2018 (11) TMI 789 - AT - Income Tax

Reopening of assessment - assessee has received accommodation entry from Sh. Gupta - Held that - There is no mention of any cheque number and amount shows is ₹ 10 lacs. As per bank statement which is at page 36 of the paper book on 09.09.2004 there is a cheque entry of ₹ 1 lacs cheque number is 00884535/-. It can be seen that the Assessing Officer has proceeded on wrong assumption fact. The amount of ₹ 10 lacs is not supported by any cheque number whereas the allegation is that the assessee has received accommodation entry from Sh. Gupta through cheque. In considered opinion the basis of reopening itself is based on wrong facts therefore, the same cannot be upheld. Accordingly set aside the notice u/s 148 of the Act the reassessment based on such notice deserves to be quashed. Since the assessment itself has been quashed the other ad-hoc disallowance stand deleted. - Decided in favour of assessee.

Summary

Issues:
1. Assessment being time-barred under section 153 of the Income Tax Act, 1961.
2. Disallowance of expenses including Truck Hiring Charges, Vehicle Running & Maintenance, Business Promotions, Telephone Expenses, Diesel Expenses on Trucks, Salary, Purchases, and unexplained deposits in the saving Bank account.

Analysis:
1. The appeal was against the order of the CIT(A)-18, New Delhi pertaining to A. Y. 2005-06. The Assessing Officer reopened the assessment based on information received regarding accommodation entries provided by S. K. Gupta. The notice u/s 148 was issued to the assessee. The Assessing Officer made various disallowances and additions, completing the assessment.

2. The assessee challenged the reopening of assessment and the disallowances before the ITAT. The counsel argued that the reasons for reopening were based on incorrect facts and the disallowances were arbitrary. The ITAT examined the reasons for reopening and found discrepancies in the information provided. The basis of reopening was deemed incorrect, leading to the quashing of the notice u/s 148 and subsequent reassessment. Consequently, all ad-hoc disallowances were deleted.

3. The ITAT observed that there was no mention of a cheque number supporting the alleged accommodation entry of ?10 lakhs received by the assessee. The Assessing Officer's assumption was found to be erroneous as the amount lacked proper verification. The ITAT concluded that the reopening of the assessment was unfounded, leading to the quashing of the reassessment and deletion of all disallowances made by the Assessing Officer.

4. In conclusion, the ITAT allowed the appeal filed by the assessee, setting aside the notice u/s 148 and quashing the reassessment along with the deletion of all ad-hoc disallowances. The order was pronounced in open court on 12.11.2018.