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Facts
The assessee, M/s Keynesian Financial Services Ltd., filed its return for AY 2013-14. The case was reopened under Section 147 based on information that the assessee brought back unaccounted funds through bogus share sales. The AO treated ₹63 lacs from the sale of unlisted equity shares as unexplained cash credit under Section 68, and the CIT(A) dismissed the appeal for non-prosecution and on merits.
Held
The Tribunal quashed the reopening of assessment, holding that the reasons recorded by the Assessing Officer were 'scanty, vague and unambiguous' and demonstrated a 'gross non-application of mind'. The reasons lacked specific details of transactions, mode of payment, or the identity of parties, which is a prerequisite for valid reopening. The appeal was allowed.
Key Issues
Whether the reopening of assessment under Section 147 was valid when the reasons recorded by the Assessing Officer were vague, lacked specific details, and showed a non-application of mind.
Sections Cited
147, 148(2), 148, 143(2), 142(1), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
O R D E R Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 24.09.2024 for the AY 2013-14.
2. At the time of hearing, the assessee only pressed the legal issue as raised in ground no.2, which is with regard to invalid reopening of assessment u/s 147 of the Act, on the basis of borrowed satisfaction and without any application of mind by the ld. Assessing Officer.
3. The facts in brief are that the assessee field the return of income on 21.09.2013, declaring total income of ₹ 84,930/-. The assessee was engaged in the business of financing and also deals in shares and securities. The case of the assessee was reopened u/s 147 of the Act,
In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee for non-prosecution by the assessee but at the same time decided and dismissed the appeal on merits also.
After hearing the rival contentions and perusing the materials available on record, we observed that the case of the assessee was reopened u/s 147 of the Act after the ld. AO received information that assessee is a beneficiary of some credit entries. The copy of reasons recorded is available at page no.60 of the Paper Book. For the sake of ready reference the same is extracted below.:-
“Notice under section 143(2) read with section 147 of the Income-tax Act, 1961('Act) Dear Taxpayer, Thank you for filing your return of income for Assessment Year 2013-14 in response to notice under section 148 of the Act, vide Ack, no. 345776821040620 on 04/06/2020
While acknowledging the care and diligence you have taken in preparing the return, there are certain issues as mentioned below which need further clarification:- Issues as per reasons recorded for reopening On the basis of credible information on record, it is observed that M/s Keynesian Financial Services Pvt. Ltd. has brought back unaccounted fund into its regular books of accounts from bogus shell company without any financial rationale behind such transactions in the financial year 2012-13. Owing the same, I have reason to believe that income chargeable to tax has escaped assessment for the A.Y. 2013-14.
In view of the above, you may submit your response with supporting documents (if any) on the above-mentioned issues to undersigned electronically in 'E-proceedings' facility through your account in e-Filling website (www.incometaxindiaefiling.gov.in) at your convenience on or before 14/10/2020 4. In course of assessment proceedings, if required specific questionnaire(s) or requisition(s) for information/document may be issued subsequently 5. A brief note on E- Proceeding is enclosed for your kind reference. In case you require any assistance in filing your response, you may contact toll free Call Centre number 1800 103 4215 Enclosure: As above” 06. After perusal of the above reasons recorded, we note that the ld. AO noted in the reason that on the basis of credible information it is observed that the assessee M/s Keynesian Financial Services Limited has brought back unaccounted funds into its regular books of accounts from shell companies without any financial rationale behind such transactions in the financial year 2012-13 and thereafter concluded that owing the same, he has reasons to believe that income chargeable to tax has escaped assessment for the A.Y. 2013- 14. We observe that the reasons recorded by the ld. AO is scanty, vague and unambiguous. The ld. AO has just reopened the case of the assessee based on the information received without any independent application of mind. We note that there is no mention of
Since, we have allowed the appeal of the assessee on legal issue, the ground raised on merit is being left open to be decided at later stage if need arises for the same.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 28.03.2025.