ITAT held that reopening was based on vague reasons and quashed reassessment

1. Rajat Export Import Pvt Ltd filed its Return of Income for Rs 65,518.

2. The return was processed u/s 143(1) (of Income Tax Act, 1961).

3. Thereafter, based on a report of DIT (Investigation), reassessment proceedings were initiated.

4. AO held that assessee had taken accommodation entries from various persons.

5. AO's held that assessee had failed to prove the credit worthiness of the parties and as such these entries were bogus.

6. AO made addition of Rs 16 lacs to assessee's income from undisclosed sources.

7. CIT deleted the addition.

On appeal, the ITAT held as under:

8. We find that the mere reference is made to the information received from the investigation wing and the reasons are vague and are not based on tangible material.

9. The AO has mechanically issued notices u/s 148 (of Income Tax Act, 1961) on the basis of information received by him from the investigation wing of the Income Tax Department.

10. Therefore, we are of the considered view that the AO has not applied his mind so as to give an independent conclusion that he had reasons to believe that income had escaped assessment during the year under consideration.

11. We hold that the reopening of the case of the assessee for the assessment year is bad in law. 

Case Reference - ITO Vs. Rajat Export Import P. Ltd.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: "F" New Delhi

BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND

SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

ITA No: 2820/Del/2011

(AY : - 2003-04)