Marigold Merchandise Private Limited Vs ACIT (ITAT Delhi)
Borrowed Satisfaction & Zero Independent Enquiry—ITAT Delhi Sets Aside Reassessment & Deletes 1% Commission Addition-No Tangible Material, No Application of Mind: ITAT Strikes Down 148 Notice Based Solely on Investigation Wing Inputs
Assessee had originally been assessed u/s 153B(1)(b) r.w.s. 143(3) on 29.03.2014. AO later reopened the case u/s 147 by issuing notice u/s 148 on 31.03.2019—well beyond four years. Tribunal noted that in such cases the proviso to Sec.147 mandates AO to clearly demonstrate Assessee’s failure to disclose fully & truly all material facts. The reasons recorded only alleged that the bank entries “appeared” to be accommodation entries but nowhere stated how Assessee failed to disclose anything during the original 153B assessment, despite Assessee having furnished bank statements, audited financials & explanations at that stage. Thus, Ground 4 was allowed & reopening was held invalid.
Tribunal found that AO merely reproduced information from JCIT (OSD) Investigation Wing regarding alleged entry-providing. There was no independent enquiry, no verification of the bank transactions, no examination of business operations, & AO simply presumed 1% commission income of Rs.93,84,135/- on total credits of Rs.9.38 crore. Reliance was placed on jurisdictional HC rulings in RMG Polyvinyl (396 ITR 5) & Suren International (357 ITR 24) holding that such mechanical, borrowed-satisfaction reasons vitiate reassessment. Tribunal held that the AO recorded conclusions, not reasons, & failed to establish any nexus between seized material from the M3M search & Assessee’s own affairs.
