ITAT Quashes Assessment Over Contradictory Search Details and Non-Application of Mind, Invalidates Reassessment Proceedings [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed reassessment orders for Assessment Years (A.Y) 2016-17 and 2019-20 after noting contradictory search details from the notices and assessment orders - as they referred to different and unrelated search actions without any possible connection. Such contradictory facts reflected complete non-application of mind by the Assessing Officer. Thus, the Tribunal quashed the reassessments and allowed the appeals.

The Assessee, Optus Developers Pvt. Ltd, filed both the appeals for AYs 2016-17 and 2019-20 against the common order dated 10.06.2025 of the CIT(A)-30, New Delhi, arising from the assessment order dated 31.03.2024 passed under Sections 147/144 of the Income Tax Act, 1961 by the ACIT, CC-32, New Delhi.

The Assessee observed that for AY 2016-17, Section 148 notice dated 31.03.2023 stated that a search under Section 132 was conducted on the assessee on 17.09.2021, treating it as both searched and non-searched person. Further, the assessment order referred to a different search on Deepak Aggarwal and Mukesh Kumar dated 17.12.2021, with no connection between the two searches.

For the AY 2019-20, the assessee filed nil return on 01.10.2019. The show cause notice under Section 148A(b) dated 10.03.2023 sought verification of a loan of Rs. 1,00,00,000/- from CEA Consultants Pvt. Ltd. The order under Section 148A(d) alleged accommodation entries based on search on Abhishek Kumar Munka dated 17.09.2021 and information from Kolkata investigation wing and the final assessment order dated 31.03.2024 changed the basis to a search on Deepak Aggarwal and Mukesh Kumar dated 17.12.2021.

The Section 148A of the Income Tax Act, 1961 explained that: Conducting inquiry, providing opportunity before issue of notice under section 148.

“The Assessing Officer shall, before issuing any notice under section 148,—(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;(b) provide an opportunity of being heard to the assessee, [***] by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a)”

The Appellant was represented by Kapil Goel whereas the Respondent was represented by the Departmental Representative of CIT, Jitender Singh during the hearing on 02.12.2025.

The Tribunal consisting of Judicial Member, Anubhav Sharma and Accountant Member, Manish Agarwal, heard and reviewed the matter.

The Tribunal, after considering the submissions made, for the AY 2016-17 stated that the assessee was searched on 17.09.2021, incorrectly treating it as both searched and non-searched person. The assessment order referred to a completely different search on Deepak Aggarwal and Mukesh Kumar dated 17.12.2021, with no explanation connecting the two searches.

As for the AY 2019-20, the Tribunal stated variance between the show cause notice and the adjudication order. The Section 148A(d) order cited search on Abhishek Kumar Munka dated 17.09.2021 and Kolkata investigation wing information and the final assessment order changed the entire subject matter by referring to the search on Deepak Aggarwal and Mukesh Kumar dated 17.12.2021.

Accordingly, the Tribunal held these inconsistencies and contradictory search references showed complete non-application of mind, rendering the reassessment proceedings invalid.

Thus, both the appeals of the assessee were allowed and the impugned orders were quashed. The Order was pronounced in the open court on 17.12.2025.

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