2017 (7) TMI 809 - AT - Income Tax

Reopening of assessment - reasons to believe - Held that - Assessing Officer has not applied his mind so as to come to the independent conclusion that he has reason to believe that income escaped assessment for the impugned year has escaped assessment. The reasons are vague and accordingly the assessment/reassessment so made is directed to be quashed. Appeals of the assessee are allowed.

Summary

Issues involved:
Appeals arising from different orders of CIT(A) on identical issues, validity of reassessment under section 147, addition of income under section 68, confirmation of commission payment, application of section 68 to a taxpayer without business income.

Analysis:
The appeals before the ITAT Delhi involved challenges to orders of the CIT(A) on various issues. The primary contention was the validity of reassessment under section 147 of the Income Tax Act. The appellant argued that the proceedings were void-ab-initio and the reassessment was based on erroneous interpretation of the law. It was contended that the Assessing Officer lacked a valid reason to believe that income had escaped assessment. The appellant also raised procedural irregularities regarding the service of notice under section 148, asserting that the assessment was invalid.

Regarding the addition of income under section 68, the appellant disputed the CIT(A)'s decision to confirm the addition of a specific amount, arguing that the genuineness of the transaction and the creditworthiness of the donor were established through documentary evidence. Additionally, the appellant challenged the confirmation of a commission payment without supporting evidence, claiming the addition was based on conjecture.

Furthermore, the appellant contested the application of section 68 to their case, stating that as they did not have business income during the relevant year, the provision should not apply. The appellant emphasized that the CIT(A) failed to consider this aspect while confirming the addition under section 68.

The ITAT Delhi referred to a previous decision in a similar case involving accommodation entries, where it was held that the Assessing Officer must apply their mind before issuing a notice under section 148. In light of this precedent, the ITAT quashed the reassessment proceedings in the present case, as it was found that the Assessing Officer had not independently concluded that income had escaped assessment. The ITAT allowed the appeals, noting that the issues were identical across different cases and directing the quashing of reassessment proceedings in all instances.