Nazar Impex Pvt. Ltd Vs ITO (ITAT Surat)
ITAT Surat held that reopening of assessment under section 148 of the Income Tax Act without tangible material tantamount to change of opinion on the existing facts and the same is impermissible in law. Accordingly, appeal allowed and reopening quashed.
Facts- Post completion of assessment u/s. 144 r.w.s. 153C, the case was reopened and it was found that the assessee had entered into transactions of Rs.5,44,66,359/- with M/s Rose Impex, a concern run and controlled by Bhanwarlal Jain group, which was providing accommodation entries of unsecured loan and bogus purchases to various beneficiaries. AO thereafter rejected the books of account u/s 145(3) of the Act and estimated income at 0.2% on the import of Rs.1,31,96,98,887/-, 0.5% on bogus loan entry of Rs.13,73,03,854/- and 0.02% of Rs.27,83,25,785/- on local sale of Rs.27,83,25,785/-. The total commission income of Rs.33,81,582/- was added to the revised total income.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that AO has power to reopen the assessment provided there is tangible material to come to the conclusion that there is escapement of income and the reasons must have a live link with the formation of belief. Reopening based on mere change of opinion lacks validity and the notice u/s 148 cannot be sustained. In the present case, the information was already there when the original order u/s 153C of the Act was passed by the AO. Using the same information after 4 years from the end of the assessment year to reopen the assessment would tantamount to change of opinion on the existing fact, which is not permissible as held by the various Hon’ble Courts. Hence, the impugned notice u/s 148 dated 30.09.2019 is quashed. Consequently, the reassessment order us/ 1444 r.w.s. 147 dated 30.12.2019 is also set aside. In the result, assessee’s appeal is allowed.
