Case Law Details
ACIT Vs Ace Trexim Pvt. Ltd. (ITAT Kolkata)
Introduction: The case of ACIT Vs Ace Trexim Pvt. Ltd. before the Kolkata Income Tax Appellate Tribunal (ITAT) revolves around the reassessment initiated by the Assessing Officer (AO) based on alleged unexplained funds received by the assessee. The tribunal’s ruling sheds light on the necessity of tangible information for the belief of income escapement. This article delves into the details of the case and analyzes the tribunal’s decision.
Detailed Analysis: The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the deletion of an addition made by the AO concerning funds received from M/s Solvent Real Estate Pvt. Ltd. The AO had reopened the assessment under section 147 of the Income Tax Act based on information from the Investigation Wing, alleging unexplained income of the assessee.
However, the tribunal observed that the information provided by the Investigation Wing was insufficient to form a belief of income escapement. The mere receipt of funds from M/s Solvent Real Estate Pvt. Ltd. did not constitute tangible evidence of income escapement by the assessee. Despite efforts by the assessee to provide explanations and evidence, the AO failed to conduct independent inquiries and relied solely on the information received.
Furthermore, the tribunal highlighted that the turnover of M/s Solvent Real Estate Pvt. Ltd. was substantial, indicating a legitimate source of funds. Since no adverse view was taken against M/s Solvent Real Estate Pvt. Ltd., the tribunal questioned the validity of the reassessment by the AO.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
