Re-Assessment based solely on Info from Investigation Wing is invalid

By TG Team Income Tax Judiciary June 3, 2017 1 comment

TaxGuru Citation: 2017 taxguru.in 569
Case Name: Principal Commissioner of Income Tax Vs Meenakshi Overseas Pvt Ltd (Delhi High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Delhi High Court

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In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a ‘borrowed satisfaction’. The reasons fail to demonstrate the link between the tangible material and the formation of the reason to believe that income has escaped assessment.

Full Text of the High Court Order is as follows:-

1. This appeal under Section 260A of the Income Tax Act, 196 (Act) by the Revenue is directed against the impugned order dated 22nd March, 2016 passed by the Income Tax Appellate Tribunal („ITAT) in ITA No. 3148/Del/2013 for the Assessment Year („AY‟) 2004-05.

2. Admit.

3.The following question of law is framed for consideration:

Whether the ITAT erred in law and on facts in quashing the assessment proceedings under Section 147/148 of the Act?

4.The facts in brief are that the Assessee, Meenakshi Overseas Private Limited, filed its return of income on 30th October, 2004 for the AY 2004-05 declaring its income as Rs. 2,050. The return was processed under Section 143(1) of the Act on 25th November, 2004.