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Judgment
ORDER
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the learned Commissioner of Income Tax (Appeals)-26, Delhi (hereinafter referred as ‘CIT(A)’) order dated 13.03.2026 arising from the assessment order u/s 147 r.w.s 143(3) of the Income Tax Act, 1961 (hereinafter, mentioned as ‘the Act’) dated 29.12.2019 passed by the Income Tax Officer, Ward-29(3), New Delhi (hereinafter referred as the ‘AO’) for the Assessment Year (A.Y.) 2012-13.
Grounds of appeal filed by the assessee are as under:
1. Invalid assumption of jurisdiction under Section 148
The learned Assessing Officer has erred both in law and on facts in assuming jurisdiction under Section 148 of the Income-tax Act, 1961. The notice issued under Section 148 is invalid as the "reason to believe" recorded by the Assessing Officer is based on incorrect and non-existent facts and does not disclose any tangible material indicating escapement of income. The initiation of reassessment proceedings is therefore without jurisdiction and the assessment order passed pursuant thereto deserves to be quashed.
2. Erroneous addition under Section 69A
The learned Assessing Officer has erred both in law and on facts in making an addition under Section 69A of the Income-tax Act, 1961 by treating the amounts reflected in Form 26AS of the appellant as unexplained income. The addition so made is arbitrary and contrary to the facts of the case.
3. Business receipts wrongly treated as unexplained money
The learned Assessing Officer failed to appreciate that the entries appearing in Form 26AS represent business receipts of the appellant arising in the ordinary course of his business activities and therefore cannot be treated as unexplained money within the meaning of Section 69A of the Act.
4. Inclusion of receipts pertaining to different assessment years
The learned Assessing Officer further erred in including amounts pertaining to different financial years while making the impugned addition in the present assessment year. The receipts reflected in Form 26AS relate to multiple financial years and therefore could not have been brought to tax entirely in the year under consideration.
5. Addition contrary to facts and law
The addition made by the learned Assessing Officer is arbitrary, contrary to the facts on record, and without proper appreciation of the material available and is therefore liable to be deleted.
6. Liberty to amend grounds
The appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal at or before the time of hearing.”
Brief facts of the case are that the assessee, Madan Mohan Tiwari, proprietor of M/s M. M. Engineering Services filed his ITR u/s 139 of the Act on 31.03.2012 declaring total income of Rs.2,91,900/-on presumptive basis. Assessee declared income of Rs.2,80,000/- on gross receipts of Rs.35,00,000/-, with TDS credit of Rs.71,200/-.
On the basis of information that Form 26AS of the assessee for AY 2012-13 had a total receipt of Rs 3,36,23,806/- and TDS of Rs 33,62,400/- whereas the assessee had claimed TDS credit of Rs.71,200/- only. The AO therefore formed a reason to believe that TDS amount of Rs 32,91,200/- has escaped assessment for AY 2012-13. The AO initiated reassessment proceedings under section 147 of the Act with prior approval of competent authority by way of issuing notice u/s 148 of the Act dated 27.03.2019. Subsequently, the assessment order was completed under section 147 r.w.s 143(3) of the Act whereby the total income of the assessee was determined at Rs.1,69,80,000/- after making addition of Rs. 1,68,00,000/- on account of unexplained receipt. Upon appeal, the CIT(A) concurred with the AO. Aggrieved, assessee is now in appeal before us.
The first and foremost grievance of the assessee is that the reopening under section 147 of the Act for A.Y. 2012-13 is bad in law and void ab initio on the grounds of incorrect and non-existent facts. The learned AR submitted that the receipt of Rs.3,36,23,806/- in Form 26AS, being recorded in the ‘reason to believe’ is factually incorrect. It is submitted that Form 26 AS reflects only receipt of Rs 1,68,11,903/-, exactly half of the amount considered by the AO. The ld AR vehemently argued, relying on the decision in the case of ITO vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) that since foundational fact recorded by the AO does not exist in the source document then the reasons to believe is legally non-existent and there is no live link.
Per contra, learned DR relied on the decision of the AO and CIT(A).
We have heard the rival submissions and perused the material available on record. It is an admitted fact that Form 26AS for A.Y. 2012-13 shows the assessee had receipt of only Rs.1,68,14,153/-credited in the assessee’s account by M/s. V. A TECH WABAG Ltd. on which a TDS of Rs.16,80,000/- was deducted. We find the assessee’s assertion that the reopening has been made on the basis of incorrect and non-existence fact, has substantial force. We are of the considered view therefore, that the reopening of assessment under section 148 is not sustainable in the eyes of law being based on incorrect and non-existent fact rendering the assumption of jurisdiction entirely bad in law. We therefore hold that proceedings under section 147/148 is vitiated and the notice u/s 148 as well as the consequential reassessment order is void ab initio. The ground 1 is allowed.
Since the appeal is allowed on legal ground, no adjudication is made on other legal grounds or on merits.
In the result, the appeal in ITA 2745/Del/2026 is allowed.