PARESHPARI PRAVINPARI GOSAI,MORBI V. ITO WD-1 MORVI, MORVI

ITA 258/RJT/2025

AI Insights

The case involves Pareshpari Pravinpari Gosai, who appealed against the order of the Commissioner of Income-tax (Appeals) which upheld the reopening of his assessment for the Assessment Year 2017-18. The Assessing Officer had initially reopened the assessment based on an alleged unexplained investment of Rs. 26,04,000 in a partnership firm, which was not commensurate with the income declared. The Tribunal examined the legality of the reopening under sections 149 and 151 of the Income Tax Act, 1961, and found procedural lapses in the reopening process, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714593 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Union of India vs. Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMR GUPTA
• Assessee Lawyers: CHETAN AGARWAL
• Keywords: Set aside; Unexplained investment; Reopening of assessment
• Section: 147; 148; 144; 142(1); 69

Judgement Text

"ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 1 आयकर अपीलȣय अͬधकरण,राजकोट Ûयायपीठ, राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, “SMC” RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.258/RJT/2025 Ǔनधा[रण वष[/Assessment Year : 2017-18 Pareshpari Pravinpari Gosai Nityanand Society, b/h Vora Baug, Morbi-363 642 बनाम/ Vs Income Tax Officer, Ward-1, Morbi, Income Tax Office, Morbi-363 642 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ARYPG 7221 N (अपीलाथȸ/Assessee) (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Chetan Agarwal, AR राजèव कȧ ओर से/Revenue by : Shri Dheeraj Kumr Gupta, Sr-DR सुनवाई कȧ तारȣख /Date of Hearing : 15/05/2025 घोषणा कȧ तारȣख /Date of Pronouncement : 05/08/2025 आदेश/Order Per Dr. Arjun Lal Saini, A.M Captioned appeal filed by the assessee, pertaining to Assessment Year 2017-18, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals), dated 21.02.2025, which in turn arises out of an order passed by Assessing Officer u/s 147 r.w.s 144 of the Act, on 15.05.2023. 2. The grounds of appeal raised by the assessee are as under: 1. The ld. CIT(A) erred in law as well on fact in upholding reopening assessment, which is invalid, as per provisions of the section 149(1) and 151 of the Act. 2. The ld. CIT(A)erred in law as well on fact in setting aside the assessment to ld.AO for fresh assessment, which itself is illegal and void.” Printed from counselvise.com ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 2 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual and filed his original return of income, declaring total income of Rs.2,43,410/- on 17.11.2017. The assessing officer observed that as per information available on record, the assessee had made an investment of Rs.26,04,000/-, by way of partner capital, in a partnership firm /LLP namely, M/s Lizzart Granito LLP but had field the income tax return (ITR) for assessment year (AY) 2017-18, on 17.11.2017, declaring income of Rs.2,43,410/-, which is not commensurate with the above investment. Hence, as per assessing officer the income chargeable to tax had escaped assessment. Thereafter, Assessing Officer issued notice u/s 148 of the Act, on 11.6.2021. Subsequently, as per decision of Hon’ble Supreme Court’ in the case of Union of India vs. Ashish Agarwal, dated 04.05.2022, after giving an opportunity, as per provisions of section 148A(b) of the Act, the order under section 148A(d) was framed by the assessing officer, on 28.06.2022. 4. Therefore, on the basis of information received by the assessing officer, it was found that during the relevant previous year, the assessee has made investment of Rs.26,04,000/- by way of partner capital in a partnership firm/LLP namely, M/s. Lizzart Granito LLP. The assessing officer had observed that the income shown in the return of income does not commensurate with the investment made by the assessee. Accordingly, the notice u/s 148 of Income Tax Act, was issued to the assessee, on 11.06.2021, but the assessee did not comply to the said notice. Further, during the re-assessment proceedings the assessee had not complied to the notices issued u/s. 142(1) of the Income Tax Act including show-cause notices. Therefore, the Assessing Officer had passed Assessment Order u/s.147 r.w.s. 144 r.w.s.144B of the Income Tax Act making addition of Rs. 26,04,000/-, on account of unexplained investment u/s 69 of the I.T. Act for the A.Y. 2017-18. Printed from counselvise.com ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 3 5. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal, before Ld.CIT(A), who has remitted the assessee`s case back to the file of the Assessing Officer, observing that as per the newly inserted proviso to section 251(1)(a) of the Act, the Commissioner (Appeals) in case of order of assessment made u/s 144 of the Act, may set aside such assessment and refer the case back to the assessing officer for making a fresh assessment. This proviso has been inserted in the Act, w.e.f. 01.10.2024. 6. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 7. Shri Chetan Agarwal, Learned Counsel for the assessee, on the legal issue, argued that a notice u/s 148A(b) of the Act, dated 28.06.2022, was issued by the Assessing Officer, beyond the period of three years, that is, reopening of assessee`s case was done beyond three years. The learned Counsel submitted that as per section 149(1)(b) of the Act, the income chargeable to tax of Rs. 50 lakhs or more, should escape assessment, to reopen the assessee`s assessment. However, in assessee’s case income of Rs.26,04,000/- was escaped from assessment, as per the notice of assessing officer under section 148A(b) of the Act, dated 28.06.2022 (supra). Since the income, escaped from assessment is less than Rs.50 lakhs, as per assessing officer, therefore reopening of assessment of the assessee, under consideration, is beyond the period of three years, which is not permissible, hence assessment order may be quashed. 8. Shri Chetan Agarwal, Learned Counsel for the assessee, again stated that as per notice u/s 148A(d) of the Act, the sanction, under sub-clause-(ii) of section 151 of the Act, should be given either by Chief Commissioner or Principal Director General, because the assessment was being re-opened by the assessing officer after three years. Therefore, as per sub-clause-(ii) of section 151of the Act, Printed from counselvise.com ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 4 the Assessing Officer has to take permission from Chief Commissioner/Principal Director General of Income-tax, or Chief Commissioner, which the assessing officer, has failed to do so. Hence, assessment order should be quashed, on this score. 9. On the other hand, the Ld. Senior DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in earlier para and is not being repeated for the sake of brevity. 10. I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. For the sake of clarity and also being pertinent, I reproduce below the notice issued by the assessing officer under section148A(d) of the Act: Printed from counselvise.com ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 5 Printed from counselvise.com ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 6 Printed from counselvise.com ITA No. 258/Rjt/2025 (A.Y.17-18) Pareshpari P Gosai, Page | 7 From the above notice, under section 148A(d) of the Act, it is vivid that as per assessing officer, the income chargeable to tax to the extent of Rs.26,04,000/- has escaped assessment, within the meaning of section 147 of the Act, in the case of the assessee under consideration. In the assessee`s case under consideration, the reopening of the assessment was done by the assessing officer after the expiry of three years, therefore, as per sub-clause (b) of Section 149 of the Act, the income escaped from assessment should exceed Rs.50,00,000/-, to reopen the assessment. However, in assessee’s case, the income has escaped from assessment, as per assessing officer is only Rs.26,04,000/-. Therefore, I find that reopening of the assessment in the assessee`s case under consideration is not in accordance with the provisions of the Act, as noted above. Therefore, I find that notice is issued beyond period of three year for escapement of Income below Rs.50 Lakhs. Besides, the notice is issued beyond period of three year by taking approval of PCIT, whereas approval under sub-clause-(ii) of section 151 of the Act, should be given either by Chief Commissioner or Principal Director General. Based on this factual position, I quash the assessment order passed by the assessing officer, dated 15.05.2023. 11. In the result, appeal of assessee is allowed. Order pronounced in the open court on 05/08/2025. Sd/- (Dr. A.L. SAINI) लेखा सदÖय/ACCOUNTANT MEMBER राजकोट /Rajkot Ǒदनांक/ Date: 05/08/2025 DKP Outsourcing Sr.P.S देश कȧ ĤǓतͧलͪप अĒेͪषत/ Copy of the order forwarded to :  अपीलाथȸ/ The Assessee  Ĥ×यथȸ/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ(अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File By order/आदेश से, // True Copy // सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट Printed from counselvise.com "