PCIT Vs Agroha Fincap Ltd. (Delhi High Court)
Delhi HC Upholds Reopening Based on ‘Yes, I Am Convinced’ Approval – Brief Satisfaction Note Held Valid u/s 151- ITAT Erred in Calling Approval Mechanical – Reopening Not Invalid for Brevity – Delhi HC Clarifies Standard for Section 151 Sanction
In this case, the Delhi High Court examined whether an approval recorded as “Yes, I am convinced it is a fit case for reopening of assessment u/s 147 by issuing notice u/s 148” satisfies the requirement of valid sanction u/s 151.
Read SC Judgment: SC Upholds Reassessment as Approval Stating “Fit Case” Was Held Valid
The Respondent, M/s Agroha Fincap Ltd., incorporated in 1995, had filed its return for AY 2009-10 declaring income of ₹40,720, which was processed u/s 143(1). Based on information received from the Investigation Wing regarding the S.K. Jain Group of companies, the Assessing Officer found that the Assessee had received accommodation entries amounting to ₹25 lakh – ₹10 lakh from Mani Mala Delhi Properties Pvt. Ltd. & ₹15 lakh from Virgin Capital Services Pvt. Ltd. The AO recorded reasons & issued notice u/s 148 on 28.03.2016. Despite the Assessee’s objections seeking copies of documents & cross-examination of persons whose statements were relied upon, reassessment was completed on 28.11.2016, adding ₹25,00,000 as unexplained cash credit u/s 68 & ₹45,000 as commission for obtaining such entries. The CIT(A) upheld the assessment order.
