ITAT quashed reopening as AO had mechanically issued notice u/s 148 (of Income Tax Act, 1961)
ITAT quashed reopening as AO had mechanically issued notice u/s 148 (of Income Tax Act, 1961)
Assessee's return of income was processed u/s 143(1)(a) (of Income Tax Act, 1961). The assessment was reopened. AO treated the money received by assessee on share application as undisclosed income, and made addition, including the commission amount paid by assessee to accommodation entry operators. CIT(A) partly allowed assessee's appeal and deleted addition. ITAT quashed the reopening as AO had not applied his mind and mechanically issued notice u/s 148 (of Income Tax Act, 1961).-501431
1. The assessee's return of income was processed u/s. 143(1)(a) (of Income Tax Act, 1961) on returned income of Rs. 13,53,490/-. On the basis of information received from Investigation Wing of the Income Tax Department, notice u/s 148 (of Income Tax Act, 1961), after taking approval in terms of s 151(1), was issued and served upon the assessee. In response to notice u/s. 148 (of Income Tax Act, 1961) the assessee submitted that the returned filed be treated as returned of income having been filed in response to notice u/s. 148 (of Income Tax Act, 1961). The reasons for reopening for assessment was communicated to the assessee. AO held that it was proved beyond doubt that the assessee had failed to discharge the initial onus cast upon him in u/s 68 (of Income Tax Act, 1961). Accordingly, money received on account of share application was treated as undisclosed income amounting to Rs. 82,14,000/- and also added the commission paid to the entry operators amounting to Rs. 2,05,350/- to the income of the assessee by completing the assessment at Rs. 84,19,350/- u/s. 143(3) (of Income Tax Act, 1961)/147.
2. CIT(A) partly allowed the appeal of the assessee and deleted the addition.
3. On appeal, the ITAT held as under:
After going through the reasons recorded by the Assessing Officer/DCIT, Circle 17(1), New Delhi for reopening and the approval thereof by the Ld. Addl. CIT, Range-17, New Delhi, we are of the view that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 (of Income Tax Act, 1961), on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed.
4. In view of above, we are of the considered view that the above issue is exactly the similar and identical to the issue involved in the present appeal and is squarely covered by the aforesaid decisions of the Hon'ble High Court of Delhi. Hence, respectfully following the above precedents, we decide the legal issue in dispute in favor of the Assessee being bad in law and beyond the jurisdiction. Therefore, we quash the orders of the authorities below and allow the Cross Objection filed by the Assessee.”
Case ReferenceDCIT vs. M/S VINEY AUTO PVT. LTD
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'H' : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA No. 291/Del/2010 Assessment Year: 2000-01
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