2014 (8) TMI 1088 - AT - Income Tax

Validity of reopening of assessment - Held that - AO was not justified in initiating the instant reassessment proceedings based on the information received from the Director of Income-tax (Inv.), New Delhi. No individual application of mind by A0 - Decided in favour of assessee

Summary

Issues:
Initiation of reassessment proceedings based on information received from the Director of Income-tax (Inv.), New Delhi.

Analysis:
The appeal arose from an order by the CIT (A) related to the assessment year 2004-05. The Tribunal recalled its earlier ex parte order, leading to the current appeal. The main issue raised by the assessee was against the initiation of reassessment proceedings. The AO initiated the reassessment based on information received regarding the involvement of the assessee in accommodation entries. The AO made additions to the income, treating share application money as unexplained income and adding a commission on accommodation entries. The assessee challenged the initiation of reassessment proceedings, but the CIT (A) upheld it. The Tribunal analyzed the reasons recorded by the AO for initiating reassessment, which were found to be general and not specific to the assessee's case. The Tribunal referred to similar cases where reassessment proceedings were quashed due to lack of jurisdiction based on similar reasons. The Tribunal cited judgments by the Hon'ble Delhi High Court and previous Tribunal orders to overturn the initiation of reassessment proceedings in the present case. As there was no higher judicial forum order favoring the Revenue, the Tribunal held that the AO was not justified in initiating the reassessment proceedings. Consequently, the appeal was allowed, and the Tribunal pronounced the order in favor of the assessee on 19.08.2014.