ITAT Mumbai Upholds Validity of Reassessment Under Faceless Regime; Remands Additions for Fresh Adjudication

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, partly allowed the appeal of Arham Anmol Projects Pvt. Ltd. for Assessment Year 2019–20, upholding the validity of reassessment proceedings under Sections 147 read with 144B while remanding additions on merits for fresh examination.

The assessee, engaged in real estate and rental activities, was subjected to reassessment based on financial transaction data reflected in the Insight Portal. In the absence of adequate compliance, the Assessing Officer completed assessment ex parte under Section 147 read with Section 144B, determining total income at ₹7.22 crore against returned income of ₹58.16 lakh.

Major additions included ₹4.54 crore as short-term capital gains by adopting nil cost of acquisition, estimated income on contract receipts and professional fees, and addition of ₹2 crore towards rent receipts based on third-party data.

Before the Tribunal, the assessee challenged the validity of reassessment on the ground that notice under Section 143(2) was issued by the Jurisdictional Assessing Officer while assessment was completed by the faceless Assessment Unit.

The Tribunal rejected this contention, holding that issuance of notice under Section 143(2) by a competent Jurisdictional Assessing Officer satisfies the mandatory jurisdictional requirement. It observed that under the faceless regime, functions of issuance of notice and completion of assessment can be validly bifurcated, and such procedural allocation does not invalidate proceedings.

On merits, however, the Tribunal noted that additions were made mechanically due to non-compliance, without proper verification of cost of acquisition, books of account, or supporting documents. It held that determination of capital gains by adopting nil cost and estimation of income without examination of records was not sustainable.

Accordingly, all additions were set aside and the matter was remanded to the Assessing Officer for fresh adjudication after providing adequate opportunity to the assessee. The appeal was allowed for statistical purposes.