The Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that the Reassessment on the basis of wrong, incorrect and non-existing reasons is illegal and bad in law.
The assessee, M/s VSR Enterprises is a partnership firm and engaged in the business of import and export of auto parts. It filed its original return of income declaring total income of Rs.7,05,890/-. Subsequently, the Assessing Officer reopened the case under section 147 of the Act.
The AO reopened the case on the ground of the Information received from REIC through ITO Ward 43(4) New Delhi that M/s VST Enterprises Bank with Punjab & Sind Bank, Fatehpuri, Delhi, reveals an inflow of Rs.72 lakhs in cash and Rs.1.82 crores from Foreign Sources in 2007. According to the information, M/s VSR Enterprises is part of a Syndicate involved in the smuggling of Red Sanders Wood run by one Shri Shekhar. The syndicate was involved in trading banned items across the borders such as exotic herbs, such as Ashwagandha, Peacock feather, and a host of items with a wide name:pyaaz, “Aalu”, “Adrak” and “Seb”.
In appeal, the CIT(A), after considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, deleted the addition of Rs.74,12,226/- made by the Assessing Officer under section 68 on account of unexplained credit. He, however, sustained the addition of Rs.27,29,000/- made by the Assessing Officer under section 68 of the Act on account of various cash deposits. He also restricted the net profit adopted by the Assessing Officer at the rate of 15% of the total turnover to 10%.
The coram of Sudhanshu Shrivastava and R.K.Panda held that that the Assessing Officer in the instant case has recorded incorrect/wrong and non-existing reasons in the reason for reopening of the assessment and has not applied his mind to the information received from REIC, Ward 43(4)(New Delhi). Therefore, the reopening of the assessment is illegal and bad in law and is liable to be quashed.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
