ITO Vs Nova Formworks Private Ltd. (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi dismissed the Revenue’s appeal against the Commissioner of Income Tax (Appeals)-13, New Delhi [CIT(A)] regarding the reassessment of Nova Formworks Private Ltd. for Assessment Year 2007-08. The reassessment was initiated under Section 147 of the Income-tax Act, 1961, based on information that the assessee allegedly received an accommodation entry of ₹15 lakhs from MARRASS Industries Ltd. The Assessing Officer (AO) had previously completed the original assessment under Section 143(3) in 2009, determining the total income at ₹43,134. During the reassessment, the AO added ₹2.71 crore to the income under Section 68, citing lack of confirmation from investors regarding share application money. However, CIT(A) ruled that most of the share application money had already been scrutinized in the original assessment and that the reopening of the assessment was beyond the permissible four-year period. The CIT(A) also noted that the AO did not establish failure on the part of the assessee to disclose material facts.
The ITAT concurred with CIT(A), emphasizing that the reassessment was based on “borrowed satisfaction” without independent verification by the AO. The Tribunal observed that reopening was done beyond the four-year limitation, making it unsustainable. Since the AO failed to demonstrate any new tangible material warranting reassessment, the ITAT ruled that the action was merely a change of opinion rather than a valid case of income escaping assessment. Consequently, ITAT upheld the CIT(A) decision, finding the reassessment proceedings beyond jurisdiction and dismissing the Revenue’s appeal.
