Re-Assessment cannot be made in a Casual and Whimsical Manner: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the re-assesment order cannot be made in a casual and whimsical manner under the provisions of section 147/148 of the Income Tax Act, 1961.

The assessee, Mr. Manash Nandi filed his return of income on 16.08.2011 declaring total income of Rs. 1,60,970/-. The AO reopened the assessment to verify the deposits of cash in bank account of the assessee aggregating to Rs. 7,03,75,500/- against which several cheques were issued to various parties.

The assessee submitted that he is just an employee working with B.D. Agarwal Company and drawing monthly salary of Rs. 4,500/-. The assessee submitted before the AO that the employer is the only person who has deposited money in his bank account and also issued cheques from the said bank without his knowledge and thus in no way he should be held responsible for huge cash transactions which are beyond his capacity and imagination.

Shri Aby.T.Varkey, Judicial Member & Shri Rajesh Kumar, Accountant Member has observed that the AO has recorded the reasons u/s 148 of the Act in a very casual manner.

The Tribunal further observed that the AO has only reproduced in the reasons recorded the information received and hurriedly came to the conclusion that there exists escapement of income and evasion of tax without any application of mind and further stated that hence this matter is taken up u/s 147 of the Act.

Quashing the order, the Tribunal concluded that “In our considered opinion the reopening of assessment cannot me made in a casual and whimsical manner. The AO has to apply his mind to the information if received by the AO. Moreover, the balance of equity is also in favour of the assessee who is a marginal labour/ employee of meager means drawing salary of Rs. 4,500/- per month. How the person iof such scarce resources can deposit more than seven crores in cash in his bank account. The AO has completely failed to examine and verify as to who is the real person behind all this and thus has made the addition in a very casual manner.”

To Read the full text of the Order CLICK HERE
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