2018 (2) TMI 2036 - HC - Income Tax

Reopening of assessment u/s 147 - Addition u/s 68 - bogus credits - HELD THAT - At all stages the stand of the petitioner is that there was no transaction of 5 lacs from the said Brightsun Travin Private Limited in favour of the petitioner during the period under consideration. In fact counsel for the petitioner pointed out that such transfer took place during the period relevant to the assessment year 2011-12. There is no answer from the Revenue on this contention of the petitioner. In the objections raised by the petitioner as well as in the present petition such a ground has been specifically taken. Revenue is unable to dislodge this factual contention. Revenue is unable even prima facie to point out that there was actually a transaction of transfer of fund of 5 lacs from Brightsun Travin Private Limited to the petitioner during the year under consideration. Thus it is clear that the petitioner is correct in contending that the Assessing Officer has proceeded completely on wrong premise. When the reason itself is found to be erroneous and when this is the sole ground for reopening of the assessment impugned notice must be quashed. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice of reopening of assessment for the assessment year 2011-12 based on validity of reasons provided by the Assessing Officer.

Analysis:
The petitioner, a company registered under the Companies Act, filed its return of income for the assessment year 2011-12, which was initially accepted without scrutiny under section 143(1) of the Act. However, the Assessing Officer issued a notice of reopening the assessment on the grounds of undisclosed income based on certain findings. The reasons for reopening the assessment included information received from the Investigation Wing, Kolkata, regarding suspicious transactions involving various entities, including the petitioner company. It was alleged that the petitioner received unaccounted income through a transaction with a dummy concern, Brightsun Travin Pvt. Ltd, which was considered as undisclosed income under section 68 of the IT Act for the assessment year 2011-12.

The petitioner raised objections to the notice of reopening, arguing that there was no transaction of Rs. 5 lakhs from Brightsun Travin Pvt. Ltd to the petitioner as claimed by the Assessing Officer. The petitioner contended that the entire premise of the reopening was erroneous and lacked validity. Despite the petitioner's consistent stance and objections, the Revenue failed to provide any evidence or rebuttal to support the alleged transaction. The court noted that the Assessing Officer had proceeded on a wrong premise, and since the reason for reopening was found to be erroneous and unsubstantiated, the impugned notice was quashed. The court held that when the sole ground for reopening the assessment is based on incorrect information, the notice must be invalidated, leading to the disposal of the petition in favor of the petitioner.