Reassessment bad as reasons to believe wrongly stated ITR was processed only u/s 143(1)

Reassessment order quashed as reasons to believe stated that return was processed only u/s 143(1) whereas return was actually processed under Section 143(3)

In a recent judgment, ITAT Ahmedabad has upheld quashing of reassessment order on account of non application of mind as reasons recorded stated that return of income was only processed u/s 143(1) whereas return was processed under Section 143(3) of the Income Tax Act, 1961 (the Act)

ABCAUS Case Law Citation:
4842 (2025) (11) abcaus.in ITAT

In the instant case, the Revenue had challenged the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) in in quashing the assessment order passed u/s 143(3) r.w.s. 147 r.w.s. 144B of the Income Tax Act, 1961 (the Act).

The case of the respondent assessee was reopened by the Assessing Officer (AO) by issuing notice u/s 148 of the Act. The reasons recorded by the Assessing Officer for initiating proceedings u/s 147 of the Act stated that the assessee had disclosed only a meager income in the return but made huge cash deposit in the bank account therefore there are reason to believe that income chargeable to tax has escaped assessment.

In the reasons recorded, the AO further stated that for the relevant Assessment Year return of income was filed but no scrutiny assessment u/s 143(3) of the Act was made and the return of income was only processed u/s 143(1) of the act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.

The Tribunal observed that Assessing Officer had held that the return of income was processed under Section 143(1) of the Act, whereas the facts on record revealed that the return was processed under Section 143(3) of the Act.  The assessee also submitted that the assessment order had been passed under Section 143(3) of the Act, and Department could not dispute this fact on record.  

The Tribunal held that it was evident from the record that the Assessing Officer had not applied his mind to the facts of the case, which rendered the reassessment order void and ab initio. 

Accordingly, the Tribunal quashed the the reassessment order and the appeal of the Revenue was dismissed. 

Download Full Judgment Click Here >>

• AO can’t take two different stands on immunity u/s 270AA(2) for a same transaction
• ITAT held 2000 gram jewellery reasonable in view of customary practices & CBDT Instruction
• Documents obtained post search & information obtained from public domain not incriminating material
• No second reopening for unexplained credits in bank due to bank’s name change
• FDCM invites application for empanelment of practising CAs/ Chartered Accountant Firms