This article discusses ITA No. 1903/DEL/2020, involving Vijay Singhal, New Delhi, and the Income Tax Officer (ITO) Ward 36(2), New Delhi. The case pertains to the Assessment Year (AY) 2012-13 and was filed on November 26, 2020, with the final order pronounced on December 23, 2022. The main issue in this case revolves around the reassessment notice and the disallowance of certain purchases claimed by the appellant.
Vijay Singhal, the appellant, contested the reassessment made by ITO Ward 36(2), New Delhi. The appellant claimed that the reassessment notice issued under Section 148 of the Income Tax Act, 1961, was void and without jurisdiction. Additionally, the appellant argued against the addition of Rs. 8,50,000 as unexplained income under Section 69 and Rs. 17,000 as alleged commission paid.
The appellant’s primary contention was that the notice under Section 148 was issued without proper jurisdiction and that the reassessment was based on incorrect information. The appellant further argued that the purchases from M/s Radhika Trading Co. were genuine, supported by invoices, and duly accounted for in the books. The payments were made through online transfers or account payee cheques.
The Senior Departmental Representative (DR), Shri Sumesh Swani, opposed the appellant’s submissions and supported the orders of the lower authorities. The DR argued that the reassessment was based on information received from the Investigation Wing, indicating that M/s Radhika Trading Co. was not engaged in any genuine business activities and was merely providing accommodation entries.
The Income Tax Appellate Tribunal (ITAT) reviewed the case, led by Shri Kul Bharat, Judicial Member. The tribunal considered the arguments and material placed on record by both parties. The ITAT noted that the reassessment was initiated based on information suggesting escapement of income, which justified the Assessing Officer’s (AO) action.
The tribunal referred to various legal precedents and concluded that the AO had valid reasons to believe that income had escaped assessment. Hence, the reopening of the assessment was upheld.
Regarding the merits of the addition, the tribunal observed that the appellant had provided sufficient evidence to support the genuineness of the purchases from M/s Radhika Trading Co. The appellant furnished invoices, bank statements, and VAT returns, indicating that the transactions were duly accounted for and taxes were paid. The tribunal found no material evidence suggesting that M/s Radhika Trading Co. was a non-existent entity or that the transactions were bogus.
The ITAT directed the AO to delete the additions of Rs. 8,50,000 and Rs. 17,000, as there was no substantial evidence to support the claim that the transactions were not genuine.
The ITAT’s decision emphasizes the importance of substantiating claims with adequate documentation and the need for tax authorities to base their assessments on concrete evidence. This case highlights the necessity for a fair and transparent reassessment process, ensuring that taxpayers’ rights are protected.
The final order, pronounced on December 23, 2022, reads:
In the light of aforesaid, this Bench is of the considered view that the reopening of the assessment was justified based on information suggesting escapement of income. However, on merits, the appellant provided sufficient evidence to support the genuineness of the purchases from M/s Radhika Trading Co. Accordingly, the Assessing Officer is directed to delete the addition of Rs. 8,50,000 and Rs. 17,000.
Above decision was pronounced in open court on 23rd December, 2022.
Signed by:
(KUL BHARAT) Judicial Member
Dated: 23rd December, 2022
This judgment reinforces the principle that reassessments must be based on solid evidence, ensuring fairness and transparency in tax proceedings.
ITA No. 1903/DEL/2020 – Vijay Singhal vs. ITO Ward 36(2), New Delhi: Appeal for AY 2012-13
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