INCOME TAX ACT, 1961

Section 147

Reassessment - Reasons to believe - No independent application of mind by AO -

AO received information from investigation wing as to assessee having booked bogus profit on commodity transaction. Accordingly, AO reopened assessment and made addition under section 68. Assessee contended that AO proceeded merely on the basis of report given by Investigation Wing and had not preferred to verify the same from audited financials brought before him by the assessee.Held: In the reasons recorded for reopening assessee was shown to have earned profit of Rs. 1,37,260 from trading commodities allegedly as bogus profit where as per audited balance sheet, profit and loss account and Schedule IC, sales and other income assessee has booked profit from commodities at Rs. 149,19,900 and not Rs. 1,37,250. Accordingly, there was no application of mind on part of AO before recording reasons to believe which being replica of information received from investigation wing, could not be a tangible material per se. Accordingly, very initiation of proceedings under section 147/148 was bad-in-law, hence not sustainable.

REFERRED :

FAVOUR : In assessees favour.

A.Y. : 2010-11

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