The Income Tax Appellate Tribunal, Delhi Bech “C” quashes the order of reassessment passed on grounds of incorrect facts, non-application of mind and failure to furnish reasons to the assessee.
In the appeal preferred by Mr. Karan Khurana, the order of the CIT(A) upholding reassessment was challenged on grounds of noncompliance of requirements under Section 147 and 148 of Income Tax Act, non furnishing of reasons recorded and performa and sanction under Section 151 of the Income Tax Act, non-application of mind by the Assessing Officer, mechanical satisfaction recorded by Principal CIT and non furnishing of valid notice under Section 148 of Income Tax Act within the time limit prescribed under Section 149(1)b of Income Tax Act.
It was the case of the appellant that the reassessment proceedings were initiated without providing copy of the reasons recorded, the preforma or the copy of sanction afforded under Section 151 of the Income Tax Act. These documents were denied to the appellant despite his written request demanding the same.
Further, the reassessment was initiated by the Assessing Officer based on the information that appellant had maintained various Bank accounts which have not been accounted for in the regular books of account and that a deposit of Rs.58,40,171/- had been made therein. However, the Assessing officer had mechanically acted upon such information without applying his mind. This is evident as subsequently, the Assessing Officer in his remand report admits that from the bank documents it can be seen that the deposit was for an amount of 30.74,006/- alone.
In substantiating his contentions, the appellant relied on a plethora of decisions including those in cases of Pr. CIT Vs. Meenakshi Overseas (P) Ltd. 395 ITR 677 (Del.), Pr. CIT Vs. RMG Polyvinyl (I) Ltd., 396 ITR 5 (Del.), Pr. CIT vs. G&G Pharma India Ltd. [2016] 384 ITR 147 (Del.) , Signature Hotels P. Ltd. Vs. ITO, PCIT Vs. Jagat Talkies Distributors 85 taxmann.com 189 (Del.) , PCIT vs. Ramaiah 103 taxmanncom 201 (Kar.), CIT vs. M/s Trend Electronics 61 taxmann.com 308 (Bom.), CIT vs. Videsh Sanchar Nigam Ltd. (340 ITR 66) (Bom.), CIT vs. Fomento Resorts and Hotels Ltd. dated 27.11.2006 (Bom.) CIT vs. IDBI Ltd. etc.
The Income Tax Appellate Tribunal on perusal of facts and various decisions founded the aforesaid two grounds in favour of the Appellant. As regards non furnishing of reasons for reassessment and sanction, the Tribunal held that ,
“The valuable right of the assessee has been denied by the authorities below in this regard. Therefore, the entire reassessment proceedings are nullity, invalid and bad in law.”
Further, as on the Second ground pertaining to non application of mind and initiation of reassessment based on wrong, incorrect and non-existent facts, the Tribunal held thus:
“19.2 In the present case, the AO recorded wrong facts on many count in the reasons recorded for reopening of the assessment i.e. AO recorded incorrect amount of Rs. 58,40,171/- credited in HSBC account, Noida despite he has admitted in the assessment order that it was Rs. 30,74,006/-. The AO in the reasons also recorded incorrect fact that no assessment has been completed in this case u/s 143(3) but in the reason itself AO recorded that earlier reassessment has been done u/s 147/148 read with section 143(3) of the Act. The AO also incorrectly recorded that sanction for reopening of assessment is required under proviso to section 151(1) of the Act despite such proviso does not exist in the statute as it was amended in 2015. The AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It makes clear that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. The AO has recorded incorrect amount which escaped assessment. The reasons failed to demonstrate the live link between the alleged tangible material and the formation of belief that income chargeable to tax has escaped assessment. The decisions relied upon Ld. Counsel for assessee in the cases of Pr. CIT Vs. Meenakshi Overseas (P) Ltd. 395 ITR 677 (Del.), Pr. CIT Vs. RMG Polyvinyl (I) Ltd., 396 ITR 5 (Del.), Pr. CIT vs. G&G Pharma India Ltd. [2016] 384 ITR 147 (Del.) and Signature Hotels P. Ltd. Vs. ITO (supra) squarely apply to the facts and circumstances of the case. Considering the facts and circumstances of the case, in the light of the above discussion, and decisions referred to in the order, we are of the view that reopening of the assessment is invalid and bad in law and that sanction/approval granted is also without any application of mind.”
Consequently, the Tribunal quashed the impugned reopening of the assessment.
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