ACIT Vs Delightful Estate Developers LLP (ITAT Kolkata)
In a significant ruling concerning the validity of tax reassessment proceedings, the Income-tax Appellate Tribunal (ITAT), Kolkata Bench, has quashed an assessment framed under Section 147 of the Income-tax Act, 1961. The tribunal held that the reasons recorded by the Assessing Officer (AO) for reopening the case were vague, scanty, and lacked specific details of the alleged transactions, amounting to a borrowed satisfaction without independent application of mind.
The case involved M/s Delightful Estate Developers LLP and pertained to the assessment year 2017-18. The assessee had initially filed its return of income declaring a total income of nil on July 21, 2017. Subsequently, a search action was conducted on the Banka Group of companies on May 25, 2018. During the course of this search, information emerged suggesting that a key person, Shri Mukesh Banka, and entities associated with him were engaged in providing accommodation entries, essentially facilitating transactions without actual underlying business activity.
Based on findings from this search, the Income Tax Department received information indicating that M/s Delightful Estate Developers LLP was a beneficiary of such accommodation entries totalling Rs. 68,00,224/-. Citing this information, the AO initiated reassessment proceedings under Section 147 of the Act, believing that income to this extent had escaped assessment. A notice under Section 148 was issued on March 31, 2021, after obtaining approval from the competent authority as required by law. The assessee complied with the notice by filing a return of income on April 2, 2021, and subsequently received statutory notices.
