The Income Tax Appellate Tribunal in Mumbai has struck down a ₹1.46 crore reassessment against a man who earned barely ₹3,500 a month working as an office boy, ruling that the revenue department failed to legally serve him notice before reopening his tax file.
The demand collapsed entirely on jurisdiction.
In an order delivered on September 21, 2026, the appellate tribunal declared the department's reassessment order void from the outset. Revenue authorities had linked the former office boy to substantial financial transactions routed through a bank account opened in the name of a proprietary pharmaceutical firm. The man denied owning the firm, telling the tribunal his former employer had taken his signatures and KYC documents under the guise of routine job security checks, only to surreptitiously secure a second PAN card in his name.
Yet the tribunal did not determine whether the man was the victim of corporate identity theft. It did not need to.
The tax reassessment stemmed from internal department data flagging heavy commercial activity tied to a pharmaceutical business registered as the man’s proprietary concern.
Bank records obtained by the Assessing Officer showed ₹1,27,62,500 in total debit entries alongside ₹18,85,000 in credit transactions. Treating the business as the worker's undisclosed operation, the assessing officer categorized the ₹1.27 crore debits as unexplained expenditure under Section 69C of the Income Tax Act. He then added the ₹18.85 lakh credits as unexplained income under Section 68.
Because the assessee did not appear during initial proceedings, the tax officer framed an ex-parte best-judgment assessment under Section 144 read with Section 147 of the Act. The resulting order pegged his taxable income at ₹1,46,57,500.
The worker pushed back. He detailed that he had joined an employer as an office boy in September 2009, earning ₹3,500 each month for approximately 18 months. He insisted he gave his identification papers solely to secure his employment. He had never floated a pharmaceutical trading house, he said, nor had he ever authorized or conducted a single banking transaction on that ledger.
The entire assessment fell apart over how tax sleuths dispatched the statutory reopening notice under Section 148 on March 27, 2019.
Department records revealed that an initial notice sent to an address in Bandra East bounced back unserved. Rather than tracing the assessee, departmental inspectors traveled to an address in Bhiwandi and pasted the notice onto the door of a locked room.
The tribunal dismantled that manoeuvre.
Affixture on the door of any locked room, without establishing that it was the residence or business premises of the assessee, cannot constitute service upon him merely because a departmental officer had gone there and pasted a notice.
Income Tax Appellate Tribunal, Mumbai
The department’s own records conceded that the worker did not reside at the Bhiwandi site. Months later, officers finally sourced his actual residential address in Vile Parle and his personal email through records obtained from credit bureau TransUnion CIBIL.
A subsequent show-cause notice issued on November 22, 2019, finally reached the former office boy. He fired back within five days, disputing the duplicate PAN and disowning any association with the pharmaceutical entity.
The tribunal held that discovering an assessee after the fact does not wipe away flawed statutory process.
The final show-cause notice dated 22.11.2019 was thus the first communication which, on the basis of the material before us, is shown to have actually reached the assessee. Participation after raising a timely objection cannot retrospectively convert affixture at an unrelated premises into valid service.
Income Tax Appellate Tribunal, Mumbai
Because the Section 148 notice was never properly served before the statutory limitation deadline, the Assessing Officer never acquired legal authority to reopen the file.
| Assessment Parameter | Tax Department Finding | Tribunal Final Ruling |
|---|---|---|
| Monthly Salary of Assessee | Not factored during assessment | ₹3,500/month as office boy (2009–2011) |
| Unexplained Debits (Sec 69C) | ₹1,27,62,500 | Quashed entirely |
| Unexplained Credits (Sec 68) | ₹18,85,000 | Quashed entirely |
| Total Additions Assessed | ₹1,46,57,500 | Nullified on jurisdictional grounds |
| Service of Sec 148 Notice |
The assessment order passed under section 144 read with section 147 is, therefore, invalid and is hereby quashed.
Income Tax Appellate Tribunal, Mumbai
Both financial additions of ₹1.27 crore and ₹18.85 lakh collapsed with the voided assessment. The tribunal noted, however, that it has left the underlying criminal allegations regarding stolen PAN credentials, forged signatures, and fraudulent commercial bank routing open without a finding on the merits.
| Claimed via affixture in Bhiwandi |
| Held invalid; locked room had no assessee link |
| Final Reassessment Status | Best judgment under Sec 144 / 147 | Declared illegal and set aside |