The Income Tax Appellate Tribunal (ITAT), Delhi bench, quashed reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, on the basis of a vague report from the investigation wing without applying their mind to the report.
The assessee, Shark Packaging (India) P. Ltd., was a company. Upon perusal of the information received from DIT(Inv.), New Delhi, that the assessee company was allegedly a beneficiary of accommodation entries by entry operator, Sh. Surendra Kumar Jain, the assessing officer initiated reassessment proceedings under section 147 of the Income Tax Act against the assessee.
Aggrieved by the order, the assessee filed an appeal before the CIT(A), who dismissed the appeal. Thus, the assessee filed a second appeal before the tribunal.
During the proceedings, Mayank Patawari, Counsel for the assessee, argued that the Assessment Officer had initiated proceedings under Section 147 of the Income Tax Act 1961 and issued a notice under Section 148 of the Act solely based on the report provided by the Investigation Wing.
Anuj Garg, Counsel for Revenue, argued that it was evident from the Investigation Wing’s report and the purportedly incriminating material discovered during the search and seizure operation of entry provider Shri S. K. Jain that the assessee had benefited from accommodation entries from several Jain Group paper companies. Therefore, the Assessing Officer had a valid reason to believe that the income to the extent of alleged entries had escaped assessment for AY 2008-09.
The Tribunal, while considering the appeal, observed that the assessee’s purported accommodation entry, date of the transaction, type of transaction (i.e., share application money, unsecured loan, or any other kind of transaction), and the entity or company from which the assessee received the alleged entry or undertook the transaction were all missing from the report. Therefore, it is also clear that the Assessing Officer had proceeded to initiate reassessment proceedings and issue notices under Section 148 of the Income Tax Act without any examination, verification, or evaluation of the facts, documentary evidence, and the report received from the Investigation Wing, New Delhi, without having sufficient information and details of the alleged entry transaction.
After reviewing the facts and records, the two-member bench of Pradip Kumar Kedia (Accountant member) and Chandra Mohan Garg (Judicial Member) observed that the Assessing Officer proceeded to initiate reassessment proceedings only on the basis of a vague report from the Investigation Wing without applying their mind to the report and other alleged documentary evidence. Therefore, the bench allowed the ground raised by the assessee.
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