INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - No tangible material - No further enquiry made by AO pursuant to information emanated from investigation wing

AO on the basis of statement recorded by investigation wing in case of one 'S' and some material seized from his premises, formed a belief that transactions with M/s. CFAM Soft (India) (P) Ltd. and M/s. BT TechNet Ltd. done by assessee were not genuine transactions but only accommodation bills were taken from them and accordingly, AO reopened assessment and made addition.Held: A perusal of assessment order framed under section 143(3) read with section 147 showed that entire assessment order was devoid of any reference to statement of 'S'. It was not known as to what question 'S' said that M/s CFAM Soft (India) Pvt. Ltd. and M/s BT TechNet Ltd. were providing accommodation bills. Further, entire transactions had been done through A/c payee cheques and it was not the case of AO that assessee had purchased accommodation bills by making payments through cheques and receiving cash through back door. Neither AO issued any notice under section 133(6) nor he cared to summon officers of two companies under section 131. Thus, 'information received from Investigation Wing could not be said to be tangible material per se without a further inquiry being undertaken by AO to establish link between tangible material and formation of reason to believe that income had escaped assessment and consequently, reassessment was unjustified.'

Relied:CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC), Pr. CIT v. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Del) : 2017 TaxPub(DT) 2034 (Del-HC), Pr.CIT v. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del) : 2017 TaxPub(DT) 1791 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-07

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