ITAT upheld reopening as AO had sufficient information
ITAT upheld reopening as AO had sufficient information
Garg Concast Ltd manufactured/traded steel ingots etc. It filed its return declaring a loss, and assessment was completed. AO u/s reopened assessment on allegation of payment by assessee to bogus parties. AO made addition on purchases for export which were allegedly over-vauled. CIT(A) deleted former addition but confirmed latter addition. ITAT upheld reopening as AO had sufficient information. It upheld deletion of latter addition.-500737
1. Garg Concast Ltd manufactured and traded steel ingots, steel rods, etc.
2. It filed its return declaring a loss of Rs.1,18,57,040., and assessment was completed at a loss of Rs.81,10,550.
3. The assessment was reopened u/s 148 (of Income Tax Act, 1961) on the allegation that the assessee had made payment of Rs.1,38,32,000- to bogus parties.
4. AO further added a sum of Rs.49,10,442 for purchases made for the export on the ground that the items exported were cut pieces of bars and rods, the value of which could not be more than 2% of the purchase price shown by the assessee.
5. CIT(A) deleted the addition of Rs.1,38,32,000, but confirmed the addition of Rs 49,10,442.
On appeal, the ITAT held as under:
6. The assessment though has been opened after a period of 4 years from the end of the assessment year, but the same has been reopened on receipt of information.
7. This information was not available at the time of the completion of the earlier assessment and hence in our view the proviso to section 147 (of Income Tax Act, 1961) will not be applicable.
8. As regards non-application of mind by the AO and there being no live nexus in the reasons recorded and the formation of the belief, we are in agreement with the contention of the learned DR that at the time of reopening of the assessment only a prima facie view has to be taken on the basis of the information available.
9. In the present case there was information which in our view was sufficient for the AO to reopen the assessment.
10. Further we note that the AO has simply assumed 2% of the purchase price as the cost.There is no basis for coming to such conclusion.
11. We direct the AO to delete this addition.
Case Reference - GARG CONCAST LIMITED VS. DEPUTY COMMISSIONER OF INCOME TAX.
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH "C", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
I.T.A. No. 2470/Del/2008
(A.Y. : 2000-01)
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