Assessing Officer issued Notice with Incorrect Reasons: ITAT quashes Re-Assessment [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has quashed an order for re-assessment passed under section 147 of the Income Tax Act, 1961 by noting that the notice under section 148 was issued with incorrect reasons.

Earlier, the CIT(A) held that the validity of notice under section 148 could be tested only on considering the reasons recorded while issuing the notice under section 148 and if the reasons are faulty, then the notice under section 148 and entire reassessment could be annulled. The department filed an appeal against the said order before the Tribunal.

Shri S. Rifaur Rahman, Accountant Member and Shri Amarjit Singh, Judicial Member observed that the Assessing Officer completed the assessment based on the reasons recorded for reopening that assessee has received share application money from Mr. Shirish C. Shah, who provides accommodation entries.

Dismiing the appeal filed by the department, the Tribunal held that “Subsequently when the remand report filed before Ld.CIT(A) in which Assessing Officer has agreed that share applicants do not belong to Shri Shirish C. Shah group. Accordingly, Ld.CIT(A) has held that Assessing Officer issued 148 notice with incorrect reasons. Therefore CIT(A) allowed the appeal of the assessee for reopening the assessment with incorrect reasons which is bad in law. In light of the above facts on record, we do not see any reasons to interfere with the above findings of the Ld.CIT(A). Accordingly, appeal filed by the Revenue is dismissed.”

To Read the full text of the Order CLICK HERE

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