Land Sale Allegation Based on Insight Portal Collapses: ITAT Quashes Income Tax Reassessment [Read Order]
The AO proceeded to make a 10% ad-hoc disallowance of certain expenditure, without rejecting the books of account under Section 145(3) of the Act
In a recent ruling, the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings initiated against asessee holding that reopening based solely on unverified insight portal information cannot survive once the core allegation itself fails.
The appeal was filed by Shyama Shyam Infradevelopers Pvt Ltd, against the reassessment order passed under section 147 read with section 144B of the Income Tax Act, 1961, for the assessment year 2016-17.
The assessee, Shyama Shyam Infradevelopers Pvt Ltd, argues that it had originally filed its return declaring an income of ₹3.48 lakh. Also, during the reassessment proceedings, the assessee furnished sale deeds, audited financial statement construction agreements and income details of the landowners.
After examining the material on record, the AOaccepted the audited books of accounts and concluded that there was no under -reporting of gross receipts.
The respondent, a ssessing officer (AO), reopened the assessment after the insight portal data indicated that the assessee had allegedly sold immovable property for ₹6.21 crore during the year, whereas gross receipts of only ₹3.86 cr were reflected in the return.
The tribunal observed that once no addition is made on the issue recorded for reopening, the very assumption of jurisdiction under Section 147 fails. Relying on judicial precedents, CIT Vs. Jet Airways India Ltd, Ranbaxy Laboratories Ltd. Vs. CIT, CIT Vs. Mohammed Junaid Dadani, the bench held that additions on other issues cannot survive when the original reopening ground itself does not result in any addition.
The bench, comprising Shri M Balaganesh (Accountant Member) Quashed the reassessment proceedings as void ab initio. It further held that the ad-hoc disallowance of expenses was unsustainable even on merits, as the books of accounts were audited and never rejected.
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