This case involves an appeal by the Assistant Commissioner of Income Tax (ACIT), Central Circle-30, New Delhi, against MK Wood India Pvt. Ltd. The appeal concerns reassessment orders for the assessment years 2011-12 and 2012-13, focusing on the deletions of additions made under sections 68 and 69C of the Income-tax Act, 1961.
MK Wood India Pvt. Ltd. was incorporated in 1998 and is engaged in the business of trading and selling timber, plywood, etc. For AY 2011-12, the company filed its return of income under section 139 of the Income-tax Act, declaring a total income of Rs. 1,72,92,735/-. For AY 2012-13, the declared income was Rs. 2,32,50,410/-. Initial scrutiny assessments under section 143(3) and subsequent reassessments under section 153A did not reveal any incriminating material or concealment of income.
However, another round of reassessment under section 147, initiated following a search on a third party, resulted in significant additions. For AY 2011-12, the assessed income was Rs. 4,66,41,890, with additions of Rs. 2,90,58,579 under section 68 and Rs. 2,90,585 under section 69C. For AY 2012-13, the assessed income was Rs. 4,56,64,235, with additions of Rs. 2,21,94,431 under section 68 and Rs. 2,21,944 under section 69C.
The Revenue’s grounds of appeal for AY 2012-13 included:
MK Wood India Pvt. Ltd. filed cross objections challenging the jurisdiction of the ACIT to reassess under section 147. The main contentions were:
The tribunal examined the recorded reasons and found that the ACIT’s reassessment was based solely on information from a third party’s search proceedings, lacking independent application of mind. It highlighted the absence of specific material indicating the nature of alleged accommodation entries and criticized the mechanical approach of the ACIT.
The tribunal allowed the cross objections by MK Wood India Pvt. Ltd., quashing the reassessment orders for AY 2012-13 due to improper jurisdiction and lack of tangible material. Consequently, the Revenue’s appeals were dismissed.
This decision underscores the necessity for a rigorous and independent verification process before initiating reassessment proceedings and reaffirms the importance of adhering to principles of natural justice.
ITA 572/DEL/2021: ACIT CC-30, New Delhi vs. MK Wood India Pvt. Ltd., New Delhi
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