ACIT CIRCLE, KARNAL vs. MAHESH INDUSTRIES PVT. LTD.,, KARNAL

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ITA 1329/DEL/2020Status: DisposedITAT Delhi02 December 2024AY 2011-12Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI M. BALAGANESH (Accountant Member)4 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The tribunal held that the reopening of assessment was unsustainable in law because the addition made in the assessment order was not on the sole reason recorded for initiating the reopening proceedings. Citing judicial precedents, the tribunal concluded that such a course of action adopted by departmental authorities is not sustainable.

What were the facts?

The Assessing Officer reopened the assessment for AY 2011-12 under sections 147/148 based on information that the assessee received Rs. 2.95 crore from an individual, representing bogus sales. However, the final assessment order did not make an addition for the bogus sales but instead disallowed expenditure of Rs. 17.20 crore.

What were the issues?

Whether the reopening of assessment under sections 147/148 is valid if the additions made during assessment are not based on the original reason recorded for initiating the reopening proceedings.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH

For Appellant: Ms. Rano Jain, Adv, Ms. Mansi Jain, CA
For Respondent: Ms. Jaya Choudhary, CIT(DR)
Hearing: 26.11.2024Pronounced: 02.12.2024

Heard together (2 matters)

C.O. No.19/Del/2021
C.O. No.20/Del/2021

Read from the judgment's own cause title. This page is filed under one of them.

3.

It is noticed from a perusal of this “lead” file, and more particularly, from the assessment order dated 30th December, 2018; that the Assessing Officer had in fact set into motion his section 148/147 reopening jurisdiction after recording the sole reason to believe that the assessee had received funds amounting to Rs.2,95,00,000/- from Sh. Raman Kumar, who had transferred funds to various entities, which represented its bogus sales. As against this, the department could hardly dispute the clinching fact that the learned Assessing Officer’s said assessment proceeded to disallow the corresponding expenditure booked against the said bogus sales; coming to Rs.17,20,36,471/- only. Meaning thereby, that the learned Assessing Officer had not made any addition qua the foregoing sole reason of reopening (supra) and therefore, such a course of action adopted by departmental authorities is not sustainable in law as per Ranbaxy Laboratory Vs. CIT (2011) 336 ITR 136 (Del) and CIT Vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.).

4.

We accordingly conclude that the impugned reopening deserves to be quashed in these peculiar facts and circumstances. 3 | P a g e & 1330/Del/2020 & C.O. Nos.19 & 20/Del/2021 Ordered accordingly. This Revenue’s lead appeal M/s. Mahesh Industries Pvt. Ltd.’s cross objection 19/Del/2021 is accepted in very terms.

5.

Same order to follow in the Revenue’s remaining appeal and latter assessee’s C.O. No. 20/Del/2021 therein since involving identical facts.

6.

All other pleadings herein in these four cases stand rendered academic.

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