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2021 (5) TMI 96 - AT - Income TaxReopening of assessment u/s 147 - addition u/s 68 - HELD THAT - It is well settled law that validity of the reassessment proceedings is to be judged with reference to the reasons recorded for reopening of the assessment which is reproduced above. Assessee in the case of M/s Neelkanth Plywood Pvt. Ltd. 2019 (9) TMI 256 - ITAT DELHI has produced on record the identical worded reasons recorded by the same AO Sh. Virender Singh, ITO, Ward-18(1), New Delhi for reopening of the assessment, copy of the same is produced on record. In the case of M/s Neelkanth Plywood Pvt. Ltd. (supra) the Tribunal considering the issue in detail vide order dated 21.08.2019 reproduced above has quashed the reopening of the assessment. Since the facts of the case of the assessee are identical with the facts of the case of M/s Neelkanth Plywood Pvt. Ltd. (supra). Thus following the same we set aside and quash the reopening of the assessment u/s 147 - Decided in favour of assessee.
Issues Involved:
1. Reopening of the assessment under Sections 147/148 of the Income Tax Act, 1961. 2. Addition of ?25 lakhs under Section 68 of the Income Tax Act. 3. Addition of ?45,000 on account of unexplained investment. Detailed Analysis: Reopening of the Assessment under Sections 147/148: The assessee challenged the reopening of the assessment for AY 2008-09. The original return was filed on 08.07.2008 declaring an income of ?5,340, processed under Section 143(1). The reassessment was initiated based on information from the Director of Income Tax (Investigation-II) indicating that the assessee received accommodation entries totaling ?25 lakhs from entities controlled by Shri Surender Kumar Jain, an entry operator. The reasons for the belief that income had escaped assessment were detailed in a letter dated 12.03.2013, which mentioned the entities and amounts involved. The Tribunal examined the reasons recorded for reopening and noted that the same AO, Sh. Virender Singh, had recorded similar reasons for reopening the assessment in another case (M/s Neelkanth Plywood Pvt. Ltd.) for the same AY 2008-09. In that case, the ITAT had quashed the reopening of the assessment, citing a lack of independent application of mind by the AO and reliance on the investigation wing's report without tangible material or specific allegations against the assessee. The Tribunal found that the facts in the current case were identical to those in the M/s Neelkanth Plywood Pvt. Ltd. case. Therefore, it followed the earlier decision and quashed the reopening of the assessment under Section 147, declaring it illegal and void. Addition of ?25 Lakhs under Section 68: The AO made an addition of ?25 lakhs under Section 68, citing unexplained cash credits from M/s Nisha Holding Limited, M/s Brite Indu Resources Ltd., and M/s Finage Leasing & Finance India Ltd. The Tribunal, however, did not delve into the merits of this addition since the reassessment itself was quashed, rendering the addition academic. Addition of ?45,000 on Account of Unexplained Investment: Similarly, the AO made an addition of ?45,000 on account of unexplained investment. Again, the Tribunal did not address the merits of this addition due to the quashing of the reassessment proceedings. Conclusion: The Tribunal allowed the appeal of the assessee, quashing the reopening of the assessment under Section 147 and deleting both the additions of ?25 lakhs under Section 68 and ?45,000 on account of unexplained investment. The judgment emphasized the necessity for the AO to independently apply their mind and not merely rely on the investigation wing's report. The reassessment proceedings were declared illegal and void, setting a precedent for similar cases.
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