SBS Realtors (P) Ltd. Vs ITO (ITAT Delhi)
The ITAT Delhi, in the case of SBS Realtors (P) Ltd. Vs ITO, quashed the reassessment proceedings initiated against the assessee for Assessment Year (AY) 2009-10. The tribunal’s decision was based on two primary grounds: first, the reassessment was initiated for the purpose of “verification” rather than a definite belief that income had escaped assessment; and second, the Assessing Officer (AO) had no independent basis for his belief, relying mechanically on information from an Investigation Wing without any tangible material or independent application of mind.
The assessee, SBS Realtors (P) Ltd., had received ₹2.35 crore from companies allegedly part of the “S.K. Jain group,” an entry-providing syndicate. The AO, acting on information from the Directorate of Investigation, reopened the assessment under Section 147 of the Income-tax Act. The reasons recorded by the AO stated that the case was being reopened “to verify the genuineness, identification and creditworthiness of the aforesaid transaction.” The tribunal found this phrase to be a contradiction in terms, noting that a reassessment under Section 147 requires a reason to believe that income has escaped assessment, not merely a desire to verify information. Verification, it held, is the purpose of a notice under Section 143(2), and since the time limit for that notice had expired, the AO could not use Section 147 for this purpose.
