| COURT: | ITAT Delhi |
| CORAM: | C. M. Garg (JM), G. D. Agrawal (VP) |
| SECTION(S): | 147, 148 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | independent application of mind, Reopening |
| COUNSEL: | Ashwani Taneja |
| DATE: | October 31, 2014 (Date of pronouncement) |
| DATE: | November 7, 2014 (Date of publication) |
| AY: | 2004-05 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 147 Reopening solely on the basis of information received from the investigation wing & without independent application of mind is void | |
The AO proceeded to initiate proceedings u/s 147 of the Act and to issue notice u/s 148 of the Act on the basis of information received from Investigation Wing of the department in the form of a CD prepared by Shri Sanjay Shah and Shri Vishesh Prakash, ITOs of Unit V, New Delhi. Subsequently, the AO reproduced details gathered from the CD and without application of independent mind, held that the assessee was beneficiary of accommodation entries amounting to Rs.4,51,000. In the main part of reason to believe, there is no mentioning of nature of transaction to establish and fortify the fact that the impugned transactions were in the nature of accommodation entries. We also observe that there is no mentioning of date therein and it can safely be presumed that the AO had not examined the assessment record of the assessee which was processed u/s 143(1)(a) of the Act on 15.3.2005 for forming a belief that the income of the assessee had escaped assessment.
There was no material on record to show that the AO had applied her independent mind in forming a belief which may result in the required reason to believe as per provisions of section 147 and 148 of the Act. We also held that the CIT(A) was right in following the ratio of the decision of apex court in the case of CIT vs Sun Engineering Works Pvt. Ltd. and the decision of Hon’ble Jurisdictional High Court of Vipin Khanna vs CIT (supra), Amrinder Singh Dheeman vs ITO (supra) which have been fully reelucidated and affirmed by subsequent decision of Delhi High Court in the case of Jai Bharati Maruti Ltd. Vs CIT (supra). In this situation, the CIT(A) was justified and reasonable in quashing the notice u/s 148 of the Act and entire reassessment proceedings conducted thereunder.
Very timely and handy for similarly harassed Assessee whose sunmissions on these lines with citations from SC were ignored by A O mechanically and thus, the matter reached CIT(A), whose Appellate Order is still awaited. A O has no jurisdiction / power to review through such 147/148 proceedings.
Most of the times, the completed assessments are reopened on account of objections raised by the Revinue Audit or on receiving intimation from the intelligence wing of the Department. In case of Audit objection, the A.O. has to take remedial action by reopening the assessment as he is left with no alternative, even though he may have resisted the objection initially. In case where the intimation is from the Investigation Wing, the tendency is to just issue notice under 148 of the Act without applying the mind. In both the type of situations, the A.O. usually initiates proceeding under section 147 mechanically without making any effort to justify the reopening the assessment. As a result of inadequate paper work of bringing on record the satisfaction of the A.O about the escapement of income, the fate of Revenue in such cases is doomed from the initial stage itself. In view of such half hearted approach from the Revenue Authorities, many good cases are lost in appeals and valuable time, energy and of course tax payable on such escaped income is lost forever.