Aldiablos Infotech Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
Conclusion: Since AO had merely reproduced identical reasons for multiple years without verifying facts or forming a belief based on individual year-specific material. Moreover, reopening was based on information received from an external source without any independent inquiry or application of mind by AO. Therefore, objections raised against mechanical reopening of assessment were considered and remanded the matters for fresh adjudication.
Held: Assessee-company was engaged in software-related services, had filed appeals against reassessment orders passed for Assessment Years 2013-14 to 2017-18. In these cases, reassessments were initiated under Section 147 based on information from the Investigation Wing regarding substantial cash deposits. AO issued notices and completed assessments under Sections 143(3) read with 147 for Assessment Years 2013-14 to 2016-17, and under Section 144 for Assessment Year 2017-18. Assessee contended that reassessments were initiated without independent application of mind and based purely on borrowed satisfaction. It was submitted that the reasons recorded for reopening were mechanical and identical across years, sometimes even referring to incorrect assessment years. On appeal. It was held that CIT(A) passed ex-parte orders without adjudicating assessee’s detailed objections challenging the legality of the reopening and other factual disputes. It was highlighted that assessee had duly filed written submissions contesting the validity of the reassessment proceedings, but these were not considered by CIT(A). Tribunal observed that non-consideration of objections and passing of non-speaking orders violated the principles of natural justice. Tribunal referred to the judgment in ITO v. D.C. Rastogi, wherein it was held that mechanical reopening without independent satisfaction was invalid. Tribunal also took note of the fact that AO had merely reproduced identical reasons for multiple years without verifying facts or forming a belief based on individual year-specific material. It found that the reopening was based on information received from an external source without any independent inquiry or application of mind by AO. The appeals for Assessment Years 2013-14 to 2016-17 was restored back to the file of CIT(A) for fresh adjudication after giving reasonable opportunity to assessee. In relation to Assessment Year 2017-18, where the assessment was completed ex-parte under Section 144 based on alleged unexplained deposits during demonetisation, Tribunal restored the matter to the file of AO for de novo assessment after affording the assessee an opportunity to explain the nature and source of the deposits.
