ITAT quashed reassessment proceedings based on vague reasons

1. In Roopali Marketing Ltd’s case, information was received that assessee had received accommodation entries amounting to Rs 92 lakhs from various parties.

2. AO recorded reasons for issuance of notice u/s 148 (of Income Tax Act, 1961).

3. Assessee filed copies of confirmatory letters, ITR and Balance Sheets of the various parties.

4. Assessee did not produce these parties for cross examination.

5. AO made addition of Rs 36 lakhs to assessee’s income as being accommodation entries

6. CIT(A) deleted the addition.

On appeal, the ITAT held as under:

7. We find that the reopening is based entirely by making a reference to the information received from the investigation wing.

8. The reasons are at best vague and the satisfaction of the AO is not based on any 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 reason 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 and we accordingly quash the reassessment proceedings.

Case Reference - ITO vs. M/s. Roopali Marketing 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: 2813/Del/2011

(AY : - 2003-04)