RAJKAMAL ASSOCIATES LTD.,NEW DELHI vs. ITO, WARD- 15(2), NEW DELHI

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ITA 3995/DEL/2017Status: DisposedITAT Delhi30 September 2021AY 2004-057 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were initiated on erroneous facts, making the assessment order bad in law. Consequently, the penalty levied under section 271(1)(c) was also quashed as it lacked a basis.

What were the facts?

The assessee filed its return of income, which was processed under section 143(1). The AO initiated reassessment proceedings under section 147 based on information about accommodation entries. However, the AO's assessment order was based on different entities than those mentioned in the reasons for reopening.

What were the issues?

Whether the reassessment proceedings were validly initiated based on correct information. Whether the penalty under section 271(1)(c) can sustain if the assessment order is quashed.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 143(1),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: SH. N. K. BILLAIYA

Hearing: 27/09/2021Pronounced: 30/09/2021
1.

Vide ground No.1 the assessee has challenged the assumption of jurisdiction by the AO for making assessment u/s. 147 r.w.s 143 (3) of the Act.

2.

Representatives of both the sides were heard at length. Case record carefully perused. Briefly stated that the facts of the case are that the assessee filed its return of income on 30.10.2004 declaring total income of Rs.5,550/-. The return was processed u/s.143 (1) of the Act.

3.

On the basis of the information received from the office of DIT (Inv.) the AO came to know that the assessee is a beneficiary of accommodation entries provided by one Tarun Goyal, Chartered Accountant. The following reasons were recorded for initiating proceedings u/s. 147 of the Act :-

4.

A perusal of the aforestated reasons recorded by the AO for reopening the assessment clearly show that the assessment has been reopened on the basis of the information that the assessee has taken accommodation entries from the M/s. D.U. Securities Private Limited amounting to Rs. 5 lacs whereas facts as emaniating from the Assessment Order show that the AO has proceeded with the allegation of the accommodation entries from the M/s. Adonis Securities Private Limited. The Assessment Order is completely silent and there is not even a whisper about the accommodation entries alleged to have been taken from the M/s. D.U. Securities Private Limited which was the basis for reopening the assessment.

5.

In my considered opinion the entire reopening has been done on erroneous facts thereby making reassessment order dated 14.12.2011 framed u/s. 147 r.w.s. 143 (3) of the Act bad in law.

6.

On the given facts I have no hesitation in quashing the assessment order framed on erroneous information. Ground No.1 is allowed.

7.

Since I have quashed the assessment order I do not find it necessary to dwell into the merits of the case. (A.Y.2004-05) 9. Relates to the levy of penalty u/s. 271 (1) (c) of the Act on the additions made in the assessment and contested by the assessee in (supra).

10.

Since I have quashed the assessment order in I find that the penalty so levied u/s. 271 (1) (c) of the Act does not have any leg to stand. I accordingly direct the AO to delete the penalty levied u/s. 271 (1) (c) of the Act.

Order pronounced in the open court on 30.09.2021.

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