Case Law Details
M P Ferrous And Non Ferrous India Pvt. Ltd. Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that initiation of reassessment proceedings under section 147 of the Income Tax Act based on the information received from the investigation wing is valid and sustainable in law.
Facts- AO vide order passed u/s. 143(3) read with section 147 of the Act did not agree with the submissions of the assessee and held that mere payment by cheques is not sufficient to prove that the transaction is genuine. The AO further held that the assessee has not proved the genuineness of the existence of the party and no serious efforts were made by the assessee to discharge such burden. The AO held that Bhoomidevi Credit Corporation Ltd. is only a paper company that does not exist in reality and works only to show accommodation entries after charging a small amount of commission. The AO placed reliance upon the statement of the director of Bhoomidevi Credit Corporation Ltd. recorded u/s. 131 of the Act, wherein he admitted that he was providing accommodation entries to various business establishments and charged a commission ranging from 1.5% to 2% of the transaction. Accordingly, the AO made an addition of Rs.14 lakh, to the total income of the assessee u/s. 68 of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that if there had been a relevant material on the basis of which a reasonable person can form a requisite belief that income chargeable to tax had escaped assessment, then proceedings under Section 147 of the Act could be validly initiated. In the present case, on the basis of information received from the investigation wing, reassessment proceedings in the case of the assessee were initiated. Further, it is also well settled that sufficiency or correctness of the material is not a thing to be considered at the stage of recording the reasons. As a result, we find no infirmity in the reassessment proceedings initiated by the AO under section 147 of the Act.
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