Re-Assessment based on information received from Investigation Wing of Income Tax Dept is invalid: ITAT Chandigarh [Read Order]

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In the case M/s Sangrur Agro Ltd v. ACIT, the ITAT, Chandigarh bench quashed the re-assessment proceedings under s. 148 of the Income Tax Act on ground that the same was on the on the basis of the information received from Investigation Wing of the Income Tax Department.

The original return filed by the assessee was rejected by the Department on the basis of the information received by the Assessing Officer from the office of Director of Income Tax, New Delhi that the assessee had obtained accommodation entry amounting to Rs.10 lacs from Shri Surendera Jain group of cases, Delhi as was found during search conducted at their premise. Consequent to this, the AO reopened the assessment whereby an addition of Rs.10 lacs on account of share application money was made against the assessee.

The first appellate authority, relying upon the Delhi high court decision in CIT Vs. Kelvinator of India Ltd, confirmed the order by finding that the reason to believe of the Assessing Officer was formed on an information which had been received after completion of the assessment.

The bench noted that the Tribunal in M/s J.M.D. Astrological Consultancy Services Pvt .Ltd, had quashed the re-assessment order in similar facts. It was noted that the decision of the tribunal was based on the Delhi High Court judgment in Signature Hotels P. Ltd. Vs. ITO & Anr, wherein it was held that the re-assessment proceedings initiated by the Assessing Officer on the basis of information received from Investigation Wing of the Income Tax Department and without applying his own mind was not valid.

Read the full text of the order below.