The High Court held that the Assessing Officer (AO) could not ...

Firm's low profits can't trigger reassessment without seeking explanation beforehand.

Case Laws Income Tax

September 10, 2024

The High Court held that the Assessing Officer (AO) could not reopen the assessment merely based on a belief that the average gross profit in the assessee's business line should be around 0.5% of the turnover. The court ruled that before concluding the original assessment, the AO should have sought an explanation from the assessee regarding the low net profit declared. Reopening the assessment on this ground amounted to a mere change of opinion, which is impermissible. The court also observed that the AO could have requested the KYC documents if there were doubts about the cash deposits, instead of treating it as a ground for reopening. The court emphasized that reopening must be based on fresh facts or information exposing the untruthfulness of previously disclosed facts, not merely a different inference from the same facts. The court allowed the assessee's petition, concluding that the reopening would amount to an impermissible review.

View Source

← Previous Next →

The High Court held that the Assessing Officer (AO) could not ...

Firm's low profits can't trigger reassessment without seeking explanation beforehand.

Case Laws Income Tax

September 10, 2024

You may also like:

Levying MAT u/s 115JB - 100% reduction of the profit u/s. 80IB(10) - while computing the book profit u/s. 115JB appellant had reduced it from book profit and claimed...

Additions u/s 2(22)(e) on account of deemed dividend - Accumulated profit - As per the provision of Explanation 2, all the profits of the company up to the date of...

MAT computation - share of profit from the partnership firm was sought to be excluded while computing the book profits u/s.115JB by treating it as capital receipt - the...

Seeking grant of Bail - bogus transactions fake invoices - receipt of purchase invoices in the name of fake firms without physical receipt of goods and issuing sale...

Additions u/s 68 - Low profit ratio - the assessee has discharged his onus before the revenue authorities. AO and the ld. CIT(A) rejected the explanation of the assessee...

Un-denatured Extra Neutral Alcohol was subjected to GST levy. Respondent issued show-cause notice to petitioner, allowing opportunity for written explanation and...

Reassessment of tax - the order of assessment, was not in existence on the date of issuing notice for reassessment under Section 22 (1) of the Act of 2005. Therefore,...

Short term capital gain - capital gain arose from transfer of land to the partnership firm by way of capital contribution as the assets was converted to Fixed Capital...

Unexplained Money u/s 69A r.w.s. 115BBE - Cash withdrawal from the firm as partner of the firm - along with confirmation letter given by the firm, assessee has also...

Common partners in two firms – Set off of losses incurred by one firm from another - both the firms have separate channels, be it of constitution or maintenance of...

Estimation of gross profit - assessee had given a reasonable explanation for the lower gross profit shown by it during the relevant previous year - addition for lower...

Dishonor of Cheque - The actual offence should have been committed by the Company then alone the other categories of persons would become liable for the offences - in...

Petition seeking cancellation of bail granted to respondents in a case involving filing of input tax credit for non-operational firms was dismissed. The Department...

Reopening of assessment u/s 147 - The High Court dismissed the appeal filed by the revenue, affirming the decision of the Income Tax Appellate Tribunal (ITAT) that...

Additions towards Undisclosed profit from contract work and transport income - The tribunal found that the assumptions made by Ld. AO are without any basis, on the...

Quick Updates: