Dy. CIT v. Shradha Tradelinks (P) Ltd.

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The Tax Publishers2021 TaxPub(DT) 2132 (Mum-Trib)

INCOME TAX ACT, 1961

Section 147

AO in his 'reasons to believe' had merely referred to the information that was received by him from investigation wing. Thus, dispensing with innate statutory obligation cast upon him of carrying out necessary verification, examination or any other exercise after consulting the assessee's assessment record for the year in question AO jumped to the conclusion that income of the assessee in respect of alleged accommodation transactions had escaped assessment. Accordingly, AO failed to independently apply his mind to the 'material' available on his record and mechanically acting on the information supplied by investigation wing on the basis of incomplete and incorrect facts, reopened the case of the assessee under section 147 which could not be sustained and was quashed as invalid.

Reassessment - Reopening based on investigation report - No independent application of mind by AO -

AO received information from investigation wing as to assessee being beneficiary of providers of bogus bills of transactions in shares and securities. Accordingly, AO reopened assessment and made addition. Assessee challenged this on the ground of no independent application of mind by AO. Held: AO in his 'reasons to believe' had merely referred to the information that was received by him from the DDIT(Inv.), Mumbai that assessee as a beneficiary had received accommodation entries, and therein dispensing with innate statutory obligation cast upon him of carrying out necessary verification, examination or any other exercise after consulting the assessee's assessment record for the year in question, had jumped to the conclusion that income of the assessee in respect of alleged accommodation transactions had escaped assessment. Accordingly, AO failed to independently apply his mind to the 'material' available on his record and mechanically acting on the information supplied by investigation wing on the basis of incomplete and incorrect facts, reopened the case of the assessee under section 147 which could not be sustained and was quashed as invalid.

Supported by:Pr. CIT v. Shodiman Investments (P) Ltd. (2018) 93 Taxmann.com 153 (Bom-HC : 2018 TaxPub(DT) 2370 (Bom-HC), Pr. CIT v. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del-HC) : 82 Taxmann.com 300 (Del) : 2017 TaxPub(DT) 1791 (Del-HC), Pr. CIT v. G & G Pharma India Ltd. (2016) 384 ITR 147 (Del) : 2015 TaxPub(DT) 4054 (Del-HC), PCIT v. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Del) : 2017 TaxPub(DT) 2034 (Del-HC), CIT v. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del) : 2010 TaxPub(DT) 1872 (Del-HC) and CIT v. Kamdhenu Steel & Alloys Ltd. & Ors. (2014) 361 ITR 220 (Del) : 2012 TaxPub(DT) 1644 (Del-HC).