AO can initiate Reassessment Proceedings based on information from Investigation Wing: ITAT dismisses Appeal [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer can initiate reassessment proceedings based on the information from the investigation wing.

The assessee is a firm and for the year under consideration, filed its return of income declaring a total income of Rs.4,51,770. The return filed by the assessee was processed under Section 143(1) of the Income Tax Act, 1961.

On the basis of information received from the Directorate General of Income Tax (DGIT) Investigation Wing, Mumbai about having received vital information from the Sales Tax Department of Maharashtra about some of the dealers indulged in the practice of providing accommodation entries in the form of issuing bogus sales/purchase bills without supplying any goods but providing accommodation entries only.

The assessee being one of the beneficiaries of such bogus bills, proceedings under Section 147 of the Income Tax Act were initiated and notice under Section 148 of the Income Tax Act was issued. The assessee has taken accommodation entries from twenty parties to the tune of Rs.2,36,82,462.

The Assessing Officer after recording detailed findings on merits, vide order dated 05/03/2015, passed under Section 143(3) read with Section 147 of the Income Tax Act, determined the total income of the assessee at Rs.34,12,080, after making an addition of Rs.29,60,308, being 12.5% of the total non-genuine purchases of Rs.2,36,82,482.

The Two-member bench comprising of B.R. Baskaran (Accountant member) and Sandeep Singh Karhail (Judicial member) held that if there is relevant material on the basis of which a reasonable person can form a requisite belief that income chargeable to tax has escaped assessment, then proceedings under Section 147 of the Income Tax Act can be validly initiated. In the present case, on the basis of information received from the investigation wing, reassessment proceedings in the case of the assessee were initiated. Therefore, there was no infirmity in the reassessment proceedings initiated by the Assessing Officer under Section 147 of the Income Tax Act and upheld by the Commissioner of Income Tax (Appeal) [CIT(A)]. Thus, the grounds raised by the assessee challenging the reopening of the assessment were dismissed.

To Read the full text of the Order CLICK HERE

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