Re-Assessment can’t be made on the basis of Borrowed Satisfaction of AO who has no Jurisdiction over the Assessee: ITAT [Read Order]

The Income Tax Appellate Tribunal Delhi bench recently ruled that re-assessment under section 147/148 of the Income Tax Act, 1961 cannot be made on the basis of borrowed satisfaction of assessing officer who has no jurisdiction over the assessee.

The Tribunal bench including judicial member Shri.Bavnesh Saini held so while allowing the assessee, Anant Concrete Products Pvt. Ltd’s appeal against revenue.

The assessee has filed his return amounted to Rs. 1, 66,990 on 16th September, 2009. Later it was found that the search proceedings were undertaken by DIT, New Delhi under section 132 in the case of Shri S.K. Jain group of cases, who have provided accommodation entry at Rs.9 lakhs to the assesse company. The case of the assessee-company was transferred to ITO, Ward-1(1), Meerut since jurisdiction lies with this Ward. The reassessment was completed by ITO Meerut and made an addition of aforesaid amount under section 68 of the Income Tax Act.

On first appeal, the CIT(A) upheld the re-assessment order. The CIT(A) also noted that reassessment has been initiated on the basis of information received from Investigation Wing and therefore, is valid.

The Tribunal while observing the records submitted by assessee-company observed that ITO at Ghaziabad was not having jurisdiction over the assessee. Further, the Income Tax Officer didn’t examine the information supplied by the investigation wing and that he has no reasons to believe that the income chargeable to tax has escaped assessment in his jurisdiction.

The Tribunal opinioned that ITO Meerut was initiated the proceedings under section 148 against the assessee on borrowed satisfaction of ITO, Ghaziabad and he didn’t examine any record of the case or information received from Investigation Wing. The bench found that ITO, Meerut failed to produce the reason for reopening of the assessment under section 148 of the I.T. Act. The reasons recorded by the ITO, Ghaziabad who was not authorized to do so and were having no jurisdiction over the assessee and the ITO having jurisdiction over the assessee at Meerut did not do so and merely acted on the above borrowed satisfaction of ITO, Ghaziabad, the bench said.