2010 (9) TMI 1074 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance in respect of bogus/accommodation entries amounting to Rs. 42,03,250/-.
2. Jurisdictional validity of reopening assessment u/s 147 of the IT Act.

Summary:

Issue 1: Disallowance in respect of bogus/accommodation entries amounting to Rs. 42,03,250/-

The revenue's appeal raised the issue of disallowance related to bogus/accommodation entries amounting to Rs. 42,03,250/-. The Assessing Officer (AO) noted that the assessee had received accommodation entries from various entities, which were not genuine. The AO disallowed the amount and added it to the total income of the assessee, based on detailed investigations carried out by the Directorate of Income Tax (Investigation).

Issue 2: Jurisdictional validity of reopening assessment u/s 147 of the IT Act

The assessee contested the reopening of the assessment, arguing that there was no material basis for the AO to form a belief that there was an escapement of income. The Ld. Commissioner of Income Tax (Appeals) affirmed the jurisdictional aspect but deleted the addition on merits. The Tribunal, referencing its decision in ITA No. 589/Del/2009 for A.Y. 1995-96 in the case of ACIT vs. Shri Raj Kumar Bhatia, held that the reopening was not justified as the AO did not establish that the assessee failed to disclose fully and truly all material facts necessary for the assessment. The Tribunal quashed the assessment on jurisdictional grounds, rendering the adjudication on merits academic.

Conclusion:

The Tribunal dismissed the revenue's appeal and allowed the assessee's cross-objection, holding that the reopening of the assessment was invalid due to the lack of necessary ingredients for reopening u/s 147 of the IT Act. The order was pronounced in the open court on 28/09/2010.