Case Law Details
Nakoda Metal Industries Vs ITO (ITAT Mumbai)
Introduction: In a pivotal ruling by the Income Tax Appellate Tribunal (ITAT) Mumbai, the Assessing Officer’s (AO) decision to initiate reassessment proceedings based on information from an external investigation was upheld. This case, Nakoda Metal Industries Vs ITO, sheds significant light on the limits and capabilities of AOs in pursuing reassessment. Below, we dissect the facts, legal arguments, and implications of this case.
AO’s Right to Initiate Reassessment Proceedings: The appeal had been filed by Nakoda Metal Industries for the assessment year 2009-10, opposing the earlier orders dated 05/02/2018 and 28/01/2021 under various sections of the Income Tax Act, 1961. The Tribunal decided to move ahead with the appeal’s adjudication even when the assessee had filed a writ petition before the Bombay High Court. A key point was whether the AO could initiate reassessment based on information received from an external agency, DGIT (Investigation) Wing, Mumbai, in this case.
Grounds for Reassessment: The AO received vital information initially from the Sales Tax Department of Maharashtra, indicating that the assessee was involved in making bogus purchases. Based on this, the AO had reason to believe that income for the assessment year in question had escaped assessment, and hence initiated proceedings under section 147 of the Act.
Assessee’s Counter-Arguments: Nakoda Metal Industries argued that the reassessment was against the principles of natural justice and that it was based on borrowed information from the Sales Tax Department. They also contended that contradictory findings were recorded which were prejudicial and based on conjecture.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
