ACE Tyres (P) Ltd Vs ACIT (ITAT Hyderabad)
ITAT Hyderabad held that reopening of assessment is invalid in as much as the approval/ sanction under section 151 of the Income Tax Act is granted in a mechanical manner. Further, reasons for reopening are based on on-application of mind and borrowed satisfaction. Accordingly, reopening quashed and appeal allowed.
Facts- The assessee company is part of Exel group, was subjected to search & seizure action on 04.01.2023. Simultaneous search proceedings were also conducted in the residential premises of Sri Sanaka Ramesh Kumar, Sr. Accounts Manager who looks after the financial and accounting matters of M/s Exel Rubber group of business concerns.
During the course of Search at the residential premises of Sri Sanaka Ramesh Kumar, the department has found certain loose sheets, promissory notes and excel sheets and a Dell Lap Top which were seized. Various cash transactions were noticed. Based on the unaccounted transactions the MD of the group admitted unaccounted income of Rs.107.63 crores for the three companies put together. Out of such unaccounted income, an amount of Rs.42.15 crores pertained to the appellant company. For the year under consideration i.e. A.Y 2014-15 the Appellant company admitted an amount of Rs.1.13 crores. However, the Assessing Officer has made further addition of Rs.0.27 lakhs.
