Sumangal Jewels Private Limited Vs DCIT (ITAT Kolkata)
The appeal before the Income Tax Appellate Tribunal arose from an order passed by the Commissioner of Income Tax (Appeals), Kolkata, confirming a reassessment made under Sections 147/143(3) of the Income-tax Act, 1961. The assessee challenged the very assumption of jurisdiction for reopening the assessment, contending that the mandatory conditions for invoking Section 147 were not satisfied and that the notice issued under Section 148 was void ab initio.
The facts showed that a search and survey operation was conducted on the Bhalotia Group on 01.12.2015, during which the assessee company was also covered. Relying on information allegedly gathered during the search and survey, the Assessing Officer reopened the assessment for Assessment Year 2009–10 on the ground that the assessee had introduced share capital of ₹10 lakh from another company which was stated to be a paper entity providing accommodation entries. Based on this premise, an addition under Section 68 was made and confirmed in first appeal.
The Tribunal examined the recorded reasons for reopening and noted that they merely referred to the search and survey action and reproduced the information that the share applicant company was allegedly non-genuine, based on statements recorded elsewhere. The Tribunal found that the reasons were cryptic and did not demonstrate any independent application of mind by the Assessing Officer. It observed that the Assessing Officer had simply accepted the information from an external source without verification and without establishing a live link between tangible material and the belief that income had escaped assessment.
