the Income Tax Act, 1961. The reopening assessment has been challenged by the taxpayer, and it has been argued that the reasons recorded by the AO are legally defective and show a lack of proper application of mind.

During the hearing, the assessee relied on the fact that a similar issue had already been adjudicated by the Delhi High Court in the taxpayer’s own case for the immediately preceding year, AY 2011-12. In this case, the High Court had noted that the assessing officer had not made a proper investigation of relevant facts and legal provisions before reopening the assessment. The court observed that the officer had not procured the material regarding the valuation of the land as of 1st April 1981, which was necessary to ascertain the cost of acquisition.

The Tribunal has observed that the reasons recorded for reopening of the assessment for AY 2012-13 are materially the same as those considered by the High Court for AY 2011-12. Since the defects highlighted by the High Court were equally present in the current year, the Tribunal found merit in the taxpayer’s objection.

Consequently, the ITAT held that the assumption of jurisdiction under sections 147 and 148 was invalid. Therefore, the reassessment order passed by the tax department was held to be invalid and was quashed. Thus, the tribunal allowed the appeal of the assessee.