The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) dismissed reassessment as Assessing Officer ( AO ) failed to pass assessment Order within 4 weeks from rejection of taxpayers’ objection.
The brief facts of the case are that an information was received from the Investigation Wing pursuant to a survey and search action carried out in the case of one Sanjiw Kumar Singh who has been found to be involved in providing accommodation entries in the form of bogus bills to various parties in lieu of commission.
It was pointed out that the assessee was also one of the beneficiaries and had received accommodation entries to the tune of Rs.8,53,30,337/- during different financial years including Rs.4,13,29,247/- in F.Y 2010-11 relevant to A.Y 2011-12.
The AO noted that he has reasons to believe that the income of the assessee has escaped assessment and he accordingly reopened the assessment of the assessee. The assessee filed objections against the reopening of the assessment pleading that there was no valid reason for the Assessing Officer to reopen the assessment as that the information provided by the Investigation Wing was vague
The Commissioner of Income Tax (Appeals) [CIT (A)] observed that the assessment framed by the Assessing Officer was not valid because of non-adjudication of the objections filed by the assessee. The CIT (A) called the remand report from the Assessing Officer in this respect.
However, since the AO did not send any remand report, the CIT (A) proceeded to decide the objections of the assessee himself and held that the Assessing Officer was justified in forming the reasons to believe that the income of the assessee has escaped assessment.
Further observed that the Assessing Officer since had not disputed the corresponding sales to the aforesaid purchases, therefore, only profit element was required to be added
During proceedings, the counsel for the assessee, Mr. J. P. Khaitan, contended that the reopening of the assessment was legally flawed, emphasizing the lack of independent assessment by the Assessing Officer and the non-adjudication of objections.
On the contrary, Mr. P. P. Barman, representing the revenue, argued that the CIT (A) adequately addressed the objections, and the Assessing Officer’s actions were justified due to the failure of the assessee to substantiate purchases.
The bench of Manish Board (Accountant member) and Sanjay Garg (Judicial member) observed that the assessment framed by the Assessing Officer held to be bad in law and therefore, the consequential additions made by the Assessing Officer in the reopened assessment are not sustainable.
ITAT decided the legal issue in favour of the assessee holding that the assessment framed in this case was bad in law, therefore, other grounds/issues taken by both the parties on merits are rendered academic in nature.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
