Reopening of assessment with incorrect reasons is bad in law

ACIT Vs Rakhi Properties and Leasing Pvt. Ltd. (ITAT Mumbai)

We observe that Assessing Officer completed the assessment based on the reasons recorded for reopening that assessee has received share application money from Mr. Shirish C. Shah, who provides accommodation entries. Subsequently when the remand report filed before Ld.CIT(A) in which Assessing Officer has agreed that share applicants do not belong to Shri Shirish C. Shah group. Accordingly, Ld.CIT(A) has held that Assessing Officer issued 148 notice with the incorrect reasons. Therefore Ld.CIT(A) allowed the appeal of the assessee for reopening the assessment with incorrect reasons which is bad in law. In light of the above facts on record, we do not see any reasons to interfere with the above findings of the Ld.CIT(A). Accordingly, appeal filed by the Revenue is dismissed.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

1. This appeal and cross objection are filed by the revenue and assessee against the order of the Learned Commissioner of Income Tax (Appeals)–48, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 06.07.2020 for the A.Y. 2007-08.

2. Assessee has filed the cross objection raising following grounds in its appeal: –

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