This case concerns JSD Steel Pvt. Ltd. (formerly CBS Steel Pvt. Ltd.) challenging the order passed by the National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2011-12. The key issue revolves around the reopening of the assessment under Sections 147/143(3) of the Income Tax Act, 1961, and various additions made to the assessed income.
The company did not initially file a return of income under Section 139(1) for the year under dispute. Following a notice from the ITO, JSD Steel filed a return declaring income significantly lower than the assessments completed subsequently by the ITO. The discrepancies led to an appeal and subsequent reassessment proceedings focused on alleged cash transactions exceeding Rs. 10,00,000.
The appellant challenged the validity of the reassessment order citing lack of proper grounds and non-application of mind by the Assessing Officer. The defense highlighted discrepancies in the reasons recorded for reopening the assessment, specifically pointing out inconsistencies in the assessment years mentioned and a lack of detailed evidence supporting the transactions in question.
The Tribunal, led by Shri Saktijit Dey, found substantial flaws in the Assessing Officer’s approach, noting that the reasons for reopening the assessment showed a complete non-application of mind and were mechanically acted upon. The Tribunal also noted that the additions made during the reassessment did not relate to the reasons for which the assessment was originally reopened, further invalidating the proceedings.
The Tribunal’s decision resulted in the quashing of the reassessment order, setting aside the appeal decision by the Commissioner (Appeals). This case underscores the necessity for clear and concrete reasoning in the reopening of assessments and the importance of adhering strictly to procedural fairness in tax proceedings.
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