Case Law Details
Shark Packaging (India) P. Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi held that initiation of reassessment proceedings u/s. 147 of the Income Tax Act by AO based on incorrect facts and without any verification, examination and evaluation of report of Investigation Wing and other material is invalid and unsustainable in law.
Facts- Vide the present appeal, the appellant has mainly contested initiation of reassessment proceedings under section 147 of the Income Tax Act by issuance of notice under section 148 of the Income Tax Act. Appellant also contested that the reasons recorded by the Assessing Officer for initiation of reopening of assessment does not meet requirements of sec 147 of the Act, there is no live nexus between the reasons recorded and believe formed by the Assessing Officer to allege escapement of assessment.
Conclusion- Held that where the information relieved upon by the Assessing Officer for initiating proceedings u/s. 147 of the Act did not indicate the source of alleged unexplained credit and it is not clear that the transactions were taken place with whom in that case there were absolutely no details available and the information supplied was extremely scanty and vague and in that light of the fact in view of said preposition initiation of proceedings u/s. 147 of the Act and issuance of notice u/s. 148 of the Act has to be held as not valid and sustainable being bad in law resulting in to inevitable invalidation of assessment order. Thus, we are inclined to hold that the Assessing Officer proceeded to initiate reassessment proceedings only on the basis of vague report of Investigation Wing without applying his mind to the report and other alleged documentary evidence and thus we have no hesitation to hold that the Assessing Officer proceeded merely on basis of borrowed satisfaction and he had no factual information in his hand to have reason to believe that income had escaped assessment.
Held that the Assessing Officer had recorded reasons based on incorrect facts and without any verification, examination and evaluation of report of Investigation Wing and other material before him at the time of recording reasons. Therefore, we hold that the Assessing Officer proceeded initiate reassessment proceeding and notice u/s. 148 of the Act without application of mind to the relevant material while recording reasons and forming reason to believe and thus he proceeded on the basis of borrowed satisfaction and thus he did not assure valid jurisdiction to initiate reassessment proceeding u/s. 147 of the Act and to issue notice u/s. 148 of the Act.
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