INCOME TAX ACT, 1961

Section 147

Reassessment - AO recorded wrong, incorrect and non-existing reasons while reopening - Pr. CIT accorded mechanical approval under section 151 -

AO reopened assessment and reasons for reopening were based on an information received from CIT, Central-2, dated 15-3-2012 which stated that Aseem Kumar Gupta had provided accommodation entries and this fact has been admitted by him in his statement recorded on oath during the course of search in lieu of cash received from beneficiary company and he controlled investor companies. AO, as per information, believed that assessee has received Rs. 50 lakhs as accommodation entry from Moderate Credit Corp. Ltd. Held: AO wrongly recorded that income chargeable to tax in a sum of Rs. 50 lacs had escaped assessment, despite AO had contradictorily mentioned in the reasons that assessee had received Rs. 95 lakhs from investor company and ultimately in the reassessment order, AO made addition of Rs. 95 lakhs. Since assessee had disclosed Rs. 95 lakhs as share capital money received from investor company in the return of income already filed prior to initiation of reassessment proceedings, therefore, there could not be any non-disclosure of material facts by assessee to the Revenue Department. Such fact was also wrongly mentioned in the reasons recorded for reopening of assessment. Accordingly, there was total non-application of mind on part of AO to refer the reasons for reopening of assessment and there was no live-link established between the so-called material or the escapement of income so as to validly initiate reassessment proceedings against assessee. Accordingly, reassessment was quashed as invalid, specially when Pr. CIT has recorded his satisfaction for reopening of assessment in a most mechanical manner without considering even assessment records or the return of income filed by assessee.

Supported by: Karan Khurana, Delhi v. ITO, Ward-48(2), New Delhi in ITA. No. 1783/Del./2019 vide Order, dated 17-3-2021 : 2021 TaxPub(DT) 1525 (Del-Trib) and CIT v. S. Goyanka Lime & Chemicals Ltd. (2015) 231 Taxman 73 (MP) (HC) : 2018 TaxPub(DT) 4342 (MP-HC).

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