INCOME TAX ACT, 1961

Section 147

Reassessment - Reasons to believe - Non-existing, incorrect and wrong facts noted in reasons without application of mind -

In the reasons recorded for reopening of assessment, AO mentioned escapement of income to the tune of Rs. 1.59 crores on account of purchase of plot at Noida, but, in the re-assessment order AO found that it is a case of unexplained loan to the extent of Rs. 33,18,842, thus, the reasons recorded by the AO were non-existing, incorrect and wrong and thus, AO did not apply his mind to the information available to him through O/o Sub-Registrar. It may also be noted that Counsel for the assessee filed copy of the lease deed of purchase of industrial plot at Noida which clearly shows that the total amount to be paid was Rs. 1.59 crores out of which assessee had already paid Rs. 47,70,000 and balance amount of Rs. 1,11,30,000 was to be paid in installments. In assessment year under appeal, assessee had paid the installment of the impugned amount of Rs. 33,18,842. Thus, even the information received from the O/o Sub-Registrar was not gone into in its entirety by the AO. It also appeared that AO had not gone through the contents of the Lease Deed registered with the O/o Sub- Registrar, Noida which clearly specified that the amount of Rs. 1.59 crore was to be paid by assessee in assessment year under appeal and the balance amount shall have to be paid by the assessee company in installments. Thus, there was no justification for the AO to record non-existing, incorrect and wrong facts in the reasons for reopening of the assessment. CIT(A), however, did not admit the additional evidences and confirmed the addition on merit. Held: In case incorrect, wrong and non-existing reasons were recorded by the AO for reopening of the assessment and AO failed to verify the information so received due to non-application of mind to the information, reopening of the assessment would be unjustified and was liable to be quashed. Considering the totality of the facts and circumstances of the case and in the light of material on record, the reopening of the assessment was illegal and bad in law were set aside and liable to be quashed. Accordingly, the Orders of the authorities below were set aside and, therefore, the reopening of the assessment was quashed. Resultantly, all additions were deleted.

Followed:Nataraan Monie, Gurgaon, ITO, Ward-2(5), ITA No. 1817/Del/2017, dated 7-1-2020. Relied:Pr. CIT v. SNG Developers Ltd., (2018) 404 ITR 312 (Del.) : 2018 TaxPub(DT) 3140 (Del-HC), Shamshad Khan v. ACIT (2017) 395 ITR 265 (Del-HC) : 2017 TaxPub(DT) 1691 (Del-HC), Siemens Information Systems Ltd. v. Asstt. CIT & Ors. (2007) 293 ITR 548 (Bom-HC) : 2007 TaxPub(DT) 1338 (Bom-HC), Pr. CIT v. RMG Polyvinyl (I) Ltd., (2017) 396 ITR 5 (Del-HC) : 2017 TaxPub(DT) 2034 (Del-HC) and Pr. CIT v. Meenakshi Overseas (P) Ltd. (2017) 395 ITR 677 (Del-HC) : 2017 TaxPub(DT) 1791 (Del-HC), Pr. CIT v. G and G Pharma India Ltd., (2016) 384 ITR 147 (Del-HC) : 2015 TaxPub(DT) 4054 (Del-HC) and Sarthak Securities Co. (P) Ltd. (2010) 329 ITR 110 (Del-HC) : 2010 TaxPub(DT) 2311 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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