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2021 (2) TMI 850 - AT - Income TaxReopening of assessment u/s 147 - A.O. received information from Investigation Wing - whether incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment? - HELD THAT - Section 147(b) does not exist in the Statute for the assessment year under appeal i.e., 2010-2011. It is also a fact that assessee did not maintain any such Bank Account with Mahamegha Urban Cooperative Bank, Ghaziabad. It is also a fact that no amount of ₹ 1.37 crores alleged to have been escaped assessment belonging to the assessee. The A.O, therefore, recorded wrong, incorrect and non-existing reasons in the reasons for reopening of the assessment. Thus, the reopening of the assessment have been done without application of mind and liable to be quashed. Same view have been taken by ITAT, Delhi E-Bench, Delhi in the case of Shri Natarajan Monie, Gurgaon vs., ITO, Ward-2(5) 2020 (12) TMI 345 - ITAT DELHI after following several decisions of different High Courts and quashed the reopening of the assessment in the matter. - Decided in favour of assessee.
Issues Involved:
1. Reopening of assessment under section 147/148 of the I.T. Act, 1961. 2. Addition of ?12,19,594/- as undisclosed income. Issue-wise Detailed Analysis: 1. Reopening of Assessment under Section 147/148 of the I.T. Act, 1961: The Assessee challenged the reopening of the assessment for the A.Y. 2010-2011, arguing that the reasons recorded by the Assessing Officer (A.O.) were incorrect and non-existent. The A.O. had received information from the Investigation Wing that the Assessee maintained a bank account with Mahamegha Urban Cooperative Bank, Ghaziabad, showing credits of ?1.37 crores, suspected to be involved in money laundering activities. However, the Assessee contended that no such account existed and the amount did not belong to them. The A.O. recorded reasons for reopening based on this information and issued a notice under section 148, which was served to the Assessee. Despite this, no return was filed in response to the notice. The Tribunal found that the A.O. recorded incorrect and non-existing reasons for reopening the assessment. The bank account in question did not belong to the Assessee, and no amount of ?1.37 crores was linked to them. Furthermore, the A.O. cited section 147(b) of the I.T. Act, which did not exist for the assessment year in question. The Tribunal concluded that the reopening was done without proper application of mind and was therefore liable to be quashed. This decision was supported by a similar case (Shri Natarajan Monie vs. ITO) where the Tribunal had quashed the reopening of the assessment due to incorrect reasons recorded by the A.O. 2. Addition of ?12,19,594/- as Undisclosed Income: During the assessment proceedings, the A.O. estimated the Assessee's commission income at ?9,67,594/- and treated it as undisclosed income. Additionally, a cash deposit of ?2,52,000/- in the Assessee's Oriental Bank of Commerce account was added to the income due to the absence of any explanation. The total addition made was ?12,19,594/-. The Assessee challenged this addition on merits before the CIT(A), but the appeal was dismissed. The Tribunal, upon reviewing the facts, found that the reopening of the assessment itself was invalid due to incorrect and non-existing reasons recorded by the A.O. As a result, the entire assessment, including the addition of ?12,19,594/-, was quashed. The Tribunal emphasized that the A.O. must apply their mind to the information received and verify its accuracy before recording reasons for reopening an assessment. The failure to do so renders the reopening invalid and all subsequent additions unsustainable. Conclusion: The Tribunal allowed the Assessee's appeal, quashing the reopening of the assessment and deleting all additions made. The decision underscored the importance of accurate and verified reasons for reopening assessments under sections 147/148 of the I.T. Act, 1961.
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