|The Tax Publishers2021 TaxPub(DT) 0525 (Del-Trib)
INCOME TAX ACT, 1961
Reopening of assessment based on information emanated from Investigation Wing without independent application of mind by AO was invalid and, therefore, reassessment was set aside.
Reassessment - Reason to believe - Information emanated from Investigation Wing - No independent application of mind by AO
AO received information from Investigation Wing that assessee had received and routed its own unaccounted money through accommodation entry providers. Accordingly, AO reopened assessment and made addition. Assessee alleged no independent application of mind by AO before reopening. Held: Reasons to believe recorded by AO were mechanically based on borrowed satisfaction of Investigation Wing which even did not disclose the nature of alleged accommodation entries whether loan, share application, share capital, etc., amounting to Rs. 1.30 crores is written without giving the specific details of the said amount, i.e., Bank, Cheque No, and date, etc. The entire reasons to believe recorded by AO was reproduction of conclusions drawn by Investigation Wing. Accordingly, AO had acted mechanically and without any independent application of mind and, therefore, reopening of assessment was invalid, especially when Jt.CIT under section 151 had granted the approval in a mechanical manner by mentioning only 'Yes, I am satisfied that this is a fit case for issue of notice under section 148.
Supported by:CIT v. S. Goyanka Lime & Chemical Ltd. (2015) 64 Taxmann.com 313 (SC) : 2015 TaxPub(DT) 5456 (SC), CIT v. S. Goyanka Lime & Chemicals Ltd. (2015) 56 Taxmann.com 390 (MP) : 2018 TaxPub(DT) 4342 (MP-HC), Asstt. CIT v. Dhariya Construction Co. (2011) 198 Taxman 202 (SC) : (2010) 328 ITR 515 (SC) : 2010 TaxPub(DT) 1530 (SC), Pr. Chief CIT v. RMG Plyvinyl (I) Ltd. (2017) 396 ITR 5 (Del) : 2017 TaxPub(DT) 2034 (Del-HC) and Pr. Chief. CIT v. Meenakshi Overseas (P) Ltd. (2017) 395 ITR 677 (Del-HC) : 2017 TaxPub(DT) 1791 (Del-HC).
FAVOUR : In assessee's favour.
A.Y. : 2008-09
IN THE ITAT, DELHI BENCH
H.S. SIDHU, J.M. & B.R.R. KUMAR, A.M.
SSG Mercantile (P) Ltd. v. ACIT
ITA No. 1864/Del/2019
14 January, 2021
In favour of assessee.
Appellant by: Kapil Goel, Advocate
Respondents by: Apoorva Bhardwaj, Sr. Departmental Representative
H.S. Sidhu, J.M.
This appeal by the Assessee for the assessment year 2008-09 is directed against the order of learned Commissioner (Appeals)-43, New Delhi, dated 24-1-2019.
2. The facts narrated by the revenue authorities relating to the issues in dispute are that the assessee is a Company, was incorporated on 26-7-2007 under the Companies Act, 1956. The assessee's company has filed its return of income on 30-9-2008 for the assessment year in dispute declaring income of Rs. 13,25,820. The assessing officer processed the return under section 143(1) of the Income Tax Act, 1961 (hereinafter referred as 'Act') on 1-7-2009. Subsequently, an information was received from the Director of Income Tax (Investigation)-II, Jhandewalan, New Delhi vide Letter, dated 12-3-2003 mentioning therein that a search operation was carried out in the case of Sh. Surendra Kumar Jain Group of cases (hereinafter known as Entry Operator) and after enquiry and examination of documents seized during course of search, it has been noticed that the said group is involved in providing accommodation entries to the persons which were named in the Report. The assessee company also figures in the list as one of the beneficiaries of the accommodation entries. On the basis of this information, assessing officer recorded the reasons in writing and issued notice under section 148 of the Act to the assessee on 26-3-2015, after obtaining the approval from the Joint Commissioner, Range-24, New Delhi. Thereafter, a notice under section 143(2) of the Act was issued to the assessee and in response to the same, the Authorised Representative of the assessee appeared from to time and submitted the requisite details.
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