The Income Tax Appellate Tribunal (ITAT), Mumbai, has quashed a ₹1.46 crore reassessment against a Mumbai man who claimed to earn only ₹3,500 a month as an office worker. According to reports from Mint, the tribunal ruled on 21 September 2026 that the Income Tax Department failed to establish valid service of the notice required to reopen the assessment. The tribunal did not decide whether the disputed transactions were genuine, focusing instead on procedural issues with notice service.
The assessment arose from information received by the Income Tax Department in March 2018 about a business identified as a provider of accommodation entries. As reported by Mint, examination of the bank account revealed debit entries of ₹1.27 crore and credit entries of ₹18.85 lakh associated with Kingsy Pharma, which the department identified as a proprietary concern belonging to the taxpayer. The assessing officer treated the ₹1.27 crore as unexplained expenditure under Section 69C and ₹18.85 lakh as unexplained credit under Section 68 of the Income-tax Act. With returned income taken at ₹10,000, the assessment under Sections 144 and 147 was completed at ₹1,46,57,500.
The department issued a notice under Section 148 on 27 March 2019 and sent it to an address in Bandra, Mumbai, which remained unserved. According to Mint, the department subsequently attempted to serve it by affixing it to the door of a locked room at Sonam Apartment in Bhiwandi, but the tribunal found no adequate evidence establishing that the taxpayer lived or carried on business at that premises. The department's own records indicated he did not reside there. The tribunal noted that the department later obtained his Vile Parle address and email address through information from TransUnion CIBIL, and a final show-cause notice was delivered there in November 2019.
The taxpayer disputed the connection, telling the tribunal that he had worked as an office boy for his former employer, Veeru Mehta, for approximately 18 months from September 2009, earning ₹3,500 a month. As reported by Mint, he said he had provided signatures and know-your-customer (KYC) documents for employment-related purposes, but his employer allegedly used them without his knowledge to obtain another permanent account number (PAN) and establish Kingsy Pharma. The tribunal did not conclusively determine whether this alleged misuse occurred, instead examining whether the department had validly served the notice initiating reassessment.
The ruling highlights the importance of checking whether a reassessment notice was issued and served in accordance with legal requirements. According to Mint, taxpayers who dispute notices should preserve notices, envelopes, delivery records, correspondence and responses sent to the department. The tribunal emphasized that taxpayers who believe their PAN or identity documents have been misused should gather relevant employment, banking and identity records and raise objections promptly. However, the ruling does not mean that disputed transactions are automatically invalid whenever a taxpayer denies knowledge of them, as the tribunal's decision rested on service issues rather than fraudulent transactions.
