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Facts
The assessment for AY 2011-12 was reopened under section 147/148 based on the belief that the assessee received Rs. 2.95 crore from Sh. Raman Kumar representing bogus sales. However, the Assessing Officer, in the reassessment, did not make any addition based on this initial reason to believe. Instead, the AO disallowed corresponding expenditure of Rs. 17.20 crore.
Held
The Tribunal held that the reopening of assessment under sections 147/148 was unsustainable as the Assessing Officer did not make any addition on the sole reason for which the assessment was reopened. Following judicial precedents, the Tribunal quashed the impugned reopening of assessment.
Key Issues
Whether an assessment reopened under sections 147/148 is sustainable if the Assessing Officer fails to make an addition based on the initial reason to believe but makes additions on other grounds.
Sections Cited
143(3), 147, 148
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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH
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.).
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.
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.
All other pleadings herein in these four cases stand rendered academic.