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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
The instant appeal filed by the Revenue is directed against the order dated 31.01.2026 passed by the ld. Commissioner of Income-tax (Appeals)-New Delhi [hereinafter referred to as the Ld. CIT(A)] arising out of the Assessment order dated 10.02.2025, passed by the Assessing Officer, DCIT, Central Circle-19, (hereinafter referred as "the AO") u/s 147/143(3) of Income Tax Act, 1961 (hereinafter referred to as "the Act") for the AY 2020-21.
Revenue has raised the following grounds of appeal as under:
1 . “Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law and on facts in annulling the reassessment proceedings initiated under section 147 read with section 148 of the Income-tax Act, 1961, merely on the ground that no addition was ultimately made on the issue for which the proceedings were initiated, without appreciating the addition was made on the basis of the material containing information that income as escaped assessment?
2.Whether on the facts and the circumstances of the case. Ld. CIT(A) bas erred in holding that reassessment becomes invalid if the addition on the "recorded reason" does not survive. The Ld. CIT(A) failed to appreciate that there is no statutory requirement under the Income-tax Act, 1961 mandating that an addition must necessarily be made on the issue for which proceedings were initiated, once jurisdiction is validly assumed ?
3.Whether on the facts and in the circumstances of the case. Ld. CIT(A) has cited in granting relief to the assessee by holding that the donor falls within the definition of "specified relative" under section 56(2)(v) of the Act, without appreciating that exemption under section 56 does not dispense with the assessee's obligation to satisfactorily explain the nature and source of the sum credited, particularly when proceedings were initiated under section 69(1) of the Act.?
4.Whether on the facts and in the circumstances of the case. Ld. CIT(A) has erred in ignoring the material findings of the Assessing Officer that the assessee failed to establish the creditworthiness of the donor and the genuineness of the transaction, particularly when the alleged contributors to the donor were persons of meagre returned incomes and no cogent documentary evidence such as sale deeds. financial statements, capital gain computations, or complete bank trail was furnished to substantiate the "source of the source".?
5.Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law and on facts in ignoring the surrounding circumstances and material brought on record by the A.O. which clearly indicated that the impugned transaction was merely a rotation of funds structured to camouflage unexplained income and evade tax liability, and in further failing to appreciate that where the financial capacity of the donor and the intermediary contributors is prima facie doubtful, the assessee is under a legal obligation to establish the "source of the source." which remained wholly unsubstantiated in the present case.?
6.Whether on the facts and in the circumstances of the case. Ld. CTT(A) has erred in holding the reassessment order passed under section 147 as void-ab-initio on the ground that notice under section 143(2) was issued beyond the period mentioned in the proviso thereto, without appreciating that reassessment proceedings under sections 147/148 are distinct and independent, and the impugned order having been passed within the time limit prescribed under section 153(2), could not have been annulled on this ground.?
7.(a) The order of the Ld. CIT(A) is erroneous and not tenable in law and on facts.
(b)The assessee craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
Brief facts of the case are that the assessee is an individual and has filed her return of income for AY 2020-21 on 18.12.2020 declaring total income of Rs.1,94,55,060/-. A specific information was received through Insight portal for AY 2020-21, by the AO, that during FY 2019-20, the assessee had purchased time deposits in IDBI Bank and Kotak Mahindra Bank, suggesting escapement of income. On the basis of this information, the AO initiated proceedings u/s 147 and accordingly notice u/s 148 of the Act dated 19.03.2024 was issued to the assessee. In response to the notice u/s 148, the assessee has filed her return on 28.03.2024 declaring total income of Rs.1,94,55,060/-, the same income as declared in return of income u/s 139 of IT Act. The AO issued a notice dated 16.07.2024 u/s 143(2) of the Act which ultimately resulted in passing of reassessment order u/s 147 r.w.s 143(3) of the Act by making addition of Rs.90,00,000/- treating the credits received in bank account by way of gift from relatives as unexplained money within meaning of section 69A r.w.s 115BBE of the Act. Upon appeal, the CIT(A)) quashed the reassessment proceedings.
Aggrieved, assessee now in appeal before us.
At the outset, learned Counsel of the assessee submitted that case was reopened under section 147/148 for one reason and the AO has made addition on a different reason which is not permissible. It is submitted by the learned Counsel that the reasons recorded were reopening the assessment with regard to investment made in FDR of Rs. 15,79,11,855/-, however, during the reassessment proceedings, the above FDR were found to be fully explained and therefore, there was no addition was made on that account. The addition however, was made on account of unexplained credit in the bank account of the assessee for Rs.90 lakh which the assessee had claimed it to be gift from his brother, Kuldeep Singh. The assessee relied on the decision of the jurisdictional Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs. CIT (2011) 336 ITR 136 (Del), ATS Infrastructure Ltd vs. ACIT 473 ITR 595 (Del) and CIT vs. Jet Airways (I) Ltd. reported at (2011) 331 ITR 236 (Bom.).
On the other hand, learned DR did not contest the submission made by the learned AR and relied on the orders of the AO and the CIT(A).
Heard both the parties and perused the materials available on record. We find that the case was reopened on the grounds of unexplained FDRs, however the same was found to be explained by the assessee during the reassessment proceedings. The AO thereafter made addition on the ground that source of gift have not been explained. In such facts and circumstances of the instant case, we are of the considered view that the reassessment order so framed, is unsustainable in the eyes of law. We are fortified in our view by the decisions of the jurisdictional Delhi High Court in the case of Ranbaxy Laboratories Ltd., ATS Infrastructure Ltd. and that of hon’ble Bombay High Court in Jet Airways (I) Ltd. (supra). Accordingly, the reassessment order is held as void ab initio and accordingly quashed. The appeal of the Revenue is dismissed.
In the result, appeal filed in ITA No.3366/Del/2026 is dismissed.