ITAT Bangalore Quashes Reassessment: Section 292B Cannot Cure Jurisdictional Defects Based on Incorrect Factual Assumptions
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has delivered a significant ruling concerning the validity of reassessment proceedings initiated under Section 147 of the Income Tax Act 1961. In the case of Doriswamy Gopi Vs ITO, the Tribunal held that if an Assessing Officer (AO) initiates reassessment based on a patently false assumption of fact—specifically, that the assessee had failed to file a return of income when one was actually filed—such a defect is jurisdictional in nature. Consequently, the Tribunal clarified that the curative provisions of Section 292B cannot be utilized to salvage an assessment order that lacks a valid legal foundation.
Factual Matrix of the Case
The dispute arose regarding the Assessment Year (AY) 2017-18. The assessee, an individual, challenged the order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated July 18, 2025.
The core of the controversy lay in the initiation of proceedings under Section 147. The Revenue authorities had received information suggesting that the assessee had utilized specified bank notes (SBNs) amounting to Rs. 9,50,000 to pay a cash advance for the purchase of jewellery during the demonetization period. Based on this information, the AO recorded "reasons to believe" that income chargeable to tax had escaped assessment.
However, a critical factual discrepancy appeared in the reasons recorded by the AO. The AO explicitly stated, at two separate instances within the recorded reasons, that the assessee had not filed a return of income for the year under consideration.
Contrary to this assertion, the assessee had, in fact, filed a valid return of income under Section 139 on November 18, 2017, declaring a gross total income of Rs. 8,10,187. The assessee provided the acknowledgement of this filing as evidence during the appellate proceedings.