Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that the re-opening of assessment under section 147/148 of the Income Tax Act, 1961 cannot be made merely based on enquiry conducted on the opinion of third party and without the application of mind of the Assessing Officer.
In the instant case the assessee has raised the ground of appeal regarding the legal ground of reopening of the assessment and submitted that the proceedings u/s 147/148 of the Income-tax Act, 1961 have been initiated on third party opinion and without application of mind of the AO.
During the assessment proceedings, the AO found that the assessee has escaped its income from tax liability and initiated the proceedings u/s 148 of the Act for reassessment by making necessary additions. The CIT(A) confirmed the action of the AO.
Assessee has submitted its books of accounts during the assessment period before the AO. Further the AO received a CD which containing the information regarding accommodation entries of the assessee from Addl. Commissioner of Income-Tax. the information reveals that the assessee was the beneficiary of the accommodation entries amounting to Rs.1,05,00,000/- which was actually own unaccounted money of the company introduced as capital without paying any tax. And the report also reveals that many assessees including the present assessee were engaged in a big racket of money laundering activities. It is clear that the reassessment decision taken by the AO only In light of the enquiry regarding the opinion of the third party.
The bench comprising of Judicial Member Sudhanshu Srivastava and Accountant Member B.P. Jain has found that while considering the facts and circumstances, the reassessment is not valid. The material on record showed that the return had been filed by the assessee and it is not possible to make a reassessment only in light of the enquiry regarding the opinion of a third party. The bench also found that the AO does not acquire jurisdiction to initiate proceedings u/s 147/148 of the Act and accordingly, the assessment so made is directed to be quashed and the legal ground and appeal of the assessee has allowed.
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