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| The Tax Publishers2021 TaxPub(DT) 0202 (Del-Trib) INCOME TAX ACT, 1961
Section 148
Where reason for reopening was that assessee had not filed the return of income which was found to be factually incorrect and even though there was a tangible material or information coming from the investigation wing, but AO on the said material/ information received has to apply his mind after verifying the assessment records and after due application of mind, he had concluded that income chargeable to tax had escaped assessment, therefore, reasons recorded was based on complete non-application of mind by AO.
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Reassessment - Addition under section 68 - No return of income filed for current assessment year - Addition based on presumption
During the course of search operation carried out in the case of group concerns, it was found that the said group and various entities were involved in providing accommodation entries. Assessee-company was also found to be beneficiary of the accommodation entry in the documents seized. The reasons recorded by AO have been enclosed in the paper book which are very exhaustive running into several pages. One of the core reasons for entertaining the reason to believe by AO was that, no return of income was available in the record or in the ITD system. AO on the basis of material found/ information received during the course of search came to the conclusion that assessee has taken accommodation entry from two parties through Group concern and held that the share capital received by the assessee was a bogus accommodation entry and unexplained cash credit, which was to be added under section 68. Held: AO in the reasons had categorically mentioned that no return of income was filed for assessment year 2010- 11. Even at the time of seeking approval under section 151, it was categorically mentioned that ITR was not filed. The very premise for reopening was that assessee had not filed the return of income which was found to be factually incorrect. Even though there was a tangible material or information coming from the investigation wing, but AO on the said material/ information received has to apply his mind after verifying assessment records and after due application of mind, he had to satisfy himself and reached to reason to believe that income chargeable to tax had escaped assessment. Reasons recorded was based on complete non-application of mind by AO, therefore, it did not confer any jurisdiction upon AO to reopen the case under section147.
Relied:Vijay Harishchandra Patel v. ITO (2017) 400 ITR 167 (Guj.) : 2017 TaxPub(DT) 5560 (Guj-HC), PCIT v. SNG Developers Limited (2018) 404 ITR 312 (Del) : 2018 TaxPub(DT) 3140 (Del-HC) and Pr. CIT v. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Del) : 2017 TaxPub(DT) 2034 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2010-11
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