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Facts
The assessee, Centaur Mercantile Pvt. Ltd. (later Kanakia Spaces Realty Pvt. Ltd.), filed its nil return for AY 2011-12. The Assessing Officer (AO) reopened the assessment under Section 147 based on information regarding alleged bogus purchases totaling Rs. 13,52,010/- and a bogus deduction claim of Rs. 3,00,00,000/- under Section 35AC. The assessee filed detailed objections to the reopening of assessment, providing evidence for genuine purchases and challenging the deduction claim.
Held
The tribunal held that the Assessing Officer erred in assuming jurisdiction by framing the reassessment order under Section 147 without first disposing of the assessee's objections to the reasons recorded for reopening. This action was deemed a contravention of the Supreme Court's decision in GKN Driveshafts. Consequently, the reassessment order was set aside as bad in law and without jurisdiction, rendering it unnecessary to examine the merits of the additions.
Key Issues
Whether reassessment proceedings initiated under Section 147 are valid if the Assessing Officer fails to dispose of the assessee's objections to the reasons recorded for reopening the assessment, as per the mandate of the Supreme Court.
Sections Cited
132, 133A, 139(1), 142(1), 143(3), 147, 148, 151(1), 153(2), 153(2A), 153A, 254, 35AC
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 1639/Mum/2024 & C.O. No. 86/Mum/2024, are appeal by the revenue and cross-objection by the assessee preferred against the order of the ld. CIT(A) -52, Mumbai, dated 30/01/2024, pertaining to AY 2011-12. 2 आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNAL C.O. No. 86/Mum/2024
The grievance of the revenue read as under:- "
On the facts and in the circumstances of the case, the Ld. CIT(A) erred in reducing the disallowance from 100% to 12.5% of the bogus purchases, i.e. from Rs. 13,52,010/- to Rs. 1,69,001/- and thus reducing the taxable income by Rs. 11,83,009/-, without appreciating the fact that the assessee couldn't prove the genuniness of these bogus purchases.
On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of Rs. 3,00,00,000/- on account of bogus deduction claimed u/s 35AC of the Act, without appreciating the fact that the entity trust which received the donation was only providing accommodation entries to the assessee in lieu of donation made by the assessee.
The appellant craves to leave, to add, to amend and/or to alter any of the ground, if need be.”
The grounds raised by the assessee in the cross-objections read as under:-