K K JEWELLERS,NEW DELHI vs. ITO, WARD- 47(3), NEW DELHI

This appeal by the assessee is preferred against the order of the CIT(A)-16, New Delhi dated 12.03.2018 pertaining to A.Y. 2008-09.

The grievance of the assessee is twofold. Firstly, the assessee challenged the reopening of the assessment and second the assessee is aggrieved by the additions sustained by the CIT(A) amounting to Rs.5,93,335/-.

Since the challenge to the reopening of the assessment goes to the root of the matter, I proceed to decide this issue first.

Representatives of both the sides were heard at length. Case record carefully perused and with the assistance of the counsel I have carefully considered the relevant documentary evidences brought on record in the form of paper book in the light of rule 18 (6) of the ITAT Rules.

Briefly stated the facts of the case are that action u/s.147 of the Act was taken and accordingly notice u/s.148 was issued. The basis for issuing the notice u/s.148 is the information received from DGIT (Investigation), Mumbai from which the AO came to know that the assessee has received accommodation entries from a group owned by Rajendra Jain. Be that as it may, the reassessment proceedings are triggered by service of notice u/s. 148 of the Act and the root for the issue of such notice lie in the reasons recorded.

The reasons recorded by the AO is as under :-

I have given a thoughtful consideration to the aforementioned notice. A perusal of the same show that the source of the information has not been mentioned anywhere nor there is any reference to the person who has given this information. The notice simply says that “as

Though the DR strongly supported the assessment order and vehemently stated that the investigation report received from DGIT (Investigation), Mumbai was the basis for reopening the assessment and on the basis of such information the AO has applied his mind. It is the say of the DR that the information which was in possession of the AO was very much in the knowledge of the assessee.

I failed to persuade myself in agreeing with the contentions of the DR. As mentioned elsewhere the AO has to give his opinion of escapement of income while issuing the notice and recording the reasons.

The Hon’ble High Court of Delhi in the case of Meenakshi Overseas Private Limited had the occasion to consider a similar issue when it was seized with the following question of law.

“Whether the ITAT erred in law and on facts in quashing the assessment proceedings u/s. 147 /148 of the Act and the Hon’ble High Court upheld the order of the Tribunal upholding that reassessment proceedings was not legal. The relevant findings of the Hon’ble High Court read as under :-

In the light of the aforementioned decision of the Hon’ble Jurisdictional High Court I have no hesitation in quashing the notice issued u/s. 148 of the Act thereby quashing the assessment order itself.

In the result, the appeal filed by the assessee is allowed.