ITAT quashed reopening based on vague reasons and not on tangible material

1. Information was received from the investigation wing that Rasalika Trading and Investment Co P Ltd had received entries of Rs. 22 lacs from three different parties.

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

3. Assessee furnished the copy of ITR acknowledgement which was treated as return.

4. However, since assessee had not furnished copies of bank account of the parties, AO held that their creditworthiness could not be proved.

5. AO held that it was assessee's own income from undisclosed sources and made addition of Rs 22 lacs.

6. CIT(A) dismissed assessee’s appeal.

The ITAT held as under:

7. The reasons are at best vague and the satisfaction of the AO is not based on any tangible material.

8. 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.

9. 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.

10. 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 -  Rasalika Trading & Investment Co P Ltd vs ITO .

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: 3103/Del/2013

( AY : 2004-05)