ITAT quashed reopening done in a mechanical manner

1. AO disallowed specific expenses incurred by the Head Office of M/s. Johnson Controls (S) Pte. Ltd in India to the extent of Rs. 1,49,56,937 by invoking s 440.

2. Assessee challenged the reopening as no notice u/s 148 (of Income Tax Act, 1961) was served upon the assessee and there was no tangible material before AO on the basis of which the AO could have any reason to believe that assessee’s income had escaped assessment.

On appeal, the ITAT held as under:

3. The presumption will be that the notice was sent in due course by the Department and the same had not been returned/received back unserved and thus there was reasonable presumption that the notice was received by the assessee.

4. Under such circumstances, the assessee is now estopped from taking the plea that the notice under section 148 (of Income Tax Act, 1961) was not served upon it.

5. He has neither consulted the said audit objections with the record available with him nor has checked the merits or demerits or otherwise validity of the objections raised by the audit party.

6. Under such circumstances, it cannot be said that the AO had any reason to believe that the income of the assessee has escaped assessment.

7. The reopening in this case has been done in a mechanical manner without application of mind on the basis of report of audit party which is not sustainable in the eyes of law. 

Case Reference - M/s. Johnson Controls(S) Pte. Ltd. Vs Asstt. Director of Income-tax.

IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH "I", MUMBAI

BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND

SHRI SANJAY GARG, JUDICIAL MEMBER

ITA No.7438/M/2010

(Assessment Year: 2004-05)