INCOME TAX ACT, 1961

Section 147 Section 68

Reassessment - Validity of notice under section 148 - Non-application of mind by AO - Information received from investigation wing

On the basis of information received from investigation wing. AO, without further enquiry and verification, issued notice under section 148 and added amount received from share applicants being share capital, as accommodation entries. CIT(A) reversed order of AO.Held: The AO, except preparing the table of alleged accommodation entries from the details claimed to have been received from the Investigation Wing, had not at all applied his mind. From a bare perusal of the table of the alleged accommodation entries, it was evident that the share capital shown to be received was much more than the share capital, reserves and surplus reflected as per the balance sheet. Further the payments were treated as receipts. No primary independent enquiry had been conducted by the AO which goes to prove that this was a case of non-application of mind by the AO.