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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.
Held
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.
Key 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.
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.).