AO received information from investigation wing as to assessee having received accommodation entry of Rs. 10 lakhs. Accordingly, AO reopened assessment and made addition. Assessee challenged validity of reopening on the ground of no independent application of mind by AO. Held: AO in the reasons recorded for reopening had reproduced the information received from investigation wing and reproduced the same in the notice issued under section 148. It, therefore, appeared that AO had not gone through details of information and had not even applied his mind and merely conclded that he had reason to believe that income chargeable to tax had escaped assessment. Accordingly, there was no independent application of mind by AO to the report of investigation wing and, therefore, reopening was invalid.
IN THE ITAT, DELHI BENCH
BHAVNESH SAINI, J.M. & B.R.R. KUMAR, A.M.
Madhu Apartment (P) Ltd. v. ITO
I.T.A. Nos. 3869 & 3870/Del/2018
1 February, 2021
In favour of Assessee.
Assessee by: Suresh K. Gupta, C.A.
Revenue by: Prakash Dubey, Sr. Departmental Representative
Bhavnesh Saini, J.M.
This appeal by Assessee has been directed against the Order of the learned Commissioner (Appeals)-22, New Delhi, dated 26-4-2018, for the assessment years 2009-2010 and 2010-2011.
2. We have heard the Learned Representatives of both the parties through video conferencing and perused the findings of the authorities below.
3. In both the appeals, the assessee challenged the initiation of re-assessment proceedings under section 147/148 of the Income Tax Act, 1961, validity of sanction granted under section 151 of the Income Tax Act, 1961 and addition of Rs. 10 lakh each under section 68 of the Income Tax Act, 1961 and addition of Rs. 18 lakhs each on account of Commission.
4. Briefly the facts of the case are that assessee company filed its return of income for the assessment year 2009-2010 on 25-9-2009 declaring Rs. (-)5,90,668 and on 28-9-2010 for the assessment year 2010-2011 declaring income of Rs. (-)24,235. The assessing officer received information from Investigation Wing vide Letter, dated 12-3-2013 mentioning that search was carried-out in the case of Shri S.K. Jain Group of cases and it is transpired that assessee has received accommodation entry of Rs. 10 lakhs each in both the assessment years under appeal from M/s. VIP Leasing and Finance (P) Ltd., and M/s. Mega Top Promoters (P) Ltd., in a sum of Rs. 10 lakhs each. The assessing officer after giving an opportunity of being heard to the assessee, made additions of Rs. 10 lakhs in both the assessment years under appeals and have also added Rs. 18,000 on account of unexplained expenditure to obtain accommodation entry. The assessee challenged the re-assessment proceedings as well as additions before the learned Commissioner (Appeals), however, both the appeals of the assessee have been dismissed.
5. Learned Counsel for the Assessee referred to the copies of the reasons recorded for reopening of the assessment in which the assessing officer has mentioned that section 147(b) is applicable in the aforesaid cases for reopening of the assessment. He has submitted that the said section does not exist in the Statute.
Therefore, incorrect reasons are recorded and there was non-application of the mind on the part of the Approving Authority while giving sanction under section 151 of the Income Tax Act, 1961. He has submitted that the issue is covered by Order of ITAT, Delhi G-Bench, Delhi in the case of VRC Township (P) Ltd., Delhi v. ITO, Ward-17(1), New Delhi in ITA. No. 1503/Del./2017 vide Order, dated 14-10-2020 in paras 6 and 7 the Tribunal held as under :--