ITO Vs B.C. Enterprises (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, dismissed the Revenue’s appeal and allowed the assessee’s cross objections after holding that the reassessment proceedings initiated under Sections 148 and 148A of the Income-tax Act were invalid. The assessee, engaged in the business of trading in agricultural commodities, had originally filed its return for Assessment Year 2018-19, which was processed under Section 143(1). Based on information available through the Insight Portal alleging that the assessee had received accommodation entries in the form of bogus purchases from entities controlled by Shri Ashok Kumar Gupta, the Assessing Officer issued a notice under Section 148A(b), passed an order under Section 148A(d), reopened the assessment, and ultimately made an addition of ₹5.43 crore. The Commissioner (Appeals) upheld the reopening but restricted the addition to the profit element by applying a gross profit rate of 0.88%, leading to the Revenue’s appeal and the assessee’s cross objections challenging the validity of the reassessment proceedings.
The Tribunal examined the notice issued under Section 148A(b) and found that it merely stated that information had been received through the Insight Portal regarding alleged bogus purchases without disclosing the underlying material. The notice did not provide particulars such as the statements relied upon, the names and addresses of the alleged accommodation entry providers, the details of the transactions, or the results of any enquiry conducted. The Tribunal noted that the assessee had sought copies of the relied-upon material and filed a detailed reply, but the Assessing Officer proceeded to pass the order under Section 148A(d) without considering the reply and incorrectly recorded that no response had been received.
