Bangalore ITAT Rules ₹10 Lakh Addition Invalid Due to DRP’s Typographical Mistake

Background of the Dispute

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Ramya Tumkur Guruchannabasappa Vs ITO examined whether an addition of ₹10 lakh could legally survive when it arose solely because of a numerical error in the Dispute Resolution Panel’s (DRP) directions, even though the DRP’s reasoning clearly showed an intention to delete the entire Section 69 addition.

The appeal, bearing ITA No. 162/Bang/2025, related to Assessment Year 2019-20, and challenged a final assessment framed under section 144 read with section 144C (13) of the Income Tax Act 1961, by the Income Tax Officer, Ward International Taxation–1(1), Bengaluru.

The assessee’s primary grievance was the sustenance of an addition of ₹10,00,000 to her total income despite the fact that her declared income for the year was only ₹1,05,176, an amount below the basic exemption threshold. She also questioned the applicability of Section 69 and Section 115BBE to the alleged unexplained amounts.

Reopening and Basis of Reassessment

Issue of Notice Under Section 148

  1. The reassessment proceedings commenced with a notice issued under section 148 on 28 March 2023.
  2. The basis for reopening the assessment was information indicating:
    • Time deposits of ₹1,55,00,000 with State Bank of India,
    • Reportable transactions aggregating ₹1,83,25,770,
    • Bank interest of ₹86,638 from Vijaya Bank,
    • Interest of ₹13,938 from Oriental Bank of Commerce, and
    • Outward remittance of ₹5,37,482.

These financial activities triggered the belief that income chargeable to tax had escaped assessment, leading the Assessing Officer (AO) to reopen the case.

Subsequent Proceedings Under Section 142(1) and Show-Cause

  • The AO issued multiple notices under section 142(1) calling for details, supporting evidences, and explanations with respect to the above-mentioned transactions.
  • A show-cause notice dated 5 January 2024 was also served, requiring the assessee to justify why additions should not be made.
  • As recorded in the assessment order, the assessee did not furnish a response to these notices.

In the absence of a reply or supporting documentation, the AO proceeded to frame a draft assessment order based primarily on the information available from third-party sources and internal records.

Draft Assessment and Section 69 Addition

Computation in the Draft Assessment Order

In the draft assessment order dated 2 February 2024, the AO invoked Section 69 (unexplained investments) and proposed an addition of ₹3,38,25,770.