Case Law Details
M/s Nishit Fincap Private Limited Vs ITO (ITAT Delhi)
In this case The original assessment was completed u/s 143(3) on 03.12.2010 determining the total income at Rs.48,360/-. I find the assessment in this case was reopened on the basis of information obtained from the Investigation Wing, according to which, during the search and seizure operations u/s 132/133A in the case of Mr. Surender Kumar Jain and group of cases and post search enquiries/verification, it is established that the Sh. S.K. Jain, who is known entry provider and also in the business of providing accommodation entries to various beneficiaries companies, had given accommodation entry of Rs.15 lakhs from his company namely M/s Shalini Holdings Ltd. to the assessee. Accordingly, the case of the assessee was reopened by recording reasons which have been already reproduced in the preceding paragraph. A perusal of the reasons so recorded shows that the AO has reopened the assessment by invoking the provision of clause (b) of Explanation-2 of section 147 of the Act.
A perusal of clause (b) of explanation-2 clearly shows that the same is applicable in a case where a return has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. However, a perusal of the paper book filed on behalf of the assessee shows that the original assessment has been completed u/s 143(3) on 03.12.2010 by the Income Tax Officer, Ward-13, New Delhi for the impugned assessment year. Therefore, it is clear that the AO without application of mind and on the basis of report of the Investigation Wing and without verifying the assessment records wherein, the original assessment was completed u/s 143(3), has reopened the assessment. Therefore, the very initiation of proceedings by invoking clause (b) of Explanation-2 of section 147 renders the reassessment proceedings invalid and consequently, such reassessment proceedings have to be quashed on account of non-application of mind before reopening of the assessment.
Considering the fact that the AO has invoked clause (b) of Explanation-2 of section 147 of the Act, which is not applicable in the instant case and further considering the fact that the AO has merely stated that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment without specifying which material, the assessee has not disclosed, especially when every issue was examined during the course of original assessment u/s 143(3) by calling information u/s 133(6), which was complied with by the investing company, I hold that the reassessment proceedings initiated by the AO and upheld by the Ld. CIT(A) is not in accordance with law. I, therefore, quash the same.
FULL TEXT OF THE ORDER OF ITAT DELHI
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