Case Number: ITA 1204/DEL/2020
Appellant: Arun Kumar Aggarwal, New Delhi
Respondent: ITO Ward-35(8), New Delhi
Assessment Year: 2012-13
Case Filed On: 2020-06-18
Order Type: Final Tribunal Order
Date of Order: 2023-05-18
Pronounced On: 2023-05-18
This appeal was filed by Arun Kumar Aggarwal against the order passed by the Income Tax Officer (ITO), Ward-35(8), New Delhi, for the assessment year 2012-13. The appellant, engaged in the business of trading and chemicals under the name M/s Arco Chem, filed a return declaring an income of Rs. 6,71,790/-. The case was selected for scrutiny and initially assessed at Rs. 7,07,886/-. Subsequently, the case was reopened based on information received from the Directorate of Income Tax (Investigation) regarding high-value cash transactions linked to the appellant.
Arun Kumar Aggarwal raised several grounds of appeal against the ITO’s order, including:
1.1 The CIT(A) erred in confirming the actions of the Assessing Officer (AO) in issuing a notice under section 148 of the Income Tax Act, 1961, which was without jurisdiction and barred by limitation.
2.1 The initiation of proceedings under sections 147/148 was without satisfaction and material on record, making the actions erroneous and unlawful.
3.1 The AO made an addition of Rs. 34,02,000/- on account of alleged bogus purchases, which the appellant contested as erroneous and unsustainable.
The tribunal noted that the case was reopened based on information from the DDIT (Investigation) about high-value cash deposits and transfers in the account of M/s Astro Informatics, which was suspected to be a dummy/shell company. The AO had observed that transactions were mostly in round figures, indicating non-regular business activities.
The tribunal observed that despite notices issued under section 133(6) of the Act to verify transactions with M/s Astro Informatics, no response was received. An inspection revealed that the said firm did not exist at the given address. Therefore, the AO treated the purchase of Rs. 48,49,500/- from M/s Astro Informatics as accommodation entries from a dummy shell company.
The tribunal referred to various judicial pronouncements, including the Hon’ble Apex Court’s decision in Commissioner of Income Tax vs. Foramer France, where it was held that assessments cannot be reopened on a mere change of opinion. The tribunal also cited the Hon’ble High Court of Delhi’s ruling in D.T & T.D.C. Ltd. vs. ACIT, which emphasized that reopening beyond four years requires specific allegations of failure to disclose material facts fully and truly.
The tribunal concluded that the reopening of assessment under section 147/148 was invalid as it was based on a mere change of opinion and without alleging failure to disclose material facts. The tribunal allowed the ground of appeal regarding the limitation and set aside the reassessment order, rendering other grounds of appeal academic.
The tribunal’s decision in ITA 1204/DEL/2020 underscores the necessity for proper jurisdiction and adherence to legal provisions in tax assessments. The ruling highlights the impermissibility of reopening assessments beyond four years without substantial reasons, thereby providing relief to Arun Kumar Aggarwal.
The order was pronounced in the open court on 18/05/2023 by the tribunal members Shri Anil Chaturvedi and Shri Yogesh Kumar U.S.
Order pronounced in the open court on: 18/05/2023
Judicial Member: Yogesh Kumar U.S.
Accountant Member: Anil Chaturvedi
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