2013 (9) TMI 1230 - AT - Income Tax

Summary

Issues Involved:
1. Validity of initiation of reassessment proceedings u/s 148 of the Income Tax Act, 1961.
2. Merits of the additions made by the Assessing Officer (A.O.).

Summary:

1. Validity of initiation of reassessment proceedings u/s 148 of the Income Tax Act, 1961:

The assessee challenged the initiation of reassessment proceedings u/s 148 of the Income Tax Act, 1961, arguing that the A.O. did not have valid reasons to believe that income had escaped assessment. The A.O. initiated reassessment based on information received from the D.D.I.T., Investigation Wing, Agra, stating that the assessee had taken accommodation entries in the form of capital gains. However, the Tribunal found that the A.O. acted on vague and general information without any tangible material or evidence. The reasons recorded by the A.O. were deemed vague and based on no material, failing to establish a live link with the formation of belief. The Tribunal cited several judicial precedents, including decisions from the Hon'ble Delhi High Court and the Hon'ble Supreme Court, which emphasized the necessity of specific and reliable information for valid reassessment proceedings. Consequently, the reassessment proceedings were quashed as invalid.

2. Merits of the additions made by the Assessing Officer (A.O.):

On the merits, the A.O. had added Rs. 2,99,212/- as accommodation entry u/s 68 of the Act and Rs. 29,921/- as commission for obtaining the accommodation entry. The assessee provided evidence of the purchase and sale of shares, claiming long-term capital gains exempt u/s 54EC of the Act. The A.O. rejected the assessee's evidence, concluding that the transactions were not genuine. However, the Tribunal found that the A.O. did not produce any evidence to prove the assessee's documents as false. The Tribunal noted that the A.O. did not examine any information or report before making the additions and relied on vague information. Since the reassessment proceedings were quashed, the resultant additions made by the A.O. were also deleted.

Conclusion:

The Tribunal allowed the appeals of the assessee, quashing the reassessment proceedings u/s 148 of the Act and deleting all resultant additions made by the A.O.