2022 (7) TMI 1084 - AT - Income Tax

Reopening of assessment u/s 147 - information received from Investigation Wing - information received from the Investigation Wing that the assessee has accepted accommodation entry - Addition u/s 68 - HELD THAT - It is obvious from the reasons recorded by the AO for reopening the assessment under section 147 that notice under section 148 has been issued to the assessee only on the basis of the information received from Investigation Wing. Under identical facts and circumstances of the case, the Tribunal has consistently held that the reassessment proceedings are not valid. In the assessee s own case for AY 2010-11. Since the facts of the case are identical to the facts of the case decided by the Tribunal in the case of Nihal Chand Rakyan 2017 (12) TMI 1813 - ITAT DELHI as also in the assessee s own case we hold that the reassessment proceedings initiated by the Ld. AO is invalid. Therefore, assessment framed consequent thereto is ab-initio-void. In the result, appeal filed by the assessee is allowed on the issue of validity of the reassessment proceedings. Since the assessee succeeds on this legal ground, we refrain from adjudicating the issues on merit. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reassessment proceedings under Section 147 of the Income Tax Act, 1961.
2. Addition of Rs. 33,09,470/- under Section 68 of the Act on account of bogus purchases.
3. Addition of Rs. 33,34,050/- on account of the difference between the closing balance of the capital account as on 31st March 2009 and the opening balance as on 1st April 2009.

Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147:
The primary issue was whether the Assessing Officer (AO) validly assumed jurisdiction under Section 147 of the Income Tax Act, 1961. The AO reopened the case based on information received from the Investigation Wing, alleging that the assessee accepted accommodation entries. The Tribunal noted that the reopening was solely based on this information without independent application of mind by the AO. Citing precedents such as *Sfil Stock Broking Ltd.*, *Signature Hotels (P) Ltd.*, and *G&G Pharma India Ltd.*, the Tribunal emphasized that reopening on the basis of mere information from the Investigation Wing without independent verification is invalid. Consequently, the Tribunal held that the reassessment proceedings were invalid and the subsequent assessment framed was void ab initio.

2. Addition of Rs. 33,09,470/- under Section 68:
The AO added Rs. 33,09,470/- to the assessee's income, considering it as bogus purchases from M/s. Mayank Impex. The assessee argued that the purchases were genuine, supported by invoices, and payments were made via account payee cheques, duly reflected in the bank account. The Tribunal observed that the AO did not verify the facts or provide the assessee an opportunity to confront Mayank Impex. The Tribunal noted that similar issues in the assessee's own case for AY 2011-12 were decided in favor of the assessee, declaring the reassessment proceedings invalid. Therefore, the Tribunal refrained from adjudicating this issue on merit, given that the reassessment proceedings themselves were invalid.

3. Addition of Rs. 33,34,050/- on Account of Difference in Capital Account Balances:
The AO added Rs. 33,34,050/- due to a discrepancy between the closing balance of the capital account as on 31st March 2009 and the opening balance as on 1st April 2009. The assessee explained that this difference arose because the return for AY 2009-10 was revised, and the reason for revision was accepted by the AO in the assessment proceedings for AY 2009-10. The Tribunal noted that the revised return was accepted, and thus, the difference in the capital account balances stood reconciled. However, since the reassessment proceedings were held invalid, this issue was not adjudicated on merit.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, holding that the reassessment proceedings initiated by the AO were invalid. Consequently, the assessment framed was void ab initio, and the Tribunal refrained from adjudicating the issues on merit. The decision underscores the necessity for the AO to independently apply their mind when reopening assessments based on information received from the Investigation Wing.