Ganesh Ganga Investments Pvt. Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi held that reopening of assessment under section 148 of the Income Tax Act based on incorrect facts and incorrect recording of reasons is invalid and bad-in-law. Accordingly, reopening is liable to be quashed.
Facts- A search/survey operation u/s. 132/133A of the Income Tax Act, 1961 was conducted by the Investigation Wing at the business and residential premises of Shri Himanshu Verma. During the course of inquiry made by the Investigation Wing, it also came to the notice that Shri Himanshu Verma was engaged in the business of providing accommodation entries through cheques/PO/DD in lieu of cash to large number of beneficiary companies through various paper and dummy companies floated and controlled by him. On the basis of the material available on record, AO after recording reasons for reopening of the assessment, issued notice u/s. 148 to the assessee. AO analyzed the statement of Shri Himanshu Verma through whom amount have been received and the A.O. ultimately rejected the explanation of assessee on genuine share application money received from 38 parties and made addition of Rs.11.05 crores. The A.O. further noted that assessee has paid commission in cash for arranging these entries, on which, addition was made of Rs.22,10,000/- i.e., @ 2% of the amount in question which was also added to the returned income.
