Mumbai ITAT Quashes Rs. 47.33 Lakh Addition: INSIGHT Portal Data Cannot Substitute Mandatory Section 148A Procedure
Overview of the Dispute
The Mumbai Bench of the Income Tax Appellate Tribunal recently delivered a significant ruling in Nadia Shahvir Nooreyezdan Vs ITO (ITAT Mumbai), holding that system-generated data from the INSIGHT Portal cannot, on its own, trigger valid reassessment proceedings under Section 147 of the Income Tax Act, 1961. The Tribunal quashed the notice issued under Section 148, the consequent reassessment order, and the resulting addition of Rs. 47,33,000 — finding the entire exercise void ab initio on account of complete non-compliance with the mandatory procedural framework under Section 148A.
The case pertained to Assessment Year 2020-21 and arose from a property transaction where the assessee had purchased an immovable property for Rs. 1.40 crore, while the stamp duty value of the same property stood at Rs. 3,14,44,653. Relying exclusively on information flagged through the INSIGHT Portal under the e-Verification Scheme notified under Section 135A, the Assessing Officer proceeded to issue a notice under Section 148 dated 29.03.2024, entirely bypassing the pre-conditions laid down under Section 148A.
Background Facts and Sequence of Events
The assessee had duly filed her return of income for AY 2020-21, which was processed under Section 143(1). The property acquisition was made through a registered sale deed, with stamp duty paid on the higher value as determined by the stamp authorities. The transaction was fully disclosed in the return of income.
Subsequently, the Assessing Officer initiated reassessment proceedings under Section 147 based solely on data available on the INSIGHT Portal. The AO alleged that the difference between the purchase consideration of Rs. 1.40 crore and the stamp duty valuation of Rs. 3,14,44,653 indicated escapement of income chargeable to tax.
During the course of reassessment, the property was referred to the Departmental Valuation Officer (DVO), who determined the fair market value at Rs. 1,87,33,000. The AO accordingly treated the difference of Rs. 47,33,000 (being the gap between the DVO value and the purchase consideration) as income of the assessee under Section 56(2)(vii) of the Income Tax Act, 1961. This addition was subsequently confirmed by the CIT(A) through the National Faceless Appeal Centre (NFAC), New Delhi, vide its order dated 30-Dec-2025.
Aggrieved, the assessee filed an appeal before the ITAT Mumbai, also seeking admission of an additional ground challenging the jurisdictional validity of the entire reassessment proceedings.
Admission of Additional Legal Ground
Before entering into the substantive merits of the appeal, the Tribunal addressed the assessee's application for admission of an additional ground — specifically Ground No. 13, which questioned the AO's jurisdiction on account of complete non-adherence to Section 148A.
The Tribunal, relying on the principles established by the Hon'ble Supreme Court in Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr, 187 ITR 688 and NTPC v. CIT, 229 ITR 383, held that the additional ground was legal in nature and went to the very root of the case. Accordingly, it was admitted and adjudicated on merits as a threshold issue.