21 [2019] 70 ITR (Trib.) 211
(Delhi) M/s. Key Components (P) Ltd.
vs. the Income Tax Officer ITA. No.366/Del./2016 A.Y.: 2005-2006 Date of order: 12th
February, 2019
Section 148 – Mere
reliance on information received from Investigation Wing without application of
mind cannot be construed to be reasons for reopening assessment u/s. 148
FACTS
The assessee’s case was reopened on the basis of
information received from the Investigation Wing of the Income-tax Department
that the assessee company has taken accommodation entries. The assessee
objected to the reopening; however, the AO completed the assessment after
making an addition of undisclosed income on account of issue of share capital.
The assessee challenged the reopening of the assessment as well as the addition
on merits before the Commissioner (Appeals). The CIT(A), however, dismissed the
appeal of the assessee on both grounds. Aggrieved, the assessee preferred an
appeal on the same grounds to the Tribunal.
HELD
The
Tribunal observed that in this case the AO has merely reproduced the
information which he received from the Investigation Wing, in the reasons
recorded u/s. 148 of the Act. He has neither gone through the details of the
information nor has he applied his mind and merely concluded that the
transaction SEEMS not to be genuine, which indicates that he has not recorded
his satisfaction. These reasons are, therefore, not in fact reasons but only
his conclusion, that, too, without any basis. The AO has not brought anything
on record on the basis of which any nexus could have been established between
the material and the escapement of income. The reasons fail to demonstrate the
link between the alleged tangible material and formation of the reason to
believe that income has escaped assessment, the very basis that enables an
officer to assume jurisdiction u/s. 147.
The
Tribunal remarked, “Who is the accommodation entry giver is not mentioned. How
can he be said to be ‘a known entry operator’ is even more mysterious.”
In
coming to the conclusion, the Tribunal discussed the following decisions at
length:
1. Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. [395
ITR 677] (Del.)
2. Pr. CIT vs. G&G Pharma India Ltd. (2016)
[384 ITR 147] (Del.)
3. Pr. CIT vs. RMG Polyvinyl (I) Ltd. (2017)
[396 ITR 5] (Del.)
4. M/s. MRY Auto Components Ltd. vs. ITO – ITA.
No. 2418/Del./2014, dated 15.09.2017
5. Signature Hotels Pvt. Ltd. vs. Income-tax
Officer Writ Petition (Civil) No. 8067/2010 (HC)
6. CIT vs. Independent Media Pvt. Limited – ITA
No. 456/2011 (HC)
7. Oriental Insurance Company Limited vs.
Commissioner of Income-tax [378 ITR 421] (Del.)
8. Rustagi Engineering Udyog (P) Limited vs.
DCIT W.P. (C) 1293/1999 (HC)
9. Agya Ram vs. CIT – ITA No. 290/2004 (Del.)
10. Rajiv Agarwal vs. CIT W.P. (C) No. 9659 of
2015 (Del.)
