Case Law Details
DCIT Vs M.D. Garments Pvt. Ltd. (ITAT Kolkata)
Assessment was reopened by AO merely on the basis of information received and there was no independent application of mind as AO failed to point out failure of assessee to furnish truly and fully all material facts. Therefore, reopening was not justified.
FULL TEXT OF THE ITAT JUDGMENT
This appeal is preferred by the revenue against the order of Ld. CIT (A) – 20, Kolkata dated 18.07.2017 and the same is being disposed of along with the cross-objection filed by the assessee being C.O. No. 38/Kol/2018.
2. The assessee in the present case is a company which is engaged in the business of dealing in readymade garments and fabric. The return of income for the year under consideration was filed by it on 27.09.2009 declaring a total income of Rs. 6,26,220/-. The said return was originally processed by the AO under section 143(1) of the Act. Subsequently he found that the share capital and share premium amounting to Rs. 40,00,000/- received by the assessee through Kolkata based jamakharchi/shell/paper companies was nothing but unaccounted income of the assessee which was brought back in the business in the guise of share capital. He accordingly reopened the assessment and issued a notice under section 148 after recording the reasons. In response to the said notice, the return of income was filed by the assessee on 26.04.2016. The assessee also obtained a copy of reasons recorded by the AO for reopening the assessment and raised its objection by filing a petition on 27.05.2016. The Assessing Officer did not find merit in the said objections and overruling the same by a speaking order passed on 04.07.2016, he proceeded to complete the assessment under section 143(3)/147. In the assessment so completed vide an order dated 20.09.2016, the total income of the assessee was determined by the AO of Rs. 47,06,220/- after making the addition of Rs. 40,00,000/- under section 68 by treating the share capital and share premium amounts as unexplained cash credit and made an addition of Rs. 80,000/- under section 69C on account of unexplained expenditure incurred on payment of commission for obtaining the accommodation entry.
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