The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has nullified the Reassessment Order, pointing out that the Assessing Officer ( AO ) relied blindly on the Investigation Wing report for reopening the assessment without due diligence.
Initially, the assessee filed the return of income for the Assessment Year 2010-11 on September 29, 2010, declaring an income of Rs. 5,06,090/-. Subsequently, information was received from the Assistant Director of Income Tax ( Investigation ) indicating that M/s Akik Marketing India Pvt. Ltd., the assessee company, had received accommodation entries from companies associated with Pradeep Kumar Jindal during the relevant financial year 2009-10.
The assessment was concluded under Section 147/143(3) of the Income Tax Act, 1961 with an order dated December 27, 2017, resulting in the assessment of income at Rs. 3,91,31,450/-.
During the proceedings, Mr. Gurjeet Singh, representing the assessee, argued that the AO failed to fulfill the requirements of Section 147, which necessitates the AO to have ‘reasons to believe’ in the escapement of income. He contended that the reopening was solely based on information from the ADIT(Inv.)-2(l), New Delhi, without the AO independently satisfying himself.
It was further highlighted that the AO’s actions were solely based on suspicion rather than belief, which is crucial for initiating reassessment proceedings. The AO’s reliance on the Investigation Wing report without independent assessment was criticized.
The two-member bench of the tribunal, comprising M. Balaganesh ( Accountant member ) and Anubhav Sharma ( Judicial member ), noted the unreasonableness of the reassessment proceedings. They observed a lack of application of mind by the AO during the recording of reasons, coupled with vague and unjustified justifications.
Ultimately, the ITAT decision highlighted the importance of AO’s independent assessment and diligent consideration of tangible evidence before initiating reassessment proceedings, rather than mere reliance on reports without proper scrutiny.
Consequently, appeal of assessee is allowed and impugned assessment order is quashed.
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