ITAT quashed reopening as AO had acted in a mechanical manner, on mere suspicion

1. The assessee filed its return of income showing a total loss of Rs.(-)32,424/-. The return was accompanied with final accounts and tax audit report u/s 44AB (of Income Tax Act, 1961) . The return was processed u/s 143(1) (of Income Tax Act, 1961). Later on, the case was reopened u/s 147 (of Income Tax Act, 1961) and notice u/s 148 (of Income Tax Act, 1961) was issued on the basis of information received by the Investigation Wing Delhi that the assessee had received Rs.29,87,040 in the assessment year.

2. CIT(A) upheld the order of the AO.

3. The ITAT held as under:

"4. Therefore, we find that the AO in a mechanical manner and on assumption and presumption and without application of mind has initiated the proceedings u/s 147 (of Income Tax Act, 1961) on mere suspicion and non-existent belief and fact which having no nexus live link with the formation of link for formation of belief of escapement of income by the AO is absent in this case. Therefore, we find force in the contention of the ld. AR that the AO has mechanically, without application of mind, reopened the assessment u/s 147 (of Income Tax Act, 1961)/148 of the Act, therefore, the same needs to be quashed and we order accordingly.

Case Reference - M/s. Excellent Land Developers Pvt. Ltd. Vs. DCIT

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'B' : NEW DELHI)

BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND

SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

ITA No.3052/Del./2013

(ASSESSMENT YEAR : 2004-05)