Gulmohar Towers Private Limited Vs ITO (ITAT Kolkata)
In Gulmohar Towers Pvt. Ltd. vs ITO (A.Y. 2011-12), reassessment was initiated alleging accommodation entries and addition of ₹43.32 crore based on investigation wing information relating to sale of shares. The ITAT observed that the reasons recorded were vague, generic and lacked independent application of mind, merely reproducing investigation inputs without establishing how income had escaped assessment. The Tribunal held that reopening based on borrowed satisfaction and suspicion, without tangible material, is invalid.
The Tribunal also noted from the approval sheet (page 8) that sanction granted u/s 151 by the PCIT was mechanical, merely stating “satisfied” without recording independent reasoning. Such casual approval defeats statutory safeguards and renders reassessment proceedings void ab initio.
On merits as well, the Tribunal found that the impugned receipts represented sale proceeds of investments held in earlier years and reflected in balance sheets; therefore, addition u/s 68 was unsustainable. Relying on PCIT vs Tulsyan & Sons (P) Ltd., it held that monetisation of existing investments cannot be treated as unexplained income. Accordingly, the reassessment was quashed and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 10.102024 for the AY 2011-12.
