The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the notice issued under Section 148 of the Income Tax Act, 1961 as the Assessing Officer failed to verify the genuineness of the credible information before issuing the notice.
In the present case the order of AO reveals that he received information and there was a reason to believe that income chargeable to tax has escaped assessment within the meaning of under Section 147 of the Income Tax Act. Therefore, notice under Section 148 of the Income Tax Act issued on 19.03.2020 after recording reasons and taking prior approval of CIT-4, Kolkata.
There was nothing brought by the AO to substantiate that an amount of Rs. 35 Lakh had been received by the assessee from M/s. Brahma Tradelinks Pvt. Ltd., contrary to that the statement filed by the assessee goes to establish that an amount of Rs. 20 Lakh was received.
Mr. S.K. Tulsiyan representing the assessee from M/s. Brahma Tradelinks Pvt. Ltd. during the relevant financial year. There is nothing brought by the AO with regard to the receiving of Rs. 35 Lakh, save and except this fact that he received credible information. The AO failed to provide any details of the alleged receipt of Rs. 35 Lakh from the said party at any point of time.
Further submitted that the AOs before issuing notice had to verify the genuineness of the credible information but the AO did not do so. Hence, accordingly the issuance of notices under Section 148 of the Income Tax Act is bad in law. Further drew the attention of the Bench by saying that in fact the AO had no information of receiving Rs. 35 Lakh from M/s. Brahma Tradelinks Pvt. Ltd. though in reality there was a receipt of total Rs. 20 Lakh only from the said party.
The two member bench of the tribunal comprising Rajesh Kumar ( Accountant member ) and Pradip Kumar Choubey ( Judicial member ) were of the opinion that information as alleged to be received by the AO cannot be said to be credible information. Moreover, further find that in the preceding A/Y 2012-2013, reopening proceedings was initiated by the then AO against the assessee on the same issue, i.e the transaction of the assessee with the same entity, viz. M/s Brahma Tradelink Pvt. Ltd. and after being satisfied with the identity of the entity and the genuineness of the transaction, no addition was made.
Accordingly, ITAT held that the issuance of notices under Section 148 of the Income Tax Act was illegal, wrong and it was hereby quashed. The entire proceedings held after that have also been quashed. Accordingly, the appeal filed by the assessee was allowed.
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