ITAT Ahmedabad Quashes Reassessment Based on Borrowed Satisfaction from ACB Report
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, set aside the reassessment proceedings initiated by the assessing officer against an assessee, which was based on the borrowed satisfaction from the Anti-Corruption Bureau (ACB) report.
The ACB has registered a case under the Prevention of Corruption Act against Shri Vikrambhai Lilabhai Desai (the assessee’s father), a Deputy Mamlatdar and his family members, including the assessee, Krunalkumar Virambhai Desai. Based on the information received from the ACB report, the case of the assessee was reopened under section 147/148 of the Income Tax Act.
This information alleged that the assessee had made cash deposits of Rs 30,97,000 in his bank account and also made cash payments of Rs 50,00,000 for the purchase of land rights. The AO was not satisfied with the assessee’s explanation regarding the source of the cash deposit and cash payments, due to which the AO made an addition of the total amount of Rs 80,97,000 as unexplained income. The assessee filed an appeal before the CIT(A), but did not succeed. Therefore, the assessee approached the ITAT.
Before the ITAT, the assessee argued that the assessee’s case was reopened based on the borrowed belief of the ACB without applying his mind to the information received.
The Tribunal agreed with the contentions of the assessee that the reopening was based on the information received from the ACB about the disproportionate assets acquired by Shri Vikrambhai Lilabhai Desai, not by the assessee. Further, the AO had not done his own independent inquiry or verification to find out the nature of the disproportionate assets attributed to the assessee by the ACB.
The Tribunal held that since the ACB proceedings were initiated against the assessee’s father for the disproportionate assets acquired by Shri Vikrambhai Lilabhai Desai, the proceedings for escapement of income should have also been initiated against the assessee’s father only.
The ITAT relied on its earlier decision in the case of Arpanbhai Vikrambhai Desai, where similar reassessment proceedings were held invalid. Therefore, for a valid reopening, the AO must record his own belief based on proper application of his mind rather than solely relying on the third-party information.
Accordingly, the ITAT held the reassessment proceedings to be invalid and quashed the order passed under Sections 147 read with 144B.
Case Citation: Krunalkumar Virambhai Desai Vs ITO (ITAT Delhi); ITA No. 1703/AHD/2025; 20/01/2026; 2014-15
