Rita Das Vs ACIT (ITAT Kolkata)
The reassessment for AY 2011-12 was initiated solely on the basis of an information letter from the Investigation Wing alleging high cash deposits and withdrawals in the assessee’s bank account. The Tribunal found that the Assessing Officer reproduced this information verbatim while recording reasons and carried out no independent verification or enquiry. There was thus no live link between the information received and the formation of belief that income had escaped assessment.
Relying on the Delhi High Court ruling in Meenakshi Overseas Pvt. Ltd., the Tribunal held that reasons must show application of mind and disclose the tangible material connecting the assessee to escapement of income; mere conclusions borrowed from an investigation report are insufficient.
The approval granted under section 151 by the PCIT was also found to be mechanical, containing only the remark “Fit case” without any recorded satisfaction. This was held to violate the mandate of law as explained by the Supreme Court in Serjauddin & Co. and by the Calcutta High Court in Sambuddha Tracon Pvt. Ltd., which require conscious, reasoned satisfaction by the approving authority.
On both counts—non-application of mind by the AO and mechanical sanction by the PCIT—the reopening under section 147 was held to be invalid and was quashed. Consequently, the reassessment order itself was set aside.
Since the quantum reassessment did not survive, the penalty levied under section 271(1)(c) had no legs to stand on and was also deleted.
Both the quantum and penalty appeals of the assessee were allowed in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
